Tribunal rejects additions without incriminating material under section 153C, citing 'CIT vs. Kabul Chawla'.

The Tribunal allowed the assessee's Cross-objections and dismissed the Department's appeals for Assessment Years 2006-07 to 2007-08 and 2010-11. The Tribunal held that additions made without incriminating material under section 153C are not legally sustainable, following the precedent set by 'CIT vs. Kabul Chawla'. As no incriminating material was found during the search, the additions were deemed invalid. Therefore, the Tribunal deleted the additions in all years, ruling in favor of the assessee and against the Department.

---

---

Issues involved:
Department's appeals and assessee's Cross-objections for Assessment Years 2006-07 to 2007-08 and 2010-11 involving common issues.

Analysis:

Department's Grounds:
1. Whether the Ld. CIT (A) erred in allowing relief on account of deemed dividend u/s 2(22) (e) without admissible evidenceRs.
- The Department contested the relief granted by the Ld. CIT (A) without sufficient evidence.
2. Whether the Ld. CIT (A) erred in deleting the addition of unexplained credit without proper evidenceRs.
- The Department challenged the deletion of an addition made by the AO due to lack of admissible evidence.
3. Whether the Ld. CIT (A) erred in directing treatment of capital gain as exempt under section 10(38) without adequate evidenceRs.
- The Department questioned the decision to treat capital gain as exempt under section 10(38) without substantial proof.

Assessee's Cross-objection:
Whether additions made under section 153C without incriminating material are legally sustainableRs.
- The assessee raised objection to additions made under section 153C without any incriminating material found during the search.

The issue of additions without incriminating material was addressed first. The Tribunal referred to the case of 'CIT vs. Kabul Chawla' where it was held that additions without incriminating material are not legally sustainable under section 153A. The Tribunal emphasized that for additions to be valid under section 153C, incriminating material must be found during the search. As no such material was discovered in the current case, the additions were deemed invalid.

The Tribunal cited 'Meeta Gutgutia' case to support the decision, highlighting the importance of incriminating material for additions under section 153C. The Tribunal concluded that in the absence of such material, the additions made were beyond jurisdiction and hence, unsustainable.

Following the precedent set by 'Kabul Chawla', the Tribunal accepted the Cross-objections raised by the assessee and proceeded to delete the additions made in all years. The Tribunal dismissed the Department's appeals as the issues were resolved in favor of the assessee based on the lack of incriminating material. The order was pronounced on 08/08/2018, with all Cross-objections allowed and Department's appeals dismissed.

---