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Facts
For AY 2011-12, a search u/s 132 was conducted on a related group, leading to a notice u/s 153A to the assessee. The assessment was unabated, and the AO made an addition of Rs. 70,00,000 u/s 68 for unexplained cash credit (share capital application money). The CIT(A) deleted this addition, holding that the AO lacked jurisdiction to make additions in an unabated assessment year without incriminating material found during the search. The Revenue appealed the CIT(A)'s order.
Held
The Tribunal upheld the CIT(A)'s decision, confirming that for unabated assessments under Section 153A, no additions can be made unless based on incriminating material found during the search, relying on the Supreme Court's ruling in Pr. CIT Vs. Abhiser Buildwell (P) Ltd. Consequently, the Revenue's appeals were dismissed, and the assessee's cross-objections were also dismissed as infructuous.
Key Issues
Whether the Assessing Officer can make additions in an unabated assessment year under Section 153A without incriminating material found during a search action, specifically regarding unexplained cash credit under Section 68.
Sections Cited
250, 68, 139(1), 132, 153A, 143(2)
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Income Tax Appellate Tribunal, “B” BENCH, KOLKATA
Before: Shri Rajesh Kumar, AM& Shri Pradip Kumar Choubey, JM]
ORDER Per Bench:
All these appeals filed by the revenue and the Cross Objections filed by the assessee are against the separate orders of Ld. CIT(A), Kolkata-21 dated 20.06.2024 & 18.06.2024 for AY 2011-12 passed u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”).
ITA No.2221/Kol/2024 A.Y.2011-12.
The revenue has filed appeal before us challenging the deletion of addition to the tune of Rs.70,00,000/- by Ld. CIT(A) as made by the AO u/s. 68 of the Act on account of unexplained cash credit.
At the outset we note that the appeal is barred by limitation by 78 days by the revenue for the condonation petition has been filed explaining the delay to be on account of not getting any alert in the office of AO or ld. PCIT and it only came to be noticed orders passed by the ld. CIT(A) were downloaded after sometime. Besides the office of ld. PCIT was under heavy pressure of disposing of the time barring cases/matters. We find the delay for sufficient reasons and accordingly condone the same by admitting the appeal of the assessee for adjudication.
The facts in brief are that the assessee filed the return of income u/s. 139(1) of the Act on 15.07.2011 declaring total income of Rs.1,040/-. A search action u/s. 132 of the Act was conducted on 09.09.2015 and subsequent dates on UNIGLOBAL GROUP of which the assessee is a related entity. Accordingly notice u/s. 153A of the Act was issued and was duly served. The assessee complied with the said notice by filing a return of income declaring loss of Rs. 1,040/- on 28.08.2017. Thereafter, statutory notices were issued along with questionnaires which were duly complied and replied by the assessee. Pertinent to state that the impugned assessment is an unabated assessment on the date of search as there were no pending proceeding on the date of search and also the time period prescribed under the Act for issuing notice u/s. 143(2) had also 3 CO Nos. 58 &54/Kol/2024 2222/Kol/2024 Unicorn Land Developers (P) Ltd. & Unicorn Nirman (P) Ltd. AYs 2011-12 expired. The AO, after taking into account the contentions and submissions of the assessee, made addition to the income in respect of share capital application money.
4. The Ld. CIT(A) in the appellate proceeding allowed the appeal of the assessee on legal issue that AO has no jurisdiction to make addition in an unabated assessment year without any incriminating materials and directed the AO to delete the addition in respect of share application money on the ground that the addition.
After hearing the rival contentions and perusing the material available on record, we find that the return of income was filed u/s 139(1) of the Act on 15.07.2011. A search action u/s 132(1) was conducted on the assessee on 09.09.2015. So, on the date of search there were no pending proceedings before the AO qua this assessment year and also that the time limit for issuing notice u/s 143(2) had already expired. Therefore, the impugned assessment was unabated on the date of search or had attained finality in terms provisions of section 153A of the Act. Now the issue before us for adjudication is whether the AO has jurisdiction to make additions without there being any incriminating materials seized during the search. In our opinion the addition in case of unabated assessment can only be made with reference to incriminating materials seized during search and not otherwise. We note that in the appellate order, Ld. CIT(A) has clearly recorded a finding of fact that AO has not referred to any incriminating materials found during the course of search qua the share application . Accordingly, we are in agreement with the Ld. CIT(A) that addition in case of unabated assessment year can only be made on the basis of search material found and seized during search. The case of the assessee is squarely covered by the decision of Hon’ble Supreme Courtin the case of “Pr. CIT Vs. Abhiser Buildwell (P) Ltd.” [2023] 149 taxmann.com 399 (SC), wherein the Hon’ble Supreme Court has held that in the case of non- abated/completed assessments, no addition can be made by the Assessing Officer in an assessment carried out u/s.153A of the Act in the absence of any incriminating material found during the search action which has been respectfully followed by the ld. CIT(A) while deleting the additions. The order passed by the ld. CIT(A) appears to be correct and therefore the appeal of the revenue is dismissed by upholding the order of ld. CIT(A).
4 CO Nos. 58 &54/Kol/2024 2222/Kol/2024 Unicorn Land Developers (P) Ltd. & Unicorn Nirman (P) Ltd. AYs 2011-12 would apply, mutatis mutandis, to other appeal as well. Accordingly, both the appeals of the revenue are dismissed.
The Cross Objections Nos. 54 & 58/KOL/2024 AYs 11-12 are filed by the assessee in support of the orders of the ld. CIT(A). Since, we have dismissed the appeals of the Revenue by upholding the orders of the CIT (A) in both these assessment years, therefore, these cross objections become infructuous and dismissed.
In the result, both the appeals of the Revenue and cross objections of the assessee are dismissed.
Order is pronounced in the open court on 15.01.2025