ITAT Ahmedabad Judgments — August 2023

The Tribunal held that the CIT(A) erred in confirming the addition of Rs. 37,14,80,775/-. The Tribunal found that the seized material from third-party brokers, Raju Jethanand Tekwani and Dharmendra Jethanand Bhambhani, constituted 'dumb documents' without any cogent material or independent clinching evidence to establish cash receipts by the assessee. The Tribunal noted that the AO had not established that these brokers were employees or representatives of the assessee, nor had verification been conducted to link the buyers in the seized documents with the actual buyers. Therefore, the direction to treat the amount as receipts in the years of unit transfer was deemed devoid of merit and liable to be quashed. Furthermore, the Tribunal held that the CIT(A) had exceeded his jurisdiction by giving directions for additions in subsequent years, as an appellate authority can only adjudicate on the assessment year in dispute before it. The Tribunal relied on the decision in Sun Metal Factory (I) (P.) Ltd. vs. Assistant Commissioner of Income Tax. Consequently, the assessee's grounds of appeal were allowed, and the Revenue's appeal was dismissed for AY 2014-15. The same findings were applied to AYs 2015-16 and 2016-17.

The Tribunal held that the order of the CIT(A) was not infirm and did not require any interference. The Tribunal upheld the CIT(A)'s decision to delete the addition of Rs. 8,05,11,000/-. The reasoning was based on several points: (1) The additions were made based on an excel sheet found from a third party (Mr. Murlidhar M. Trivedi), and apart from the assessee's name appearing in it, there was no further corroborative evidence to substantiate the alleged on-money payment. (2) The assessee had furnished all relevant documents, including agreements and cheque payment details, for the property purchase. (3) Additions cannot be made solely on the basis of jottings or notings without corroborative evidence, citing various ITAT and Supreme Court decisions (e.g., Rajvee Tractors Pvt. Ltd., Gordhanbhai Talavia, Pradeep Amrutlal Runwal, Regency Mahavir Properties, Vinit Ranawat). (4) Crucially, the assessee was not granted an opportunity to cross-examine the person whose statement was the basis for the addition, violating the principles of natural justice, as held by the Supreme Court in Andaman Timber Industries and CIT vs. Sunita Dhadda. (5) The locus standi of Mr. Murlidhar M. Trivedi to make statements implicating the assessee was not established, as his relationship with NODPL was unclear, and even the Revenue could not verify it during arguments. Therefore, the evidentiary value of his statement was questionable.

The Tribunal held that the Ld. CIT(A) was justified in deleting the disallowance of deduction under Section 80IB(10) of the Act. The Tribunal noted that the District Valuation Officer (DVO) had provided a clean chit to the assessee in its report dated 13.01.2016, stating that all conditions for Section 80IB(10) had been fulfilled for all projects. Crucially, the Tribunal observed that the AO had not considered this DVO report in his assessment order. The Tribunal found that the Ld. CIT(A) had dealt with all the aspects raised by the AO and that the observations made by the CIT(A) in deleting the addition were unambiguous and proper. Therefore, the Tribunal upheld the CIT(A)'s decision, finding the Revenue's appeals devoid of merit. The appeals were dismissed.

The Tribunal held that the Ld. CIT(A) was justified in deleting the disallowance of deduction under Section 80IB(10) of the Act. The Tribunal noted that the District Valuation Officer (DVO) had provided a clean chit to the assessee in its report dated 13.01.2016, stating that all conditions for Section 80IB(10) had been fulfilled for all projects. Crucially, the Tribunal observed that the AO had not considered this DVO report in his assessment order. The Tribunal found that the Ld. CIT(A) had dealt with all the aspects raised by the AO and that the observations made by the CIT(A) in deleting the addition were unambiguous and proper. Therefore, the Tribunal upheld the CIT(A)'s decision, finding the Revenue's appeals devoid of merit. The appeals were dismissed.

The Tribunal held that the Ld. CIT(A) was justified in deleting the disallowance of deduction under Section 80IB(10) of the Act. The Tribunal noted that the District Valuation Officer (DVO) had provided a clean chit to the assessee in its report dated 13.01.2016, stating that all conditions for Section 80IB(10) had been fulfilled for all projects. Crucially, the Tribunal observed that the AO had not considered this DVO report in his assessment order. The Tribunal found that the Ld. CIT(A) had dealt with all the aspects raised by the AO and that the observations made by the CIT(A) in deleting the addition were unambiguous and proper. Therefore, the Tribunal upheld the CIT(A)'s decision, finding the Revenue's appeals devoid of merit. The appeals were dismissed.

