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Facts
A search operation in the Bajaj Group led to a Section 153A notice against the assessee. The AO made an addition of Rs. 6,34,00,000/- for unexplained investment in shares under Section 68, but the CIT(A) deleted this addition, noting it was made without any incriminating material found and the investment was already disclosed.
Held
The Tribunal upheld the CIT(A)'s decision, confirming that no addition can be made in a Section 153A assessment without incriminating material found during the search, particularly when the investment was already disclosed in the financial statements. The Tribunal relied on the Supreme Court's ruling in PCIT vs. Abhisar Buildwell P. Ltd.
Key Issues
Whether additions made and assessments framed under Section 153A without any incriminating material found during search, and where investments were already disclosed, are sustainable.
Sections Cited
Section 153A, Section 68
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Income Tax Appellate Tribunal, DELHI BENCH ‘F’ : NEW DELHI
Before: SHRI SHAMIM YAHYA & SHRI Y0GESH KUMAR US
PER SHAMIM YAHYA, ACCOUNTANT MEMBER :
This appeal by the Revenue is directed against the order of the ld. CIT (Appeals)-30, New Delhi dated 28.02.2022 for the assessment year 2011-12. 2. The Revenue has taken the following grounds of appeal :- “1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in quashing the proceedings u/s 153A and deleting the additions made by the AO.
2. On the facts and in the circumstances of the case, the CITCA) did not considered the facts of the case.
3. On the facts and in the circumstances of the case, the CITCA) has erred in not deciding the case on merit and decided the case only on ground 7 & 12 raised by the appellant.
The order of the CITCA) is erroneous and is not tenable on facts and in law.”
Brief facts of the case are that search and seizure operation under section of the Income-tax Act, 1961 (for short ‘the Act’) was carried out in the case of Bajaj Group on 20.04.2017. Consequently, notice under section 153A of the Act was issued by the AO. AO assessed the income of the assessee at Rs.6,39,62,330/- as against the returned income of Rs.5,62,330/- by making an addition of Rs.6,34,00,000/- on account of unexplained investment in shares under section 68 of the Act. Upon assessee’s appeal, ld. CIT (A) noted that addition was made de hors 4. of any incriminating material found, hence he deleted the addition. The observation of the ld. CIT (A) may be gainfully read as under :-
“Moreover, in the case of the appellant the addition made by the AO of Rs.6,34,00,000/- on account of investments in preference shares is otherwise unwarranted under the provisions of the Act. The year under consideration being the year which falls beyond the period of 6 years and is covered in the extended period of 10 years from the end of relevant assessment year as per the amendment vide Finance Act, 2017, the AO was authorized to issue notice under section 153A only where he is in possession of any tangible evidence found during the course of search which reveals any undisclosed investment in the form of asset in the hands of the assessee. However, in the present case of the appellant, in the assessment order there is no reference to any such tangible evidence found during the course of search leading to any undisclosed investment in the form of asset being made by the appellant. The preference shares of Rs.6,34,00,000/- are appearing in the schedule of investments of audited financial statements of the appellant company. Further there is no finding/ observation of the AO that the said investment was not disclosed in the financial statements. Hence, the AO was not justified in reopening the case for the year under consideration by issuing notice under section 153A without referring to any books of account, other documents or evidence which reveal the escapement of income as per the 4th proviso to Section 153A which is pre- condition to issue notice in the relevant assessment year (i.e. beyond six assessment years). In view of these facts the assessment framed under section 153A for the year under consideration is hereby quashed and addition made by the AO of Rs.6,34,00,000/- is hereby directed to be deleted.”
Against this order, Revenue is in appeal before us. We have heard both the parties and perused the records. Ld. DR for the Revenue fairly accepted that addition is made de hors of any 6. incriminating material found in this case. 7. Ld. Counsel of the assessee, on the other hand, submitted that investment in preference shares has been duly disclosed in the financial statement. He further submitted that AO has not made reference to any incriminating material found in this case. Hence, he submitted that the issue is squarely covered in favour of the assessee by catena of case laws. He submitted that recently this position was affirmed by the Hon’ble Supreme Court in the case of PCIT vs. Abhisar Buildwell P. Ltd. vide order dated 24th April, 2023. 8. Upon careful consideration, we find that it is undisputed that addition in this case was made without any incriminating material found during search and seizure operation. In this view of the matter, ld. CIT (A)’s view is correct one and duly supported by case laws in this regard. Accordingly, in the background of the aforesaid precedent and factual position, we do not find any infirmity in the order of the ld. CIT(A). We affirm the same. 9. In the result, the appeal of the Revenue is dismissed. Order pronounced in the open court on this 14th day of March, 2024.