SH.RAJINDER MITTAL,PANCHKULA vs. ACIT, CHANDIGARH

आदेश/ORDER Per Annapurna Gupta, Accountant Member

The present appeal has been preferred by the assessee against the order dated 9.10.2013 of the Commissioner of Income Tax (Appeals)(Central), Gurgaon [hereinafter referred to as CIT(A)], passed u/s 250(6) of the Income Tax Act,1961(hereinafter referred to as “Act”).

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thereafter for assessing the income of the assessee u/s

142(1) and 143(2) of the Act alongwith detailed

questionnaire. Meanwhile it was seen that the accounts of

the group concern and the seized documents were complex in

nature and hence in the interest of revenue the case of the

group including the assessee was referred to the special

auditor u/s 142(2A) of the Act. The audit report u/s 142(2A)

was submitted by the assessee and thereafter the income

was assessed at Rs.17,93,536/- after making additions u/s

68 of the Act on account of unexplained cash found

deposited in two bank accounts of the assessee amounting

to Rs.8,70,000/- and unexplained loan of Rs.5,00,000/- and

additions u/s 69C on account of unexplained expenses

emanating from certain documents found during search.

where the assessee contested only the additions made u/s

68 of the Act which were all upheld by the Ld.CIT(A) on

merits holding that the assessee had been unable to explain

the same .

appeal before us, raising the following grounds of appeal:

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it. So, this addition is highly unjustified. Therefore, the addition of Rs. 3,70,000/- is prayed to be deleted. 3. That the Ld. Commissioner on Income (Appeal) (Central), Gurgaon grossly erred and his action is unjustified and illegal in addition of Rs. 5,00,000/- on account of unexplained cash credit u/s 68 on the basis of Bank statement. As in replied by the assessee that section 68 did not apply to assessee, along with bank statement did not constitute any books of accounts and that the cash deposit in bank account by all three joint holders, but Ld. CIT (A) ignored it. So, this addition is highly unjustified. Therefore, the addition of Rs. 5,00,000/- is prayed to be deleted. 4. That the Ld. Commissioner on Income (Appeal) (Central), Gurgaon grossly erred and his action is unjustified and illegal in addition of Rs. 5,00,000/- on account of unexplained cash credit u/s 68 on the basis of Bank statement. As in replied by the assessee that section 68 did not apply to assessee, along with supporting documentary evidence, but Ld. CIT (A) ignored it. So, this addition is highly unjustified. Therefore, the addition of Rs.5,00,000/- is prayed to be deleted. 5. Charging interest under section 234 A, 234 B and 234 C are not warranted due to the facts of the case. 5. The assessee has also raised additional ground before

us which reads as under:

“That the Ld. CIT (A) is not justified in confirming the additions / disallowances in assessment made u/s. 153A (1) (b) r.w.s. 143 (3) of the I. T. Act, 1961 in the absence of incriminating material found during the course of Search as no assessment was pending for the A. Y. 2006- 07 on the date of initiation of search.” 6. Vis a vis the same it was contended that since the issue

raised in the additional ground was a legal issue and

further since no new fresh facts were required to be

considered for adjudicating the same, it may be admitted for

adjudication. In support the assessee relied upon the

decision of the Hon'ble Apex Court in the case of NTPC

Limited Vs. CIT, 283 ITR 390.

the admission of the additional ground in writing stating

that incriminating material were seized during search and,

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therefore, there was no illegality in the assessment framed

in the present case. It was pointed out that an document

having notification marked A-2 was found and seized, pages

82 to 89 of which pertained to a sale deed in respect of land

purchased by the assessee in village Dhakoli alongwith the

other co-owners. The Ld. DR also pointed out that the

assessee has made disclosure of Rs.1,63,400/- on account of

the same.

Ld. counsel for assessee that the additional ground raised

before us is a legal ground and since no fresh facts need to

be considered for adjudication of the same, we have no

hesitation to admit the same for adjudication. The objection

of the Ld. DR is only an argument for the purpose of

adjudicating the issue raised in the additional ground and,

therefore, cannot be considered at the stage of admission of

the additional ground. The objection of the Ld.DR is

therefore, dismissed and the additional ground raised by

the assessee is admitted for adjudication.

validity of the addition made u/s 68 of the Act, we shall deal

with the same first.

counsel for assessee pointed out that in the assessment

framed subsequent to the search conducted on the assessee

additions were made on account of unexplained cash

deposits in the bank account of the assessee amounting to

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Rs.3,70,000/- and Rs.5 lacs, in two separate bank accounts

of the assessee and further on account of unexplained cash

credit in the form of unsecured loan received from one Shri

Devinder Singh of Rs.5 lacs and further on account of an

document found during search pertaining to a sale deed in

respect of purchase of land made by the assessee amounting

to Rs.1,63,000/- and Rs.31,100/-.The Ld. counsel for

assessee pointed out that it was not pressing against the

addition made vis-à-vis documents seized during search. It

was stated by the Ld. counsel for assessee that it was only

contesting the addition made on account of unexplained

cash in bank and unexplained cash credit and its solitary

argument against the same was that no incriminating

material relating to these additions was found during the

course of search and that it was simply based on documents

procured during the course of post search enquiry when the

copies of bank accounts were submitted and it was noted

therefrom that there were cash deposits and unsecured loans

taken by the assessee in the bank accounts, the explanation

of which was sought from the assessee and found to be

unsatisfactory. The Ld.Counsel for the assessee thereafter

pointed out that there was no pending assessment relating

to the impugned year as on the date of search and,

therefore, in view of the above facts and in view of various

judicial decisions in this regard, no addition unconnected

with any material seized during the course of search could

have been made in the hands of the assessee. Our attention

was drawn to paras 6, 7 and 8 of the assessment order

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wherein the additions on account of cash deposits in the