The Tribunal held that the appeal filed by the Revenue was dismissed. The Tribunal agreed with the CIT(A)'s finding that the addition of Rs. 1,52,14,018/- was made based on AIR information and not on any incriminating material found during the search. The Revenue's counsel fairly admitted this fact and could not point out any infirmity in the legal proposition followed by the CIT(A). The Tribunal reiterated the legal position, supported by the Hon'ble Apex Court's decision in *CIT Vs. Abhisar Buildwell Pvt. Ltd.* [2023] 149 taxmann.com 399, that in cases of unabated assessments, no addition can be made in the absence of incriminating material found during a search under Section 132 or requisition under Section 132A. The CIT(A)'s order allowing the rectification application and deleting the addition was upheld. The Tribunal found no reason to interfere with the CIT(A)'s order.

The Tribunal held that the additions made by the Assessing Officer under Section 14A and Section 36(1)(iii) were not sustainable. The Tribunal noted that the assessment years were unabated and that the additions were based solely on the assessee's books of accounts, with no incriminating material found or seized during the search operation. The Tribunal relied on the Supreme Court's decision in 'Abhisar Buildwell Private Ltd.', which held that in unabated assessments, no additions can be made under Section 153A if no incriminating material is found during the search. The Tribunal also referred to a co-ordinate bench decision in 'DCIT Vs. Bina Divyangbhai Shah' which followed the 'Abhisar Buildwell' ruling and the Gujarat High Court's decision in 'PCIT v. Backbone Projects Limited'. Consequently, the grounds raised by the Revenue were found to be devoid of merit and were dismissed. The CIT(A)'s order deleting the additions was upheld.

The Tribunal held that the additions made by the Assessing Officer under Section 14A and Section 36(1)(iii) were not sustainable. The Tribunal noted that the assessment years were unabated and that the additions were based solely on the assessee's books of accounts, with no incriminating material found or seized during the search operation. The Tribunal relied on the Supreme Court's decision in 'Abhisar Buildwell Private Ltd.', which held that in unabated assessments, no additions can be made under Section 153A if no incriminating material is found during the search. The Tribunal also referred to a co-ordinate bench decision in 'DCIT Vs. Bina Divyangbhai Shah' which followed the 'Abhisar Buildwell' ruling and the Gujarat High Court's decision in 'PCIT v. Backbone Projects Limited'. Consequently, the grounds raised by the Revenue were found to be devoid of merit and were dismissed. The CIT(A)'s order deleting the additions was upheld.

The Tribunal upheld the order of the CIT(A) and dismissed the appeal filed by the Revenue. The Tribunal noted that the assessment was framed under Section 153A pursuant to a search under Section 132, but no incriminating material was found with respect to the unsecured loans. The Tribunal relied on the Supreme Court's decision in PCIT v. Abhisar Buildwell Private Limited and the Gujarat High Court's decision in PCIT v. Backbone Projects Limited, which held that in unabated/concluded assessments, no additions can be made in an assessment framed under Section 153A if no incriminating material is found during the search. The original assessment was unabated as the time limit for issuing a notice under Section 143(2) had expired. Therefore, the additions of Rs. 78,52,200/- made by the AO were not sustainable. The Tribunal also acknowledged that the assessee had filed additional evidence before the CIT(A) to satisfy the ingredients of Section 68, and the CIT-DR could not point out any deficiency in these evidences. The ratio decidendi is that additions under Section 153A are permissible only if based on incriminating material found during search in cases of unabated assessments.

