Assessment under Section 68 requires incriminating evidence from a search; absence of such evidence invalidates post-assessment additions.

JUDGMENT

Navin Chawla, J. (Oral)--This appeal has been filed by the appellant challenging the order dated 02.07.2018 passed by the learned Income Tax Appellate Tribunal (Delhi Benches: "D" New Delhi) (hereinafter referred to as "ITAT") dismissing the appeal of the appellant being I.T. Appeal No. 6683/Del/2013.

2. It is the case of the appellant that on 31.10.2008 a search and seizure operation under Section 132 of the Income Tax Act, 1961 (hereinafter referred to as the `Act') was carried out in the Raj Darbar Group of cases. During the search operation certain incriminating documents belonging to the respondent company were also seized and, therefore, proceedings under Section 153C of the Act were initiated against the respondent vide notice dated 21.07.2010. It is claimed that during the post search enquiries and assessment proceedings, it was gathered that about 25 companies all having addresses in Kolkata applied for allotment of shares of the respondent and later family members/companies of the Raj Darbar Group bought back the shares at a much lower price than the price at which the shares were allotted to these Kolkata based companies. It is further claimed that efforts to serve summons under Section 131 of the Act through Inspectors also revealed that these companies could not be located and the identity of these concerns were also doubtful. Therefore, the Assessing Officer, vide assessment order dated 22.12.2010, treated the amount of Rs.3.32 crores received from these companies as unexplained cash credits under Section 68 of the Act and added the said amount back to the income of the respondent company.

3. The respondent being aggrieved of the above, filed an appeal before the Commissioner of Income Tax (Appeals)-XXXI [hereinafter referred to as `CIT(Appeals)'], which was allowed vide order dated 11.10.2013. The appellant challenged the said order before the learned ITAT which has dismissed the said appeal vide the Impugned Order.

4. The learned counsel for the appellant submits that the learned ITAT has failed to appreciate that in the present case, the assessment order was passed on the allegation of 25 companies, all having addresses in Kolkata and having applied for allotment of shares of the respondent company, been found not in existence. He submits that in the facts of the present case, therefore, the learned ITAT has erred in placing reliance on the judgment of this Court in Commissioner of Income Tax (Central)-III vs. Kabul Chawla, 2015 SCC OnLine Del 11555 : (2016) 380 ITR 573 (Del).

5. We find no merit in the submissions made by the learned counsel for the appellant. Both, the learned CIT (Appeals) as also the learned ITAT, have found that the Assessing Officer has not made use of any seized documents while making additions to the total income of the respondent under Section 68 of the Act. The finding of the learned ITAT in this regard is reproduced hereinbelow:

"9. We further observe that the learned Assessing Officer while farming the assessment order has not referred to any seized documents belonging to the assessee found during the course of search proceedings. In the remand proceedings the learned Assessing Officer has also submitted that no any incriminating materials have been referred to while framing the assessment order. A perusal of the seized documents and their description revealed that the seized documents mentioned in the satisfication note do not relate to the accommodation entry transactions. The case laws relied by the learned Departmental Representative are not applicable in the present facts of the case and the learned DR could not bring an