Tribunal dismisses revenue's appeal, deletions made in assessment for AY 2012-13, incriminating material required.

The tribunal held that the assessment for AY 2012-13 could not be disturbed without incriminating material found during the search. Therefore, additions made towards share application money and commission were deleted. The revenue's appeal was dismissed.

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Issues Involved:

1. Deletion of addition towards share application money of Rs. 70,00,000/-.
2. Deletion of addition of Rs. 35,000/- on account of commission for getting accommodation entries.
3. Validity of assessment under section 153A without incriminating material.

Issue-wise Detailed Analysis:

1. Deletion of addition towards share application money of Rs. 70,00,000/-:

The assessee filed its return of income for the Assessment Year (AY) 2012-13 declaring a total loss of Rs. 60/-. A search and seizure operation was conducted on 7.11.2013 at the business and residential premises of the 'Dollar Group'. Following the search, a notice under section 153A was issued, and the assessee filed its return of income again declaring a total loss of Rs. 60/-. The assessee argued that the year under consideration was an unabated assessment year as the time limit for issuing a notice under section 143(2) had expired. Therefore, the income assessed originally could not be disturbed unless incriminating material was found during the search. The Assessing Officer (AO) made an addition of Rs. 70,00,000/- towards share application money under section 68 of the Act, claiming that the assessments under section 153A could be framed irrespective of incriminating materials found during the search.

The Commissioner of Income Tax (Appeals) [CIT(A)] deleted the addition on the grounds that no incriminating material was found during the search related to the share capital and share application money. The CIT(A) relied on the jurisdictional precedents and the decision of the Hon’ble Calcutta High Court in the case of Veer Prabhu Marketing Ltd, where it was held that in the absence of incriminating material, the originally assessed income should not be disturbed.

2. Deletion of addition of Rs. 35,000/- on account of commission for getting accommodation entries:

The AO also made an addition of Rs. 35,000/- towards commission paid for obtaining accommodation entries related to the share application money. The CIT(A) deleted this addition as well, citing the absence of any incriminating material found during the search. The deletion of this addition was consequential to the deletion of the addition towards share application money.

3. Validity of assessment under section 153A without incriminating material:

The primary argument was whether additions could be made under section 153A in respect of a concluded proceeding without any incriminating material found during the search. The tribunal noted that the assessment for AY 2012-13 was originally completed under section 143(1) and was a concluded proceeding as the time limit for issuing a notice under section 143(2) had expired. The tribunal referred to several judicial precedents, including the decision of the Hon’ble Delhi High Court in the case of Kabul Chawla, which held that in the absence of any incriminating material, completed assessments could not be disturbed under section 153A.

The tribunal also referred to the decision of the Hon’ble Calcutta High Court in the case of Veer Prabhu Marketing Ltd and the Hon’ble Supreme Court's dismissal of the Special Leave Petition (SLP) in a similar case, reinforcing that the addition under section 153A should be based on incriminating material found during the search.

Conclusion:

The tribunal held that the assessment for AY 2012-13, being a concluded assessment, could not be disturbed in the absence of any incriminating material found during the search. Consequently, the additions made by the AO towards share application money and commission were directed to be deleted. The appeal of the revenue was dismissed.

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