The Tribunal held that Ground No. 1 of the assessee's appeal was general and did not require specific adjudication. Regarding Ground No. 2.1 and 2.2, the Tribunal noted that the Ld. CIT(A) had correctly held that on-money receipts reflected in loose papers pertaining to two units sold by the assessee represented undisclosed income. However, the Tribunal agreed with the Ld. CIT(A)'s observation that extrapolation of such on-money to all units and all assessment years was not justified in the absence of concrete evidence, especially when no sales were made in AY 2015-16. The Tribunal upheld the deletion of additions made by the AO for AY 2012-13 and 2015-16. Regarding Ground No. 3.1 and 3.2, the Tribunal did not explicitly record its finding on the alleged unaccounted transaction of Rs. 1,00,00,000/- and the addition of Rs. 20,00,000/-, but the overall outcome suggests these were not sustained. Ground No. 4 was implicitly addressed by the decision on Ground No. 2. The Tribunal did not record any specific findings on Grounds No. 5 and 6 concerning interest and penalty. For Revenue's Ground No. 2, the Tribunal upheld the Ld. CIT(A)'s deletion of the addition of Rs. 1,63,50,000/- because no specific date was mentioned in the loose papers, making it impossible to tax the amount as undisclosed income in AY 2015-16. The ratio decidendi is that additions based on seized material require clear linkage to the assessee and the relevant assessment year, and extrapolation without sufficient evidence is not permissible. The operative direction was that the assessee's appeal was partly allowed and the Revenue's appeal was dismissed.

The Tribunal held that Ground No. 1 of the assessee's appeal was general and did not require specific adjudication. Regarding Ground No. 2.1 and 2.2, the Tribunal noted that the Ld. CIT(A) had correctly held that on-money receipts reflected in loose papers pertaining to two units sold by the assessee represented undisclosed income. However, the Tribunal agreed with the Ld. CIT(A)'s observation that extrapolation of such on-money to all units and all assessment years was not justified in the absence of concrete evidence, especially when no sales were made in AY 2015-16. The Tribunal upheld the deletion of additions made by the AO for AY 2012-13 and 2015-16. Regarding Ground No. 3.1 and 3.2, the Tribunal did not explicitly record its finding on the alleged unaccounted transaction of Rs. 1,00,00,000/- and the addition of Rs. 20,00,000/-, but the overall outcome suggests these were not sustained. Ground No. 4 was implicitly addressed by the decision on Ground No. 2. The Tribunal did not record any specific findings on Grounds No. 5 and 6 concerning interest and penalty. For Revenue's Ground No. 2, the Tribunal upheld the Ld. CIT(A)'s deletion of the addition of Rs. 1,63,50,000/- because no specific date was mentioned in the loose papers, making it impossible to tax the amount as undisclosed income in AY 2015-16. The ratio decidendi is that additions based on seized material require clear linkage to the assessee and the relevant assessment year, and extrapolation without sufficient evidence is not permissible. The operative direction was that the assessee's appeal was partly allowed and the Revenue's appeal was dismissed.

The Tribunal held that Ground No. 1 of the assessee's appeal was general and did not require specific adjudication. Regarding Ground No. 2.1 and 2.2, the Tribunal noted that the Ld. CIT(A) had correctly held that on-money receipts reflected in loose papers pertaining to two units sold by the assessee represented undisclosed income. However, the Tribunal agreed with the Ld. CIT(A)'s observation that extrapolation of such on-money to all units and all assessment years was not justified in the absence of concrete evidence, especially when no sales were made in AY 2015-16. The Tribunal upheld the deletion of additions made by the AO for AY 2012-13 and 2015-16. Regarding Ground No. 3.1 and 3.2, the Tribunal did not explicitly record its finding on the alleged unaccounted transaction of Rs. 1,00,00,000/- and the addition of Rs. 20,00,000/-, but the overall outcome suggests these were not sustained. Ground No. 4 was implicitly addressed by the decision on Ground No. 2. The Tribunal did not record any specific findings on Grounds No. 5 and 6 concerning interest and penalty. For Revenue's Ground No. 2, the Tribunal upheld the Ld. CIT(A)'s deletion of the addition of Rs. 1,63,50,000/- because no specific date was mentioned in the loose papers, making it impossible to tax the amount as undisclosed income in AY 2015-16. The ratio decidendi is that additions based on seized material require clear linkage to the assessee and the relevant assessment year, and extrapolation without sufficient evidence is not permissible. The operative direction was that the assessee's appeal was partly allowed and the Revenue's appeal was dismissed.

