2019 (5) TMI 406 - AT - Income Tax

Tribunal allows appeals, deletes additions by AO for lack of incriminating material, covered by surrendered amounts.

Shri Banna Lal Jat Versus The ACIT, Central Circle, Ajmer

Shri Banna Lal Jat Versus The ACIT, Central Circle, Ajmer - TMI Issues Involved:1. Validity of addition made under Section 153A without incriminating material.2. Addition of Rs. 7,14,920 based on peak of incoming cash.3. Addition of Rs. 2,00,000 as unaccounted receipt.4. Addition of Rs. 6,32,171 as unaccounted expenditure.Issue-wise Detailed Analysis:1. Validity of Addition Made Under Section 153A Without Incriminating Material:The assessee challenged the addition made under Section 153A on the grounds that no incriminating material was found during the search. The Tribunal noted that the original returns for AY 2010-11 and 2011-12 were filed and processed before the search, and no incriminating material was found during the search. The Tribunal relied on various judicial precedents, including the Hon'ble Delhi High Court's decision in *Kabul Chawla* and the Hon'ble Rajasthan High Court's decision in *Jai Steel (India)*, which held that in the absence of incriminating material, no addition can be made under Section 153A. The Tribunal concluded that the addition made by the AO was not sustainable as it was not based on any incriminating material found during the search.2. Addition of Rs. 7,14,920 Based on Peak of Incoming Cash:The AO made an addition of Rs. 30,09,720 based on entries in seized material, which the assessee claimed were recorded in the books of accounts. The CIT(A) restricted the addition to Rs. 7,14,920 based on the peak of incoming cash. The Tribunal noted that the assessee had already surrendered Rs. 1,35,00,000 on account of discrepancies in the books and an additional Rs. 93,00,000 for miscellaneous irregularities. The Tribunal held that the addition of Rs. 7,14,920 was covered by the surrendered amount and deleted the addition.3. Addition of Rs. 2,00,000 as Unaccounted Receipt:The AO treated a receipt of Rs. 2,00,000 recorded on seized documents as unaccounted, and the CIT(A) applied a net profit rate of 13.28%, confirming an addition of Rs. 26,560. The assessee argued that the amount was part of an imprest account maintained by an employee and was covered by the surrendered amount of Rs. 93,00,000 for miscellaneous irregularities. The Tribunal accepted the assessee's explanation and deleted the addition, noting that it was covered by the previously surrendered amount.4. Addition of Rs. 6,32,171 as Unaccounted Expenditure:The AO made an addition of Rs. 6,32,171 based on the difference between the actual unaccounted expenditure recorded in seized material and the amount surrendered by the assessee. The CIT(A) restricted the addition by applying a net profit rate, resulting in an addition of Rs. 83,952. The Tribunal noted that the assessee had already surrendered Rs. 93,00,000 for miscellaneous irregularities and held that the addition was covered by this amount. Consequently, the Tribunal deleted the addition.Conclusion:The Tribunal allowed the appeals filed by the assessee, deleting the additions made by the AO on the grounds that they were either not based on any incriminating material found during the search or were covered by the amounts already surrendered by the assessee for miscellaneous irregularities.