2018 (3) TMI 1923 - AT - Income Tax

Tribunal rules in favor of assessee, dismisses Revenue's appeals, and deems cross objections infructuous.

Dy. CIT-4 Kanpur, Versus  Smt. Meenakshi Agarwal

The Tribunal upheld the CIT(A)'s decision, ruling in favor of the assessee. The Assessing Officer's addition of unexplained credit entries was deemed ... Assessment u/s 153A - Pending v/s completed assessments - HELD THAT:- There was no pending assessment at the time of issuance of notice under section 153A of the Act. Completed assessment could not be interfered with by the Assessing Officer while making the assessment under Section 153A without any incriminating material unearthed during the course of search. This is clearly laid down in Kabul Chawla’s [2015 (9) TMI 80 - DELHI HIGH COURT] case. Similarly, assessment cannot be arbitrary or made without any relevance or nexus with the seized material. The assessment has to be made under this section only on the basis of seized material. The cash found during the search was properly explained in the hands of the Company to which cash belonged and there was no other incriminating document found during search related to the bank entries. We are of the considered view that on these findings relief was given to the assessee by the ld. CIT(A) and we do not find any infirmity in his order and the relief granted to the assessee is, therefore, sustained. - Decided in favour of assessee. Issues Involved:1. Deletion of addition made by the Assessing Officer on account of unexplained credit entries.2. Validity of proceedings under Section 153A of the Income Tax Act.3. Relevance of incriminating material for assessments under Section 153A.Issue-wise Detailed Analysis:1. Deletion of Addition Made by the Assessing Officer:The primary grievance of the Revenue was against the deletion of the addition of Rs. 46,35,148/- made by the Assessing Officer due to unexplained credit entries in the assessee's bank accounts. The Assessing Officer had added this amount back to the income of the assessee for the year under consideration, as the assessee failed to satisfactorily explain the nature and source of these credits.2. Validity of Proceedings Under Section 153A of the Income Tax Act:The assessee appealed before the CIT(A), who ruled in favor of the assessee, stating that the proceedings under Section 153A were not required. The CIT(A) referenced the Allahabad High Court's decision in Premier Car Sales Ltd. v. DGIT (Inv), which held that if the seized amount belonged to the company and not to the employee/agent, then block assessment against the latter should be set aside. The CIT(A) noted that the cash found during the search was explained as belonging to M/s. Bajaj Steels & Industries Ltd., and no addition was made in the hands of the company or the assessee.3. Relevance of Incriminating Material for Assessments Under Section 153A:The CIT(A) further held that since no incriminating material was found during the search operation, the completed assessments could not be interfered with under Section 153A. This position was supported by the Delhi High Court's decision in CIT (CENTRAL)-III v. Kabul Chawla, which summarized that assessments under Section 153A should be based only on seized material and that completed assessments can be interfered with only if incriminating material is found. The CIT(A) concluded that the Assessing Officer's additions were arbitrary and lacked relevance or nexus with the seized material, thus granting relief to the assessee.Conclusion:The Tribunal upheld the CIT(A)'s order, agreeing that the Assessing Officer could not treat the credit entries as unexplained cash credits without any incriminating material. The Tribunal referenced the same judicial pronouncements and found no infirmity in the CIT(A)'s decision. Consequently, all appeals by the Revenue were dismissed, and the cross objections filed by the assessee were deemed infructuous as they supported the CIT(A)'s order.Final Order:The appeals of the Revenue and the cross objections of the assessee were dismissed, and the order was pronounced in the open Court on 15/03/2018.