The Tribunal held that the assessment orders for both Assessment Years 2014-2015 and 2015-2016 were invalid due to being passed beyond the limitation period prescribed under Section 153B of the Income Tax Act, 1961. The Tribunal, respectfully following its own prior decision in the assessee's group case (IT(SS)A No.152/Ahd/2021), concluded that the search was concluded on March 10, 2015. Consequently, the time limit to complete the assessment under Section 143(3) read with Section 153A expired on March 31, 2017. As the assessment orders were passed on December 28, 2017, they were time-barred and liable to be quashed. The Tribunal noted that the Revenue had not placed any material to demonstrate otherwise or any distinguishing features in the facts of the present case. Due to succeeding on this technical ground, the Tribunal refrained from deciding the issues raised on merits, deeming them infructuous. Therefore, the grounds raised on merits by the assessee were dismissed. The operative direction was to quash the assessment orders. The ratio decidendi is that an assessment order passed beyond the period stipulated in Section 153B, calculated from the conclusion of the search as recorded in the last panchnama, is invalid.

The Tribunal held that the assessment under Section 153A is not restricted to incriminating material found during the search. The AO can assess or re-assess the total income for the six assessment years preceding the year of search, irrespective of whether the income relates to the search material. The Tribunal relied on the Supreme Court's decision in the case of Anil Kumar Bhatia and other High Court judgments. Therefore, the CIT(A)'s view that additions must be confined to incriminating material was set aside. Regarding the addition of Rs. 10 crores based on WhatsApp messages, the Tribunal found that the conversation related to a future event and did not establish that the assessee actually received or was entitled to receive the commission. No corroborating evidence was found during the search to support the AO's theory of commission receipt. The assessee's explanation of acting as an intermediary without receiving consideration was not rebutted by the AO. Consequently, the addition of Rs. 10 crores was deleted. The Tribunal also noted that the AO's observation about the assessee talking about returning amounts was not supported by the perusal of the conversation. The judgment did not provide a specific finding on the other additions/disallowances mentioned in the table (on-money, Section 40A(3), Section 69A, etc.) as the detailed reasoning for these was not included in the provided excerpt.

The Tribunal held that the assessment under Section 153A is not restricted to incriminating material found during the search. The AO can assess or re-assess the total income for the six assessment years preceding the year of search, irrespective of whether the income relates to the search material. The Tribunal relied on the Supreme Court's decision in the case of Anil Kumar Bhatia and other High Court judgments. Therefore, the CIT(A)'s view that additions must be confined to incriminating material was set aside. Regarding the addition of Rs. 10 crores based on WhatsApp messages, the Tribunal found that the conversation related to a future event and did not establish that the assessee actually received or was entitled to receive the commission. No corroborating evidence was found during the search to support the AO's theory of commission receipt. The assessee's explanation of acting as an intermediary without receiving consideration was not rebutted by the AO. Consequently, the addition of Rs. 10 crores was deleted. The Tribunal also noted that the AO's observation about the assessee talking about returning amounts was not supported by the perusal of the conversation. The judgment did not provide a specific finding on the other additions/disallowances mentioned in the table (on-money, Section 40A(3), Section 69A, etc.) as the detailed reasoning for these was not included in the provided excerpt.

The Tribunal held that the assessment under Section 153A is not restricted to incriminating material found during the search. The AO can assess or re-assess the total income for the six assessment years preceding the year of search, irrespective of whether the income relates to the search material. The Tribunal relied on the Supreme Court's decision in the case of Anil Kumar Bhatia and other High Court judgments. Therefore, the CIT(A)'s view that additions must be confined to incriminating material was set aside. Regarding the addition of Rs. 10 crores based on WhatsApp messages, the Tribunal found that the conversation related to a future event and did not establish that the assessee actually received or was entitled to receive the commission. No corroborating evidence was found during the search to support the AO's theory of commission receipt. The assessee's explanation of acting as an intermediary without receiving consideration was not rebutted by the AO. Consequently, the addition of Rs. 10 crores was deleted. The Tribunal also noted that the AO's observation about the assessee talking about returning amounts was not supported by the perusal of the conversation. The judgment did not provide a specific finding on the other additions/disallowances mentioned in the table (on-money, Section 40A(3), Section 69A, etc.) as the detailed reasoning for these was not included in the provided excerpt.

