2020 (2) TMI 148 - AT - Income Tax

Tax Tribunal Rules in Favor of Assessee for 2008-09 and 2013-14 Assessments, Quashing Assessment & Allowing Advance Tax

Sagar Kumar Ray, Versus DCIT, Central Circle-1, Bhubaneswar

The Tribunal allowed the appeal for the assessment year 2008-2009, quashing the assessment under Section 144/153A due to the absence of incriminating ... Assessment u/s 153A - Unexplained Cash Credit u/s. 68 - HELD THAT:- Tribunal quashed the orders of both the authorities below holding therein that when no incriminating material has been found during the course of search then, no addition can be made while framing the assessment u/s 153A of the Act. The aforesaid principle and ratio are clearly applicable on the facts of the present case also. Therefore, it is clear that no incriminating material was found during the course of search, which could have been utilized for making assessment u/s.144/153A - DR could not controvert the above facts by bringing any cogent material on record. It is also a fact that return was filed u/s.139(1) on 05.11.2008 and the due date of issue of notice u/s.143(2) is 30.09.2009 for A.Y.2008-2009. However, the search was conducted in case of the assessee on 11.04.2012 and the AO framed the assessment u/s.144/153A of the Act on 31.03.2015, therefore, it is clear that the assessment framed by the AO was abated in pursuance to the search. Accordingly, we set aside the impugned order passed by the CIT(A) and quash the assessment framed by the AO u/s.144/153A of the Act dated 31.03.2015. Thus, the legal ground raised by the assessee is allowed. Non considering advance tax payment thereby raising Income Tax demand - HELD THAT:- We have also gone through the ITR Return of the assessee for the assessment year 2013-2014, copies of which have been filed in the paper book at pages 7 to 19 and found that at page No.7, in column 7(a) of the Acknowledgement, the assessee has paid Advance Tax of ₹ 33,33,333/-. We also found from the ITR-4 form in the Schedule IT the assessee has disclosed the advance tax of ₹ 33,33,333/-. However, the ld. AR before us submitted that the same has not been taken into consideration by the AO while computing the income of the assessee. We think it fit to restore this issue to the file of AO to consider the advance tax paid by the assessee after verifying and examining the documents filed by the assessee before us in the form of paper book Issues Involved:1. Legality of the addition of unexplained cash credit under Section 68.2. Disallowance of various expenses as bogus.3. Validity of assessments under Section 153A without incriminating material.4. Non-consideration of advance tax payment in computing income.Issue-wise Detailed Analysis:1. Legality of the Addition of Unexplained Cash Credit under Section 68:The assessee contested the addition of Rs. 9,66,112/- as unexplained cash credit in the proprietor’s capital account and Rs. 4,56,820/- in respect of sundry creditors. The assessee argued that these amounts were genuine and supported by the balance sheet, creditors' details, addresses, ledger copies, and balance confirmations. The Tribunal noted that the Assessing Officer (AO) made these additions without any incriminating material found during the search, thus rendering the additions unsustainable under Section 153A.2. Disallowance of Various Expenses as Bogus:The AO disallowed 30% of rent, employee expenses, conveyance, and telephone expenses on an estimated basis, deeming them bogus. The assessee argued that these expenses were incurred for business purposes and were genuine. The Tribunal found that no incriminating material was found during the search to justify these disallowances, thus making the disallowance unsustainable.3. Validity of Assessments under Section 153A without Incriminating Material:The primary legal issue was whether the AO could complete the assessment under Section 144/153A in the absence of any incriminating material found during the search. The Tribunal examined the Panchanama and other documents, concluding that no incriminating material relevant to the assessment year was found. Citing precedents like CIT Vs. Kabul Chawla and other similar cases, the Tribunal held that in the absence of incriminating material, the assessment under Section 144/153A was not sustainable. Hence, the Tribunal quashed the assessment for the year 2008-2009.4. Non-Consideration of Advance Tax Payment in Computing Income:For the assessment year 2013-2014, the assessee argued that the AO did not consider the advance tax payment of Rs. 33,33,333/-, resulting in an erroneous tax demand. The Tribunal found that the advance tax payment was indeed disclosed in the return of income. The Tribunal directed the AO to verify and consider the advance tax payment while computing the income, ensuring the assessee is given a reasonable opportunity of hearing.Conclusion:The Tribunal allowed the appeal for the assessment year 2008-2009 on the legal ground that the assessment under Section 144/153A was not sustainable without incriminating material. For the assessment year 2013-2014, the Tribunal directed the AO to consider the advance tax payment after verification. Both appeals were decided in favor of the assessee, with the first appeal being allowed and the second allowed for statistical purposes.