Assessing Officer cannot add without incriminating material. Deletions made for 2007-08, 2008-09 assessments.

The tribunal held that for unabated assessments under Section 153A of the Income Tax Act, the Assessing Officer cannot make additions without incriminating material found during the search. Therefore, the additions made for the assessment years 2007-08 and 2008-09 were deleted. Additionally, the disallowance of Employees' Contribution to Provident Fund for the year 2009-10 was deleted, and the disallowance under Section 14A for the same year was restricted to Rs. 1,235.

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Issues Involved:
1. Justification of additions in assessments framed under Section 153A of the Income Tax Act in the absence of incriminating materials.
2. Disallowance of Employees' Contribution to Provident Fund under Section 36(1)(va) of the Act.
3. Disallowance under Section 14A of the Act read with Rule 8D.

Detailed Analysis:

1. Justification of Additions in Assessments Framed Under Section 153A:
The primary issue is whether the Assessing Officer (AO) is justified in making additions in assessments framed under Section 153A of the Income Tax Act in the absence of incriminating materials found during the search, especially for unabated assessments.

- Facts: A search was conducted on 6.10.2010, leading to assessments under Section 153A for AYs 2007-08 to 2009-10. The AO made disallowances despite no incriminating materials being found for the assessment years in question.
- Assessee's Argument: The original assessments for AYs 2007-08 and 2008-09 were completed under Section 143(1), and the time limit for issuing notice under Section 143(2) had expired. Therefore, these years should be considered concluded, and no additions should be made without incriminating materials.
- Revenue's Argument: The term 'incriminating material' is not found in the Act, and search assessments can be framed irrespective of incriminating materials as per Section 153A.
- Tribunal's Decision: The tribunal held that for unabated assessments, the AO cannot disturb the concluded assessments unless incriminating material is found during the search. The tribunal cited the case of Rahee Track Technologies Pvt Ltd vs DCIT and other relevant judgments to support this view. Consequently, the additions made for AYs 2007-08 and 2008-09 were deleted.

2. Disallowance of Employees' Contribution to Provident Fund:
The issue concerns the disallowance of Employees' Contribution to Provident Fund under Section 36(1)(va) due to delayed payment.

- Facts: The AO disallowed the employees' contribution to the provident fund for July 2008, amounting to Rs. 2,13,129/-, as it was remitted after the due date.
- Assessee's Argument: The payment was made on 16.8.2008, the next working day after the due date (15.8.2008), which was a bank holiday. The assessee cited the jurisdictional High Court's decision in CIT vs Coal India Ltd, which allows such deductions if paid before the end of the previous year.
- Tribunal's Decision: The tribunal allowed the deduction, following the jurisdictional High Court's decision in CIT vs Coal India Ltd, which permits deductions for contributions paid before the due date of filing the return under Section 139(1).

3. Disallowance Under Section 14A Read with Rule 8D:
The issue is whether the disallowance under Section 14A read with Rule 8D was justified, especially when no dividend income was earned during the year.

- Facts: The AO made a disallowance of Rs. 3,25,700/- under Section 14A read with Rule 8D, despite the assessee voluntarily disallowing Rs. 16,391/- as dividend income.
- Assessee's Argument: Only dividend-bearing investments amounting to Rs. 2,47,000/- should be considered for disallowance, not the entire investment of Rs. 6,72,79,000/-. The assessee cited the jurisdictional High Court's decision in REI Agro Ltd.
- Revenue's Argument: The revenue relied on the Special Bench decision in Cheminvest Ltd vs ITO, which considers the entire investment for disallowance under Section 14A.
- Tribunal's Decision: The tribunal restricted the disallowance to Rs. 1,235/-, following the jurisdictional High Court's decision in REI Agro Ltd, which only considers dividend-bearing investments for disallowance under Section 14A.

Conclusion:
- The appeals for AYs 2007-08 and 2008-09 were allowed, deleting the additions made under Section 153A.
- The disallowance of Employees' Contribution to Provident Fund for AY 2009-10 was deleted.
- The disallowance under Section 14A for AY 2009-10 was restricted to Rs. 1,235/-.

The order was pronounced in the open court on 02.12.2016.

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