bank and unsecured loan found deposited in bank was

discussed and made. The Ld. counsel for assessee also drew

our attention to the fact that the assessment year involved

in the impugned case was assessment year 2006-07 and

statutorily specified period for issuing notice for initiating

assessment proceedings u/s 143(2) of the Act expired on

31.3.2007 and no such notice was issued to the assessee.

Therefore, there were no ongoing assessment proceedings

when the search was conducted on the assessee on

16.1.2009, which would have abated for the purpose of

framing assessment as per the provisions of section 153A of

the Act.

undeniably the bank books in which the cash credits entries

were found and pertaining to which additions were made,

were not found during the course of search but the fact of

the matter was that the accounts of the group cases and the

seized documents were complex in nature and, therefore,

case of the group was referred for special audit u/s 142(2A)

of the Act which was not objected to by the assessee also

and it was in terms of the report submitted by the special

auditors to whom no explanation of the cash deposits was

furnished and on his recommendation the assessee was show

caused as to why the impugned additions be not made and

which resulted in the impugned additions. It was further

pointed out that seized document were found during the

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course of search relating to purchase of land which the

assessee had contended that the payment was made out of

the very same bank account in which there were unexplained

cash deposits. In these facts and circumstances, therefore,

the Ld. DR contended that the addition made on account of

unexplained cash deposits in the bank could not be seen in

isolation but were related to the investment found to have

been made by the assessee from earlier undisclosed cash

credits during the course of search and, therefore, it could

not be said that the addition was not based on any

incriminating material found during the course of search.

orders of the authorities below. The assessee ,in its

additional ground has challenged the addition made u/s 68

of the Act of unexplained cash deposited in bank and

unexplained loan taken ,on the ground that the material on

which the addition was based was not found during search

,in other words the addition was not based on any

incriminating material found during search.

made pursuant to search conducted in cases where earlier

assessment was completed, addition can be made only on the

basis of incriminating material found during search there is

no dispute. In fact courts have time and again in the cases

of CIT Vs. Continental Warehousing Corporation in ITA No.

523 of 2013 reported in (2015) 279 CTR 0389 (Bombay), CIT

Vs. Kabul Chawla, 234 Taxman 300 (Delhi). Principal CIT Vs.

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MeetaGutgutia Prop M/s Ferns ‘N’ Petals”, ITA 306/2017 and

others (Delhi) held that if no incriminating material is found

during the search action, the addition in the case of already

concluded assessment cannot be made while framing

assessment u/s 153A of the Act.

The only dispute is whether the addition made u/s 68

of the Act was based on any incriminating material or not.

additions emanated from bank accounts and bank book of

the assessee is not disputed. Further we find that the

assessment order does not mention the same having been

found during search, nor has the Ld.DR been able to

establish the said fact before us. In fact the Ld.DR has

admitted that the said documents were not found during

search but the information was obtained in the course of

special audit conducted u/s 142(2A) of the Act.

contention of the Ld.Counsel for the assessee that the

addition u/s 68 of Rs13,70,000/-was not based on any

incriminating material found during search and since

admittedly the assessment for the impugned year had not

abated, no addition therefore could have been made on

account of the same.

that that the addition made on account of unexplained cash

deposits in the bank could not be seen in isolation but were

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related to the investment found to have been made by the

assessee during the course of search and which were from

earlier undisclosed cash credits. The Ld.DR has not

substantiated his contention that the investment was from

undisclosed cash credit, with any cogent evidence. No nexus

has been shown to us by the Ld.DR between the unexplained

cash deposited in bank and the investment made for

purchase of land, documents pertaining to which were found

during search. In the absence of any link having been

established by the Ld.DR between the unexplained cash

deposits and the investments found to have been by the

assessee during search ,we see no reason to view the two

documents together to hold that the documents pertaining to

the cash credits were incriminating documents found during

search for the purpose of making addition u/s 153A of the

Act, as argued by the Ld.DR. We therefore dismiss the

contention of the Ld.DR.

the Act on account of unexplained cash deposit in Bank of

Rs.3,70,000/- & Rs.5,00,000/- and unexplained loan taken

of Rs. 5,00,000/- was not based on any incriminating

material found during search and could not be made u/s

153A of the Act. The addition so made is therefore directed

to be deleted.

The additional ground raised by the assessee is

therefore allowed.

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Order pronounced in the Open Court.

Sd/- Sd/- संजय गग� अ�नपूणा� गु�ता (ANNAPURNA GUPTA) (SANJAY GARG) �याय�क सद�य/Judicial Member लेखा सद�य/Accountant Member �दनांक /Dated: 29th March, 2019 *रती* आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकर आयु�त/ CIT 4. आयकर आयु�त (अपील)/ The CIT(A) 5. �वभागीय ��त�न�ध, आयकर अपील�य आ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड� फाईल/ Guard File

आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar