Delhi Bench of Income Tax Appellate Tribunal (ITAT) presided over by Dr. B. R. R. Kumar (Accountant Member) and Yogesh Kumar US (Judicial Member) dismissed the appeals filed by the Revenue on the grounds that no records was found on receipt of unaccounted cash or incriminating material during search conducted by Assessing Officer (AO) under Section 132(1) of the Income Tax Act, 1961.
This appeal was against the order of the Commissioner of Income Tax (Appeals) [CIT(A)] in which the question was raised that the CIT(A) erred law by deleting the additions of Rs.6,39,04,000 made by the AO under Section 69A of the Income Tax Act.
Further in the issue, the addition was made on the basis that the incriminating material relied upon by the AO were found during the search & seizure action conducted by the Director General of Central Excise Intelligence (DGECI) followed by the search by the Revenue.
Additionally, a Cross Objection (CO) was also filed by the assessee by raising issue that CIT(A) has erred in not appreciating that there was no search on the assessee.
In this case an addition has been made by the AO based on the information received from the Directorate General of Central Excise Intelligence (DGCEI) conducted search in the office of M/s AGC Realty Private Limited (M/s AGC-RPL).
Based on the enquiries conducted by DGCEI, a report has been sent to the Income Tax Department and additions have been made for the Financial Years 2012-15 under Section 69A of the Income Tax Act, of the amounts purportedly received in cash in the Assessment Order passed under Section 153A of Income Tax Act.
The additions made by the AO were based on the information received by the DGCEI.
The assessee claimed that the information held by the AO does not belong to the incriminating materials found and confiscated during the course of the search proceedings, and that the AO was not responsible for discovering such materials.
The bench observed that the AO had not undertaken any independent inquiry into the facts detailed in the DGCEI report. To establish receipt of unaccounted cash, the AO has not recorded any statement from the parties concerned. As a result, all additions made during the assessment years were made solely on the basis of data provided by the DGCEI.
According to the CIT(A), the information from the DGCEI was not the incriminating material that was seized during the search, hence it cannot be said to have affected the “completed assessments”. Consequently, the AO’s additions were removed.
The bench observed that the Central Excise authorities had ruled in favour of the assessee in his appeal, leading to the conclusion that there was no basis for inferring that assessee had received unaccounted cash and that the figures mentioned in the material they must have seized actually represented the discount he had offered.
The tribunal mentioned the judgment of the High Court of CIT Vs. Vimal Moulders (India) Ltd. wherein it was held that, where Customs Excise and Service Tax Appellate Tribunal (CESTAT) has returned a finding that there was no discrepancy in the stock, the addition made by the Income Tax Department on such stocks stands deleted.
The bench ruled that there are no records for the additions made by the AO and thus upheld the decision of the CIT(A) by deleting additions.
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