ITAT deletes Addition Made by AO u/s 68 in the Absence of Incriminating Material [Read Order]

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has deleted additions made by the Assessing Officer (AO) under Section 68 of the Income Tax Act 1961 which deals with unexplained cash deposits in the absence of any incriminating material.

During the assessment proceedings, on the basis of AIR information, the AO noted that cash deposits remained unexplained in assessee’s account Allied Computers International Limited. Accordingly, the AO vide order passed under Section 143(3) read with Section 153C of the Income Tax Act added the same to the total income of the assessee under Section 68 of the Income Tax Act.

The Commissioner of Income Tax Appeals (CIT(A)), vide impugned order, granted partial relief to the assessee and deleted the addition amounting to Rs.4 lakh appearing in the AIR report, as the same was not in the name of the assessee. However, the CIT(A) upheld the addition of Rs.70,99,350, made by the AO under Section 68 of the Income Tax Act.

Neeraj Mangla appeared on behalf of the assessee and Kishor Dhule appeared on behalf of the revenue.

In the present case, the assessee filed its original return of income on 30/09/2011, which was not picked up for scrutiny assessment and the time period for issuance of notice under Section 143(2) of the Income Tax Act also expired on 30/09/2012. Thus, on the date of issuance of notice under Section 153C of the Income Tax  Act, i.e. 29/03/2014, no assessment for the year under consideration was pending, and therefore the same was not abated as per the second proviso to section 153A read with the first proviso to Section 153C(1) of the Income Tax Act.

From the perusal of the order passed under Section 143(3) read with Section 153C of the Act, the two-member Bench comprising of Amarjit Singh, (Accountant Member) and Sandeep Singh Karhail, (Judicial Member) found that the AO made the addition under Section 68 of the Income Tax Act only on the basis of AIR information.

Therefore, it was discernible that the aforesaid addition was not based on the material found during the course of the aforesaid search, pursuant to which proceedings under Section 153C of the Income Tax Act were initiated in the case of the assessee.

The Bench further referred to the decision in DCIT v/s U. K. Paints (Overseas) Ltd  and allowed the appeal and deleted the penalty holding that the assessment year under consideration was an unabated/concluded year.

To Read the full text of the Order CLICK HERE

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