The Tribunal held that the assessment under Section 153A is not restricted to incriminating material found during the search. The AO can assess or re-assess the total income for the six assessment years preceding the year of search, irrespective of whether the income relates to the search material. The Tribunal relied on the Supreme Court's decision in the case of Anil Kumar Bhatia and other High Court judgments. Therefore, the CIT(A)'s view that additions must be confined to incriminating material was set aside. Regarding the addition of Rs. 10 crores based on WhatsApp messages, the Tribunal found that the conversation related to a future event and did not establish that the assessee actually received or was entitled to receive the commission. No corroborating evidence was found during the search to support the AO's theory of commission receipt. The assessee's explanation of acting as an intermediary without receiving consideration was not rebutted by the AO. Consequently, the addition of Rs. 10 crores was deleted. The Tribunal also noted that the AO's observation about the assessee talking about returning amounts was not supported by the perusal of the conversation. The judgment did not provide a specific finding on the other additions/disallowances mentioned in the table (on-money, Section 40A(3), Section 69A, etc.) as the detailed reasoning for these was not included in the provided excerpt.

The Tribunal held that the assessment under Section 153A is not restricted to incriminating material found during the search. The AO can assess or re-assess the total income for the six assessment years preceding the year of search, irrespective of whether the income relates to the search material. The Tribunal relied on the Supreme Court's decision in the case of Anil Kumar Bhatia and other High Court judgments. Therefore, the CIT(A)'s view that additions must be confined to incriminating material was set aside. Regarding the addition of Rs. 10 crores based on WhatsApp messages, the Tribunal found that the conversation related to a future event and did not establish that the assessee actually received or was entitled to receive the commission. No corroborating evidence was found during the search to support the AO's theory of commission receipt. The assessee's explanation of acting as an intermediary without receiving consideration was not rebutted by the AO. Consequently, the addition of Rs. 10 crores was deleted. The Tribunal also noted that the AO's observation about the assessee talking about returning amounts was not supported by the perusal of the conversation. The judgment did not provide a specific finding on the other additions/disallowances mentioned in the table (on-money, Section 40A(3), Section 69A, etc.) as the detailed reasoning for these was not included in the provided excerpt.

The Tribunal held that the assessment under Section 153A is not restricted to incriminating material found during the search. The AO can assess or re-assess the total income for the six assessment years preceding the year of search, irrespective of whether the income relates to the search material. The Tribunal relied on the Supreme Court's decision in the case of Anil Kumar Bhatia and other High Court judgments. Therefore, the CIT(A)'s view that additions must be confined to incriminating material was set aside. Regarding the addition of Rs. 10 crores based on WhatsApp messages, the Tribunal found that the conversation related to a future event and did not establish that the assessee actually received or was entitled to receive the commission. No corroborating evidence was found during the search to support the AO's theory of commission receipt. The assessee's explanation of acting as an intermediary without receiving consideration was not rebutted by the AO. Consequently, the addition of Rs. 10 crores was deleted. The Tribunal also noted that the AO's observation about the assessee talking about returning amounts was not supported by the perusal of the conversation. The judgment did not provide a specific finding on the other additions/disallowances mentioned in the table (on-money, Section 40A(3), Section 69A, etc.) as the detailed reasoning for these was not included in the provided excerpt.

The Tribunal held that the assessment under Section 153A is not restricted to incriminating material found during the search. The AO can assess or re-assess the total income for the six assessment years preceding the year of search, irrespective of whether the income relates to the search material. The Tribunal relied on the Supreme Court's decision in the case of Anil Kumar Bhatia and other High Court judgments. Therefore, the CIT(A)'s view that additions must be confined to incriminating material was set aside. Regarding the addition of Rs. 10 crores based on WhatsApp messages, the Tribunal found that the conversation related to a future event and did not establish that the assessee actually received or was entitled to receive the commission. No corroborating evidence was found during the search to support the AO's theory of commission receipt. The assessee's explanation of acting as an intermediary without receiving consideration was not rebutted by the AO. Consequently, the addition of Rs. 10 crores was deleted. The Tribunal also noted that the AO's observation about the assessee talking about returning amounts was not supported by the perusal of the conversation. The judgment did not provide a specific finding on the other additions/disallowances mentioned in the table (on-money, Section 40A(3), Section 69A, etc.) as the detailed reasoning for these was not included in the provided excerpt.

