ACIT, NEW DELHI vs. LATE SMT. BHAWNA GUPTA (THROUGH LEGAL HEIR SH. SAMEER GUPTA), UTTAR PRADESH

Both these appeals are filed by the assessee against the order dated 24.11.2016 passed by CIT(A)-23, New Delhi for assessment year 2011-12 and 2012-13.

“1. The order of Ld. CIT(A) is not correct in law and facts.

2. On the facts and circumstances of the case, the Ld. CIT(A) has erred in law in deleting the addition of Rs. 1,09,80,369/- made by the Assessing Officer on account of gain on sale of investment.

3. The appellant craves leave to add, amend any/all grounds of appeal before or during the course of hearing of the appeal.”

“1. The order of Ld. CIT(A) is not correct in law and facts.

2. On the facts and circumstances of the case, the Ld. CIT(A) has erred in law in deleting the addition of Rs. 1,88,27,050/- made by the Assessing Officer on account of Long Term Capital Gain.

3. The issues are identical in both the appeals, therefore, we are taking Assessment Year 2011-12. The assessee is an individual. During the year, the assessee earned income from house property and other sources. The assessee filed return of income for year under consideration declaring a total income of Rs. 9,08,750/-. A search and seizure operation was conducted on 03.10.2013 in Jakson Group of cases u/s 132 of the Act. Correspondingly, assessment u/s 153A initiated in case of assessee, notice u/s 153A(1) of the Act was served upon the assessee and assessee filed original ITR in response to same. Notice u/s 142(1) along with questionnaires were served upon the assessee and in respect of thereto, the authorized representative of the assessee attended the proceedings from time to time and filed necessary details and produced books of accounts. The Assessing Officer assessed the income at Rs. 1,18,89,120/- as against income of Rs. 9,08,750/- as per order u/s 153A /143(3) dated 30.03.2016 thereby making addition of Rs. 1,09,80,369/- on account of bogus exempt long term capital gain.

“24. We have considered the rival arguments made by both the sides, perused the orders of the AO and the CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the assessee in the instant case has filed his original return of income on 30th March, 2012 declaring total income of Rs. 3,92,11,220/-. In response to notice u/s 153A of the IT Act, the assessee filed return in response to notice u/s 153A on 5th January, 2015 declaring the same income. The assessee in his return of income had claimed exemption of long term capital gain of Rs. 5,62,61,726/-. The assessment order was passed u/s 143(3) read with section 153A by making addition of the long term capital gain as bogus. From the order of the assessing officer, we find nowhere it is mentioned that any incriminating material was found during the course of search. The entire addition made by the AO is based on post search inquiries. There is also no ground by the revenue that any such incriminating material was found other than the statement of Shri Sundeep Gupta at the time of search. Under these circumstances, we have to adjudicate as to whether the CIT(A) has erred in deleting the addition made by the AO in absence of any incriminating material.

The Hon’ble High Court in the said case held as under :-

“In this case the search took place in the premises on 03.10.2013. A notice under Section 153A was issued to the assessee which re-affirmed its earlier returns. The Assessing Officer completed the Section 153A assessment by adding amounts under Section 60A to the tune of ?5,62,61,726/- for AY 201 1-12. The CIT (A) and the ITAT concurrently granted relief to the assessee in the appellate proceedings holding that no fresh incriminating material was seized warranting the additions during the search. Both the appellate authorities relied upon the judgment of this Court in CIT v. Kabul Chaw la, 380 ITR 573. In these circumstances, the Court is of the opinion that no question of law arises as the ratio in Kabul Chawla (supra) applied. The appeal is, therefore, dismissed.”

In the present case also there is no unaccounted transaction found during the course of search. The capital gain that arose from the sale of shares are already recorded in the books of accounts and no incriminating material whatsoever was found during the course of search. Since the Hon'ble Jurisdictional High Court has clearly held that addition in order passed u/s 143(3)/ 153A cannot be made In absence of any incriminating material and since in the instant case, there is no evidence whatsoever on record that any incriminating material was found during the course of search and since the addition was made on the basis of certain inquiries conducted subsequent to the search on the basis of return already filed, therefore, on this issue itself addition has to be deleted. The issue in the present case is identical with that of the decision given by the Tribunal as the same is son of the assessee herein. In fact, now the son only representing the assessee after her death. Therefore, the CIT(A) rightly allowed the appeal of the assessee. Thus, appeal of the revenue is dismissed.