Tribunal rules against AO's jurisdiction for additions under section 153A & 68, citing lack of incriminating evidence

The tribunal held that the Assessing Officer (AO) lacked jurisdiction to make additions under section 153A for concluded assessments without incriminating material found during the search. It emphasized that additions in unabated assessments should not be made without such evidence, citing relevant precedents. The tribunal also ruled that additions under section 68 for unexplained share application money were unjustified as they were based on disclosed bank statements, not new incriminating material. Consequently, the tribunal allowed the appeals, deleting the additions made by the AO for the assessment years in question.

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Issues Involved:

1. Legality of assessment under section 153A in case of unabated assessments without incriminating evidence.
2. Non-compliance with binding precedents regarding additions in unabated assessments.
3. Requirement to explain the source of funds prior to the amendment of section 68.
4. Validity of additions under section 68 based on conjectures and surmises.

Detailed Analysis:

Issue 1: Legality of assessment under section 153A in case of unabated assessments without incriminating evidence

The tribunal addressed whether additions could be made under section 153A in respect of concluded proceedings without incriminating materials found during the search. The assessee argued that no incriminating evidence was found during the search, and thus, the assessment should not be disturbed. The tribunal noted the statutory requirement that for assessments not pending on the date of the search, additions could only be made based on incriminating material found during the search. Since the assessments for the years 2011-12 and 2012-13 were concluded, and no incriminating material was found, the tribunal held that the Assessing Officer (AO) had no jurisdiction to make additions under section 153A.

Issue 2: Non-compliance with binding precedents regarding additions in unabated assessments

The assessee contended that the CIT(A) failed to follow binding precedents from the Supreme Court, Jurisdictional High Courts, and the Kolkata Tribunal, which held that additions in unabated assessments should not be made without incriminating material. The tribunal reiterated that the AO could not disturb concluded assessments unless incriminating material was found during the search. The tribunal referred to the case of "M/s. A ONE Infra Projects Pvt. Ltd." where it was held that additions should not be made in the absence of incriminating material.

Issue 3: Requirement to explain the source of funds prior to the amendment of section 68

The assessee argued that prior to the amendment of section 68 on 01/04/2013, there was no requirement to explain the source of funds. The tribunal did not explicitly address this issue in detail but focused on the lack of incriminating material to justify the additions under section 153A.

Issue 4: Validity of additions under section 68 based on conjectures and surmises

The AO made additions under section 68 for unexplained share application money, asserting that the assessee failed to prove the identity, genuineness, and creditworthiness of the share subscribers. The tribunal noted that the AO relied on the disclosed bank statements and not on any new incriminating material found during the search. The tribunal held that the disclosed bank statements could not be treated as incriminating material, and thus, the addition under section 68 was not justified. The tribunal referred to various judgments, including "PCIT vs. Salasar Stock Broking Ltd." and "PCIT vs. Kurele Paper Mills Pvt. Ltd.", which supported the view that additions should not be made without incriminating material.

Conclusion:

The tribunal concluded that the AO had no jurisdiction under section 153A to make additions for the assessment years 2011-12 and 2012-13 in the absence of incriminating material found during the search. The tribunal allowed the appeals of the assessee and deleted the additions made by the AO.

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