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Facts
A search operation on the assessee's group was conducted on 28.11.2017. The Assessing Officer, relying on a prior search on M/s Faith Jewellers (who were found to be providing accommodation entries), treated the assessee's sales of bullion worth Rs. 4,01,00,081/- to Faith Jewellers as unaccounted income. The CIT(A) sustained a 2% profit addition of Rs. 8,02,002/-, considering the transactions bogus.
Held
The Tribunal ruled that for the unabated assessment year 2016-17, no addition could be made under Section 153A without incriminating material found during the search on the assessee, as established by the Supreme Court in Abhisar Buildwell. The Assessing Officer's reliance on third-party statements and findings, without direct incriminating evidence from the assessee's search, was found to be beyond the scope of Section 153A. Consequently, the jurisdictional ground of the assessee was allowed, rendering the assessment bad in law and dismissing the Revenue's appeal.
Key Issues
Whether an addition can be made in an unabated assessment year under Section 153A based solely on third-party information or statements, in the absence of incriminating material found during the search on the assessee.
Sections Cited
153A, 143(3), 132, 132(4), 133A, 143(2), 142(1), 153C, 69A
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Income Tax Appellate Tribunal, DELHI BENCH ‘A’, NEW DELHI
Before: SHRI S. RIFAUR RAHMAN & SHRI YOGESH KUMAR US, JUDICIALMEMBER AND
statement and findings in the case of M/s Faith Jewellers in order to make the addition in the case of the assessee and there is no material available linking to the case of the assessee. There is only a common thread between M/s Faith Jewellers and the assessee that assessee has sold certain jewellery to M/s Faith Jewellers and assessee has received the sale proceeds from them on the same day. Apart from that the findings in the case of M/s Faith Jewellers are that they are providing accommodation entries and if we accept that assessee has provided accommodation entries to M/s Faith Jewellers then we might have to treat the sales declared by the assessee as bogus and since the assessee has already declared the sales we cannot proceed to make separate addition which was already declared as income in the books of the assessee. Leave apart the above, we notice that the impugned assessment year is unabated, as per the facts brought on record by the assessee and we observe that there is no link to the proceedings initiated in Faith Jewellers and the assessee. Further there is no incriminating material found during the search in this case and Assessing Officer has proceeded to complete the assessment merely on the basis of statement recorded in the case of third party in post search proceedings. Even otherwise the statements were recorded prior to the search. These findings in third party cannot be treated as incriminating material Therefore, we are inclined to agree with the assessee that there is no incriminating material found during the search qua making addition in the assessment year which is unabated, by relying on Abhisar Buildwell (P) Ltd. (supra), no addition can be year. In the result, ground no. 1 raised by the assessee is allowed in favour of the assessee.
The other grounds raised by the assessee are not adjudicated at this stage.
Accordingly, appeal filed by the assessee is partly allowed as indicated above.
Since we have already adjudicated the appeal preferred by the assessee on jurisdictional issue, therefore, the assessment itself is bad in law. Therefore, the appeal preferred by the Revenue is also dismissed.
In the result, appeal filed by the assessee is partly allowed and the appeal filed by the Revenue is dismissed.
Order pronounced in the open court on this 18th day of December, 2024.