The Delhi Bench of Income Tax Appellate Tribunal (ITAT) held that the addition made by the Assessing Officer (AO) in the absence of any incriminating material found during the search operation conducted under Section 132 of the Income Tax Act,1961 is liable to be deleted.
The assesseeManjeet Kaur Saran is the wife of Harmender Singh Saran, who was the Chairman of HBN group. A search and seizure operation under Section 132 of the Income Tax Act was carried out in HBN Group. The group was engaged in diverse businesses ranging from dairy development and marketing of dairy products.
A notice under Section 153A of the Income Tax Act was issued requiring the assessee to file her return of total income, in response return declaring income of Rs. 2, 76,980 was filed.
During the process it was found that unexplained shortage of cash in the cash book has been worked out at Rs. 14,25,000. Thus, the A.O. made addition of Rs. 14,25,000/- to the total income of the assessee on account of income from undisclosed sources vide Assessment order under Section 153A of the Income Tax Act.
Aggrieved by the order, an appeal before the Commissioner of Income Tax Appeals [CIT (A)] was filed which was dismissed hence the assessee filed an appeal before ITAT.
The Authorized Representative (AR) of assessee Gunjan Jain contended that there was no incriminating material found during the search and the addition made by the AO which has been sustained by the CIT(A) in the absence of any incriminating material found during the search, invoking the provisions of Section 153A of the Income Tax Act for the year under consideration is illegal.
The Departmental Representative (DR) Sarita Kumari vehemently contended that the order of the CIT(A) is well reasoned which requires no interference.
The ITAT Bench comprising of Anil Chaturvedi, Accountant Member and Yogesh Kumar US, Judicial Member observed that the addition made by the AO which was sustained by the CIT(A) is without any incriminating material found during the search and the addition has been made only based on the personal cash book produced by the AR of the assessee during the assessment proceedings.
Further the bench stated that in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments and no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act.
Hence the addition id deleted and the appeal filed by assessee is allowed.
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