2019 (10) TMI 724 - AT - Income Tax

Tribunal dismisses Department's appeal, allows Assessee's Cross Objections. No jurisdiction under section 153C. Unexplained investment addition lacks evidence.

The DCIT, Central Circle-22, New Delhi. Versus M/s. Prominent Realtech Pvt. Ltd., M/s. Sunway Realtech Pvt. Ltd. And (Vice-Versa)

The Tribunal dismissed the Department's appeals and allowed the Assessee's Cross Objections. It found no justification for assuming jurisdiction under ... Assessment u/s 153C - whether no satisfaction have been recorded in the case of the person searched and that no incriminating material have been found to connect the assessee? - HELD THAT:- Since addition on merit have already been deleted and confirmed by us, therefore, this issue is left with academic discussion only. However, briefly, we may point-out that in this case satisfaction note have been recorded in the case of assessee instead of recording it in the case of person searched by A.O. of the assessee which is invalid. Further balance-sheet of the assessee have been referred to which was found during the course of search in the case of Triveni Group. Therefore, no satisfaction have been recorded in the case of the person searched and that no incriminating material have been found to connect the assessee with the impugned addition. It is balance-sheet of the assessee only which is already on the record of the Department as well in public domain. As relying on SINHGAD TECHNICAL EDUCATION SOCIETY [2017 (8) TMI 1298 - SUPREME COURT] there was no justification to assume jurisdiction under section 153C of the I.T. Act, 1961. In view of the above, we set aside the Orders of the authorities below and quash the assumption of jurisdiction under section 153C - Decided in favour of assessee Issues Involved:1. Assumption of jurisdiction under section 153C of the Income Tax Act.2. Addition on account of unexplained investment based on alleged payments outside the books of account.Issue-wise Detailed Analysis:1. Assumption of Jurisdiction under Section 153C:The Assessee challenged the assumption of jurisdiction under section 153C of the Income Tax Act, arguing that no incriminating material was found during the search that could justify the initiation of proceedings under this section. The satisfaction note referred to the balance sheet of the assessee, which is already in the public domain. The Tribunal found that the satisfaction note was recorded in the case of the assessee instead of the person searched, which is invalid. The Tribunal cited the judgment of the Supreme Court in Commissioner of Income Tax vs. Sinhgad Technical Education Society, which held that incriminating material must pertain to the assessment years in question. The Tribunal concluded that there was no justification to assume jurisdiction under section 153C and quashed the proceedings.2. Addition on Account of Unexplained Investment:The Assessing Officer (A.O.) made an addition of Rs. 9,70,40,500/- to the income of the assessee on the grounds that the assessee had purchased shares at a much lower price than what was initially paid by Triveni Infrastructure Development Co. Ltd. (TIDCL), implying that the assessee must have paid the consideration outside the books of account. The assessee contended that there was no evidence of any undisclosed investment, and the shares were subsequently sold at a price accepted by the A.O. in the assessment for A.Y. 2011-2012. The Commissioner of Income Tax (Appeals) [CIT(A)] and the Tribunal both found that there was no incriminating material or evidence to support the A.O.'s addition. The Tribunal noted that the addition was based merely on presumption without any concrete evidence and upheld the deletion of the addition by the CIT(A).Separate Judgments:In the case of M/s Sunway Realtech Pvt. Ltd., the issues were identical to those in the case of M/s Prominent Real-Tech Pvt. Ltd. The Tribunal followed its decision in the latter case, dismissing the Departmental Appeal and allowing the Cross Objection.Conclusion:Both appeals of the Department were dismissed, and both Cross Objections of the Assessee were allowed. The Tribunal found that there was no justification for the assumption of jurisdiction under section 153C and no evidence to support the addition on account of unexplained investment. The orders of the authorities below were set aside, and the assumption of jurisdiction under section 153C was quashed.