Addition made by AO u/s 68 of IT Act could not made in Absence of any Incriminating Material: ITAT quashes Order [Read Order]

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) quashed the order passed by the assessing officer under section 68 of the Income Tax Act,1961 for an addition made in the absence of incriminating material.

Bhavya Pankaj Shah, the respondent-assessee was an individual who belongs to the Pankaj Shah family and the assessee along with other family members and group companies was subjected to search operations under section 132 of the Income Tax Act,1961.

The assessment was completed in the hands of the assessee under section 143(3) of the Income Tax Act,1961 read with section 153A of the Income Tax Act,1961, wherein long-term capital gains declared by the assessee were disallowed holding them to be bogus in nature.

The Commissioner of Income Tax (Appeals) held that the books of accounts of the assessee itself shall constitute incriminating material. Thus, the Revenue appealed against the order passed by the commissioner.

Ms. Riddhi Mishra, the counsel for the department submitted that all these years fall under the category of "unabated assessment years" and the additions made by the assessing officer in these years were not based on any incriminating material found during the search. It was also submitted that the provision under section 153A of the Income Tax Act, 1961 should be read in conjunction with section 132(1) of the Income Tax Act, 1961 to ensure that completed assessments stand on a different footing from pending assessments.

Shri Mani Jain and Shri Patreek Jain, the counsels for the assessee contended that the additions made by the assessing officer in these years were related to the sale of shares and estimated commission and noticed that the addition related to the sale of shares already recorded in the books and the commission expenses had been made on an estimated basis.

The two-member bench comprising Smt. Kavitha Rajagopal (Judicial) and Shri B.R. Baskaran (Accountant) held that the additions made by the Assessing Officer under section 68 of the Income Tax Act,1961 are liable to be deleted while dismissing the appeal filed by the revenue.

To Read the full text of the Order CLICK HERE

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