PARAS SHARMA,ROHTAK vs. DC/ACIT CENT GURGAO 1, GURUGRAM

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ITSSA 5218/DEL/2024Status: DisposedITAT Delhi01 May 2025AY 2017-183 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the addition of Rs. 10.15 lakhs under section 68 as an unexplained cash credit was not sustainable. The Tribunal noted that the assessment year 2017-18 was an 'unabated' one, as the search action under section 132 occurred on 11.01.2019, after the close of the assessment year. Relying on the landmark decision of the Hon'ble Apex Court in PCIT Vs. Abhisar Builwell P. Ltd. (2023) 454 ITR 212 (SC), the Tribunal reiterated that in 'unabated' assessment years, additions under section 153A must be based solely on seized or incriminating material. Upon perusal of the assessment discussion, the Tribunal found no evidence that the Assessing Officer had made the addition based on any such incriminating material. Consequently, the Tribunal found it a fit case to delete the impugned addition. The appeal was allowed.

What were the facts?

The assessee, Sh. Paras Sharma, is in appeal against the order of the Commissioner of Income Tax (Appeals)-3, Gurgaon, dated 30.09.2024. This order pertains to assessment year 2017-18 and involves proceedings initiated under section 153A of the Income-tax Act, 1961. The lower authorities, including the Assessing Officer and the CIT(A), made an addition of Rs. 10.15 lakhs under section 68 as an unexplained cash credit. The assessment order was dated 09.06.2021. A search action under section 132 was conducted in the assessee's case on 11.01.2019, which is subsequent to the end of the assessment year in question, making it an 'unabated' assessment year.

What were the issues?

1. Whether the addition of Rs. 10.15 lakhs under section 68 as an unexplained cash credit is valid in an 'unabated' assessment year, initiated under section 153A, without any seized or incriminating material? (Question of law) Assessee's Contention: The assessee, through its CA, argued that since the assessment year 2017-18 is 'unabated' and the proceedings were initiated under section 153A following a search on 11.01.2019, any addition must be based on seized or incriminating material. The assessee implicitly contended that no such material was found or relied upon for the addition. Revenue's Contention: The learned Sr. DR, while acknowledging the 'unabated' nature of the assessment year, did not dispute the principle that additions in such cases must be based on seized material. The revenue's argument, as reflected in the Tribunal's finding, was that the Assessing Officer failed to demonstrate the existence of such incriminating material.

Which sections of the Income-tax Act were involved?

Section 153A,Section 68,Section 132

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: ‘F’ NEW DELHI

Before: SHRI SATBEER SINGH GODARA & SHRI NAVEEN CHANDRA

Hearing: 01.05.2025Pronounced: 01.05.2025

PER SATBEER SINGH GODARA, JM This assessee’s appeal for assessment year 2017-18, arises against the Commissioner of Income Tax (Appeals)-3 [in short, the “CIT(A)”], Gurgaon’s order dated 30.09.2024 passed in case no 11697/2016-17, involving proceedings under section 153A of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’). 2. Heard both the parties. Case file perused. 3. It emerges during the course of hearing with the able assistance coming from both the learned representatives

IT(SS)A No.5218/Del/2024

that both the lower authorities herein have made section 68 unexplained cash credit addition of Rs.10.15 lakhs in assessment dated 09.06.2021 as upheld in the CIT(A)’s lower appellate discussion. 4. Faced with this situation, learned CIT(DR) could hardly dispute the clinching fact emerging from the case file that the impugned assessment year 2017-18 is an “unabated” one since the departmental authorities had carried out section 132 search action in assessee’s case on 11.01.2019, leading to initiation of Section 153A proceedings. And that hon’ble apex court’s recent landmark decision in PCIT Vs. Abhisar Builwell P. Ltd. (2023) 454 ITR 212 (SC) has settled the law that such an addition involving an “unabated” assessment has to be based on the seized/incriminating material only. 5. From a perusal of the assessment discussion, we find that there is not even an iota of evidence indicating that the learned Assessing Officer has made the addition in assessee’s hands based on such an incriminating material. We thus find it a fit case to delete the impugned section

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IT(SS)A No.5218/Del/2024

68 addition of Rs.10.15 lakhs in very terms. Ordered accordingly. 6. This assessee’s appeal is allowed. Order pronounced in the open court on 1st May, 2025 Sd/- Sd/- (NAVEEN CHANDRA) (SATBEER SINGH GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 1st May, 2025. RK/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi

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