No Addition Can Be Made in Completed/Unabated Assessments Without Incriminating Material: ITAT [Read Order]
The Tribunal confirmed that the AO cannot make additions to a completed assessment unless the addition is based on incriminating material discovered during the search operation.
Unabated Assessments - Incriminating Material - ITAT - taxscan
Unabated Assessments - Incriminating Material - ITAT - taxscan
The Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) upheld the Commissioner of Income Tax (Appeals) [CIT(A)] order that deleted an addition of Rs. 15,00,000 made under Section 68 of the Income-tax Act, 1961 ruling that no addition can be made in completed assessments without incriminating material.
Raja Shelters Pvt. Ltd. (assessee) was one of the entities covered under a search and seizure operation conducted on the 'Golden Goenka group' on March 17, 2015. The original return for the Assessment Year (AY) 2009-10 was a completed assessment and the time limit for issuing notice under Section 143(2)/148 had expired.
The AO initiated proceedings under Section 153A and completed the assessment by making a single addition of Rs. 15,00,000/- on account of unexplained cash credit for share application money received.
Aggrieved by the AO’s order, the assessee appealed to the CIT(A). The CIT(A) allowed the appeal on the technical ground that the addition was made without linking it to any incriminating material in an unabated case, relying on the Supreme Court ruling in Abhisar Buildwell.
Aggrieved by the CIT(A)’s order, the revenue appealed to the ITAT. The Counsel for the Revenue argued that the addition was based on a seized document (ID Marks GG/3) found from the assessee's office containing bank details and share application money.
The two-member bench, comprising Rajesh Kumar (Accountant Member) and Pradip Kumar Choubey (Judicial Member), noted that it was not in dispute that no assessment was pending on the date of the search and no incriminating material relating to the issuance of share subscription was found during the search proceedings.
The Tribunal observed the crucial conclusion of the Supreme Court in Abhisar Buildwell, which mandates that no addition can be made in respect of completed or unabated assessments in the absence of any incriminating material found during the search under Section 132 of the Income Tax Act.
The tribunal observed that the AO failed to link the addition to any such material. The tribunal upheld the deletion of the unexplained cash credit addition amounting to Rs. 15,00,000. In the result the appeal filed by the revenue was dismissed.
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