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Facts
The Assessee filed appeals against orders of the Ld. CIT(A) for AYs 2012-13 to 2014-15, which upheld additions made by the AO following a search operation. The additions included deemed rental income and unexplained cash deposits in bank accounts, which the Assessee argued were not based on incriminating material found during the search. The Assessee also sought condonation of delay due to the COVID-19 pandemic.
Held
The Tribunal observed that no incriminating material was found during the search and no assessment proceedings were pending at the time of the search. Relying on the Hon'ble Supreme Court's decision in Abhisar Build Well, the Tribunal ruled that additions made on account of cash deposits without incriminating material should be deleted.
Key Issues
Whether additions made under Section 153A read with Section 143(3) are valid when not based on incriminating material found during a search operation, particularly for deemed rental income and unexplained cash deposits, and when no assessment proceedings were pending.
Sections Cited
Section 153A, Section 143(3), Section 69A
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Income Tax Appellate Tribunal, DELHI BENCH ‘H’: NEW DELHI
Date of Hearing 14/02/2024 Date of Pronouncement 27/02/2024 ORDER PER YOGESH KUMAR U.S., JM: All these appeals filed by the Assessee are against the order of Learned Commissioner of Income Tax (Appeals)-23, New Delhi [“Ld.
CIT(A)”, for short], dated 15/01/2021, 28/08/2020 & 28/08/2020, for Assessment Years 2012-13 to 2014-15 respectively.
2. The following grounds taken in these appeals are as under:
“1. The Order passed by the Ld CIT (Appeals) is opposed to law and facts of the case.
2. That in the facts of the case and as per law, the learned CIT (A) erred in upholding the additions made by the Assessing Officer in the returned income during the course of assessment u/s 153A read with section 143(3) of the Act, which are not based on any incriminating material found during the course of search on the appellant, and contrary to the ratio of various judicial precedents which have held that the scope of assessment which are not pending at the time of conducting of search u/s 153A of the Act, encompasses additions/ disallowance, based on incriminating material found during the course of search only
3. That the Ld. CIT (A) has erred in the facts and in law in upholding the addition made by the Ld. AO to the extent of Rs 64,680/- on account of deemed rental income.
4. The Ld. CIT(A) has erred in the facts and in law in upholding the Rs.2 addition made by the Ld. AO to the extent of Rs 9,14,432/- on account of unexplained money in the form of cash found to be deposited in the bank account of the Appellant/Assessee u/s 69A of the Income Tax Act, 1961.
5. That the appellant craves leave to add, alter, amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal.”
“1. The Order passed by the Ld. CIT (Appeals) is opposed to law and facts of the case
2. That in the facts of the case and as per law, the learned CIT (A) erred in upholding the additions made by the Assessing Officer in the returned income during the course of assessment u's 153A read with section 143(3) of the Act, which are not based on any incriminating material found during the course of search on the appellant, and contrary to the ratio of various judicial precedents which have held that the scope of assessment which are not pending at the time of conducting of search u/s 153A of the Act, encompasses additions/ disallowance, based on incriminating material found during the course of search only.
3. That the Ld. CIT (A) has erred in the facts and in law in upholding the addition made by the Ld. AO to the extent of Rs.71,400/- on account of deemed rental income.
4. That the appellant craves leave to add, alter, amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal.
That because of the COVID pandemic, the appeal could not be filed within the limitation period prescribed in the Income Tax Act. However, the Appellant understands that the Hon'ble Supreme Court's Order dated 23.03 2020 in Suo Moto Writ Petition No.03/2020 Extending Limitation due to COVID-19 is still operative and therefore no separate application for condonation of delay is being filed with the present appeal.”
“1. The Order paved by the Ld CTT (Appeals) is opposed to land facts of the case.
That in the facts of the case and as per lam, the learned CTT (A) red in upholding the addition made by the Assessing Officer in the returned income during the course of assessment is 151A read with section 1433) of the Act, which are not based on any incriminating material found during the course of search on the appellant, and contrary to the ratio of various judicial precedents which have held that the scope of assessment which are not pending at the time of conducting of search wis 153A of the Act, encompasses additions disallowance, based on incriminating material fond during the course of search only.
That the Lad CTT (A) has erred in the facts and in law in upholding the Rs. addition made by the LAO to the extent of Rs. 1,49,100-on account (Approx of deemed rental income
4. That the appellant craves to leave to add, alter, amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal.
That because of the COVID pandemic, the appeal could not be filled within the limitation period prescribed in the Income Tax Act. However, the Appellant understands that the Hon'ble Supreme Court's Order dated 23.01.2020 Suo Moto Writ Petition No.03/2020 Extending Limitation due to COVI-19 is still operative and therefore no separate application for condonation of delay is being filed with the present appeal.”
3. The Ld. Counsel for the Assessee submitted that the Ld. CIT(A) erred in upholding the addition made by the A.O. u/s 153A read with Section 143(3) of the Act wherein the additions are based on any incriminating material found during the course of search and by relying the ratio laid down by the Hon’ble supreme Court in the case of Abhisar Build Well (2023) 149 Taxman.com 399 (SC) sought for deletions of the additions by allowing the above appeals filed by the Assessee.
Per contra, the Ld. Departmental Representative relied on the order of the Lower Authorities, but could not dispute the claim made by the Ld. AR that additions have been made in the absence of any incriminating material found during the course of the search.
We have heard the parties perused the material. From the perusal of the assessment order, it is found that no incriminating material was found during the course of search and no assessment proceedings were pending at the time of search. The additions have been made on account of cash deposits in the bank account, therefore, following the ratio laid down the Hon’ble Supreme Court in the case of Abhisar Build Well (supra) the additions made by the A.O. for the Assessment Year 2012-13 to 2014-15 are hereby deleted.
In the result, Appeal filed by the Assessee in ITA Nos.
63/Del/2021, 64/Del/2021 and 65/Del/2021 for A.Y 2012- 13 to 2014- 15 are allowed.