BRINDAVAN ENTERPRISES PVT LTD.,NEW DELHI vs. ACIT CENTRAL CIRCLE-14, NEW DELHI

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ITA 367/DEL/2023Status: DisposedITAT Delhi18 December 2024AY 2016-17Bench: SHRI S. RIFAUR RAHMAN (Accountant Member), SHRI YOGESH KUMAR US (Judicial Member)13 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that since the assessment year was unabated and no incriminating material was found during the search pertaining to the assessee, no addition could be made. The findings from a third-party search could not be treated as incriminating material for the assessee's unabated year.

What were the facts?

A search operation led to the discovery of documents suggesting the assessee sold goods to M/s Faith Jewellers, who were later found to be providing accommodation entries. The Assessing Officer treated the sale proceeds as unaccounted income. The CIT(A) sustained a portion of the addition as profit.

What were the issues?

Whether additions can be made in an unabated assessment year without incriminating material found during search, and if third-party search findings constitute incriminating material for the assessee.

Which sections of the Income-tax Act were involved?

Section 132,Section 153A,Section 143(3),Section 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

For Appellant: Shri Rajkumar,CA &, Shri J.P. Sharma, CA
For Respondent: Shri Javed Akhtar, CIT (DR)
Hearing: 16.10.2024

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.

14.

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.

15.

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.

17.

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.

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