The Tribunal held that the assessment under Section 153A is not restricted to incriminating material found during the search. The AO can assess or re-assess the total income for the six assessment years preceding the year of search, irrespective of whether the income relates to the search material. The Tribunal relied on the Supreme Court's decision in the case of Anil Kumar Bhatia and other High Court judgments. Therefore, the CIT(A)'s view that additions must be confined to incriminating material was set aside. Regarding the addition of Rs. 10 crores based on WhatsApp messages, the Tribunal found that the conversation related to a future event and did not establish that the assessee actually received or was entitled to receive the commission. No corroborating evidence was found during the search to support the AO's theory of commission receipt. The assessee's explanation of acting as an intermediary without receiving consideration was not rebutted by the AO. Consequently, the addition of Rs. 10 crores was deleted. The Tribunal also noted that the AO's observation about the assessee talking about returning amounts was not supported by the perusal of the conversation. The judgment did not provide a specific finding on the other additions/disallowances mentioned in the table (on-money, Section 40A(3), Section 69A, etc.) as the detailed reasoning for these was not included in the provided excerpt.

The Tribunal held that the assessment under Section 153A is not restricted to incriminating material found during the search. The AO can assess or re-assess the total income for the six assessment years preceding the year of search, irrespective of whether the income relates to the search material. The Tribunal relied on the Supreme Court's decision in the case of Anil Kumar Bhatia and other High Court judgments. Therefore, the CIT(A)'s view that additions must be confined to incriminating material was set aside. Regarding the addition of Rs. 10 crores based on WhatsApp messages, the Tribunal found that the conversation related to a future event and did not establish that the assessee actually received or was entitled to receive the commission. No corroborating evidence was found during the search to support the AO's theory of commission receipt. The assessee's explanation of acting as an intermediary without receiving consideration was not rebutted by the AO. Consequently, the addition of Rs. 10 crores was deleted. The Tribunal also noted that the AO's observation about the assessee talking about returning amounts was not supported by the perusal of the conversation. The judgment did not provide a specific finding on the other additions/disallowances mentioned in the table (on-money, Section 40A(3), Section 69A, etc.) as the detailed reasoning for these was not included in the provided excerpt.

The Tribunal held that the CIT(A) had erred in deleting the additions made by the AO under section 68 of the Income Tax Act, 1961. The Tribunal found that the assessee had failed to prove the identity, genuineness, and creditworthiness of the unsecured loan of Rs. 10,00,00,000/- from Smt. Hansaben M. Patel. The AO's assessment order highlighted that Smt. Hansaben M. Patel had only filed a return for AY 2009-10 with a low declared income and that her bank statements showed rapid movement of funds, suggesting she was an accommodation entry provider. Furthermore, the AO noted that lands claimed to be sold by her were purchased and then sold within a mere 13 days, indicating she was not the genuine owner and had not offered capital gains on such transactions. The Tribunal concluded that Smt. Hansaben M. Patel had provided accommodation entries to the assessee in the guise of an unsecured loan. Consequently, the unsecured loan was added back to the total income of the assessee as unexplained cash credits. The Tribunal set aside the order of the CIT(A) and restored the order of the AO.

The Tribunal held that the addition of Rs. 10,00,000/- on account of bogus commission expenses was not sustainable. The primary basis for the AO's decision was the seized material, which the Tribunal found to be bills and credit notes for commission and professional fees, not inherently incriminating. The Tribunal also found the statement of Shri Jatin Shah to be unreliable, noting that he was an employee of another group concern (M/s. Venus Corporation) and his statement was recorded under Section 131, not Section 132(4). The Tribunal emphasized that a retracted statement, or one from a person not directly involved with the assessee, cannot be the sole basis for an addition, especially when the assessee has provided evidence of genuine payments through banking channels after TDS deduction. The Tribunal directed the deletion of the disallowance of Rs. 10 lakhs commission expenses. Regarding the Rs. 5,86,945/- addition for car purchase, the Tribunal allowed telescoping against the assessee's surrender of Rs. 6,00,000/- as bogus commission expenses, finding no reason why the cash expenditure should not be offset against the admitted surrender. Both grounds of appeal were allowed.