2019 (11) TMI 338 - AT - Income Tax

Tribunal overturns tax additions for residential property construction due to lack of incriminating material

The Tribunal set aside the lower authorities' decisions and deleted additions under section 69C of the I.T. Act for the construction of a residential ... Assessment u/s 153C - Additions u/s 69C - pertaining to construction of house belonging to HUF - HELD THAT:- It is an admitted fact that search was conducted in the case of assessee and no incriminating material was found against the assessee. However, some documents were found in search in the case of Sri L.K. Yadav. A.O. on the basis of those papers recovered from third party inferred that assessee has made payments by cheque and cash for construction of house. Copy of the seized paper is available on record which contains that “claimed but not paid”. There is no other facts stated in the seized document, therefore, it is clear that no incriminating material was found and seized during the course of search from the possession of assessee despite search was conducted in the case of assessee also The Judgment in the case of Meeta Gutgutia [2017 (5) TMI 1224 - DELHI HIGH COURT] have been confirmed by the Hon’ble Supreme Court by dismissing the SLP of the Department [2018 (7) TMI 569 - SC ORDER]. In view of the above facts, we are fo the view that the issue is covered by the Judgments of Hon’ble Delhi High Court (supra). Therefore, no additions could be made against the assessee. In this view of the matter, we set aside the Orders of the authorities below and delete both the additions in both the assessment years. Appeals of Assessee are allowed. Issues:Challenge to additions under section 69C of the I.T. Act for construction of house belonging to HUF.Analysis:1. The appeals by the Assessee contested additions of &8377; 36 lakhs and &8377; 1.50,000/- under section 69C of the I.T. Act for the A.Ys. 2012-2013 and 2013-2014.2. A search and seizure action under section 132 of the I.T. Act was conducted, leading to the A.O. making additions for undisclosed expenditure on construction of a residential property at Noida. The Ld. CIT(A) confirmed the addition of &8377; 36 lakhs for A.Y. 2012-2013 and reduced the addition to &8377; 1,50,000/- for A.Y. 2013-2014.3. The Assessee challenged the additions before the Ld. CIT(A), arguing that no incriminating material was found during the search. The Ld. CIT(A) considered the submissions and upheld the additions based on documents recovered from a third party.4. The Assessee's Counsel contended that no incriminating evidence was found during the search and relied on judgments of the Delhi High Court to support the argument against the additions.5. The Ld. D.R. supported the Orders of the lower authorities.6. The Tribunal observed that no incriminating material was found against the Assessee during the search, and the additions were based on documents found with a third party. Citing Delhi High Court judgments, the Tribunal held that without incriminating material, no additions could be sustained. Thus, the Tribunal set aside the Orders of the lower authorities and deleted both additions for both assessment years.7. Consequently, both appeals of the Assessee were allowed.This detailed analysis of the judgment highlights the issues involved, the arguments presented by both parties, the considerations of the Tribunal, and the final decision based on legal precedents and interpretations of the law.