Assessments under Section 153A of the Income Tax Act cannot be made without incriminating material found during a search, validating the deletion of additions based on lack of evidence.

JUDGMENT

Manmeet Pritam Singh Arora, J. (Oral)

CM APPL. 1733/2019 (for condonation of delay)

Keeping in view the averments in the application, the delay of 45 days in filing of the present appeal is condoned.

Accordingly, present application stands disposed of.

1. Present Income Tax Appeal has been filed challenging the order dated 27th February, 2018 passed by the Income Tax Appellate Tribunal (`ITAT') in ITA No. 4594/DEL/2016 for the Assessment Year (`AY') 2009-10.

ITA 29/2019

2. The facts of the case relevant for deciding the present appeal are as follows:

2.1. On 27.09.2009, the Assessee filed Income Tax Return (`ITR') declaring an income of Rs.9,93,09,210. The return filed by the Assessee was processed under Section 143(1) of the Income Tax Act, 1961 (`the Act'). The assessment under Section 143(3) was completed on 28.02.2011 at the returned income.

2.2. On 10.12.2013, a search and seizure operation under Section 132 of the Act was carried out in the case of the Assessee. During the assessment proceedings it was observed that as per the balance sheet of the Assessee, there was a substantial increase in the share capital and induction of the share premium for the AY under consideration. The Assessee was directed to furnish necessary details in support of the identity of the shareholders.

2.3. The Assessee was issued with an assessment order dated 31st March, 2015 by the Assessing Officer (`AO') resulting in an addition of Rs.8,00,00,000/- under Section 68 of the Act. The AO noted that the details submitted by the Assessee was not found to be satisfactory.

2.4. Aggrieved by the assessment order dated 31st March, 2015, the Assessee preferred an appeal before the Commissioner of Income Tax Appeals [`CIT(A)'], whereby vide order dated 31st May, 2016, the aforesaid addition was deleted. It was noted by CIT(A) that it is clearly brought out by the AO in her report that addition was not made on the basis of any incriminating document or material found during the course of search but the addition was made due to the failure of the appellant to discharge its onus to prove the identity, creditworthiness and genuineness of the transactions.

2.5. Aggrieved by the order dated 31st May, 2016, the Revenue preferred an appeal before the ITAT. By virtue of the impugned order, the ITAT concurred with the findings of the CIT(A) and held that no incriminating material was found during the course of the search.

3. Learned Counsel for the Appellant states that the ITAT has erred in holding that the addition which is not based on incriminating material found during the search could not be made in assessment under Section 153A of the Act and, consequently, deleted the addition without going to merits of the same. He states that the ITAT failed to appreciate that the incriminating evidence in the present case was discovered during the simultaneous search carried out on the premises of an entry operator Sh. Tarun Goel and information was received by the AO from the report of the Investigation Wing. He states that the ITAT failed to appreciate that the impugned addition under Section 68 of the Act was not based merely on the report or the statement of the entry operator Sh. Tarun Goel, these were used only as a starting point for further investigations by the AO and the same lead to be impugned addition. He states that the ITAT failed to appreciate that the scope and meaning of incriminating evidence cannot be restricted to just documentary evidence or admission by the Assessee itself.

4. He further states that the addition under Section 68 was made by the AO as the Assessee has failed to establish