DCIT-CC-7(3), MUMBAI vs. SHRI. ASHOK KUMAR AGARWAL, MUMBAI

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ITA 2819/MUM/2022Status: DisposedITAT Mumbai28 June 2023AY 2014-155 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the addition made by the AO was unsustainable as it was not based on any incriminating material found during the search. In cases of unabated assessments, additions cannot be made without such material.

What were the facts?

A search operation was conducted at the assessee's residence, leading to a notice under section 153C. The Assessing Officer (AO) made an addition of over Rs. 16 crore on account of non-genuine share transactions. The Commissioner (Appeals) deleted this addition.

What were the issues?

Whether additions can be made in an unabated assessment without incriminating material found during a search. Whether the denial of Long Term Capital Gain exemption on shares was justified.

Which sections of the Income-tax Act were involved?

Section 132,Section 153C,Section 250

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI

Before: SHRI PRASHANT MAHARISHI, AM & SHRI N. K. CHOUDHRY, JM

For Respondent: Ms. Madhumalti Chosh, CIT-DR
Hearing: 15.06.2023Pronounced: 28.06.2023

DCIT, CC-7(3), Ashok Kumar Agarwal Room No. 655, Aayakar 201, UGAM, NS Road No.9, Vs. Bhavan, M.K. Road, JVPD Scheme Juhu, Mumbai-400020. Ville Parle-(W), Mumbai-400097. PAN No. AAMPA2997A Appellant) : Respondent) Appellant/Department by : Ms. Madhumalti Chosh, CIT-DR RAssessee/Respondent : Sh. Rushabh Mehta by Date of Hearing : 15.06.2023 Date of Pronouncement : 28.06.2023 O R D E R

Per N. K. Choudhry, JM:

1.

The Revenue Department/Appellant herein has preferred this appeal against the order dated 24.08.2022 impugned herein passed by Ld. Commissioner of Income Tax (Appeals)-49 / National Faceless Appeal Centre (NFAC), Delhi {in short ‘Ld. Commissioner)’} u/s 250 of the Income Tax Act 1961 (in short ‘the Act’).

Ashok Kumar Agarwal 2. In this case, a search and seizure operation under section 132 of the Act was carried out by the DDIT, Unit- 3(2), Mumbai on dated 09.10.2014 at the residence of the assessee, who at the time of search was Director of Lotus Logistics and Developers Pvt. Ltd. Consequently, on the basis of search and seizure operation, the notice under section 153C was issued to the assessee, in response to which the assessee by filling its return of income on dated 19.10.2016 declared total income of Rs. 13,66,590/-.

2.

The AO ultimately made the addition of Rs. 16,00,,42,286/- on account of transactions of purchase and sale of shares of Global Infratech & Finance Ltd. leading to generating Long Term Capital Gain (LTCG) of Rs. 15,68,47,285/- as non-genuine.

3.

The Ld. Commissioner on appeal, deleted the said addition, mainly by holding that the addition made by the AO by denying the claim of exemption in respect of LTCG on sale of shares, is not based on any incriminating material found during the course of search.

4.

Being aggrieved, the Revenue Department has preferred this appeal.

Ashok Kumar Agarwal 5. Having heard both the parties and perused the material placed on record, we observe that admittedly the addition in hand, which has been made by the AO and affirmed by the Ld. Commissioner, dehors the incriminating material found during the course of search u/s 132 or section 132A of the Act and the assessment of the assessee is unabated, and therefore the addition in hand made by the AO is un- sustainable, in view of the dictum laid down by the Hon’ble Apex Court in the case of case of Pr. CIT v. Abhisar Buildwell (P.) Ltd. [2023] 149 taxmann.com 399, wherein it has been held as under:

13.

For the reasons stated hereinabove, we are in complete agreement with the view taken by the Delhi High Court in the case of Kabul Chawla (supra) and the Gujarat High Court in the case of Saumya Construction (supra) and the decisions of the other High Courts taking the view that no addition can be made in respect of the completed assessments in absence of any incriminating material.

14.

In view of the above and for the reasons stated above, it is concluded as under:

i) that in case of search under Section 132 or requisition under Section 132A, the AO assumes the jurisdiction for block assessment under section 153A;

Ashok Kumar Agarwal ii) all pending assessments/reassessments shall stand abated; iii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the ‘total income’ taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961.

And therefore in our considered view, impugned addition has rightly been deleted by the ld. Commissioner and thus the impugned order do not require any inference, as the same does not suffers any perversity, impropriatory and/or illegality.

Ashok Kumar Agarwal 6. In the result, appeal filed by the Revenue/Department stands dismissed.

Orders pronounced in the open court on 28-06-2023.

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