2022 (2) TMI 429 - AT - Income Tax

Appeals succeed against unjustified salary additions under Section 153A - incriminating material required

Shri Inayatalikhan A. Pathan Versus The Assistant Commissioner of Income Tax, Central Circle-2 Rajkot

The appeals were filed against a consolidated order for Assessment Years 2009-10 to 2015-16, focusing on the addition of unexplained salary from Gopal Sea ... Unexplained salary - search and seizure proceedings - HELD THAT:- It is pertinent to note that during the search and seizure operation, the Revenue has not found any incriminating documents or any cogent document or evidence relating to the assessee directly or indirectly. The addition made by the Assessing Officer as relates to unaccounted salary does not sustain in the eyes of law as the salary vouchers which was presented before the Assessing Officer clearly shows the actual salary paid to the assessee which was verifiable from the records of the assessee's bank account and other relevant documents. Merely relying on the statement which the Assessing Officer as well as the CIT(A) though admitting that the said statement is vague and inconsistent cannot be the basis for addition. As no incriminating documents were found and the only basis for the addition was that of statement which was not confronted to the assessee at all. Thus, assessment itself is not just and proper. Therefore, the additional ground raised by the assessee is allowed. Issues:- Appeal against consolidated order for Assessment Years 2009-10 to 2015-16- Addition of unexplained salary from Gopal Sea Foods- Finalizing assessment proceedings under Section 153A- Lack of incriminating documents during search- Validity of additions under Section 68- Allowance of additional grounds raised by the assessee- Unexplained investmentsAnalysis:1. The appeals were filed against a consolidated order for Assessment Years 2009-10 to 2015-16. The primary issue revolved around the addition of unexplained salary received from Gopal Sea Foods. The appellant contested the addition, claiming it was unjustified and should be deleted.2. The factual aspects being common for AYs 2009-10 to 2014-15, the case primarily focused on the assessment year 2009-10. The appellant, working as a General Manager, had his premises searched under Section 134(1) of the Act. The Assessing Officer made an addition of undisclosed salary income based on a vague statement by the appellant during the search.3. The appellant challenged the Assessment Order before the CIT(A), who partly allowed the appeal. The appellant raised additional grounds regarding finalizing assessment proceedings under Section 153A in the absence of incriminating documents. The appellant argued that no unaccounted payments were evidenced during the search, and thus, the addition under Section 68 was not sustainable.4. The Tribunal noted that no incriminating documents were found during the search, and the addition of unaccounted salary was not supported by evidence. Relying on precedents, the Tribunal emphasized the necessity of incriminating material for making additions under Section 153A. As no such material was found, the addition was deemed unjust and improper.5. Consequently, the additional grounds raised by the appellant for AYs 2009-10 to 2014-15 were allowed, and the additions did not sustain in the appeals. Similarly, for AY 2015-16, the additions related to unaccounted salary income and unexplained investments were not supported by evidence and were therefore disallowed.6. In conclusion, all the appeals of the assessee were allowed, emphasizing the importance of incriminating material for making additions under Section 153A and the need for proper evidence to support income additions. The judgment was pronounced on February 1, 2022, in favor of the appellant.