2022 (7) TMI 331 - AT - Income Tax

Appellate Tribunal quashes assessment orders under Income-tax Act, emphasizes procedural requirements

M/s Indo Autotech Ltd., M/s Admach Auto India Ltd. Versus The Dy. C.I.T. Central Circle -25 Faridabad

The Appellate Tribunal quashed the assessment orders framed under section 153A r.w.s 143(3) of the Income-tax Act, 1961. The Tribunal emphasized the ... Assessment u/s 153A - Addition u/s 69C - basis of the addition was a statement of Shri Pradeep Kumar Jindal recorded on oath u/s 132(4) of the Act wherein he admitted to providing accommodation entries to Shri Anand Kumar Jain, HUF and his family members and the entries found in the incriminating material - HELD THAT:- The basis of assessments are alleged incriminating material found from Shri Pradeep Kumar Jindal, which incriminating material/information may have belonged to the appellants and its group companies. In our considered opinion, in such a situation, the Legislature has provided section 153C in the Statute to frame the assessment. If the Assessing Officer frames the assessment without resorting to the dedicated section provided by the legislature, the whole exercise of enacting such a provision would become futile. Similar was the fate of members of the family, namely Shri Anand Kumar Jain, HUF, Individual, Shri Satish Dev Jain. In their respective cases also, under similar circumstances, assessment was framed u/s 153A r.w.s 143(3) of the Act. In their cases also, basis of the addition was a statement of Shri Pradeep Kumar Jindal recorded on oath u/s 132(4) of the Act wherein he admitted to providing accommodation entries to Shri Anand Kumar Jain, HUF and his family members and the entries found in the incriminating material. The quarrel travelled upto the Hon'ble High Court of Delhi [2021 (3) TMI 8 - DELHI HIGH COURT] Facts being identical, basis of addition are also similar and the assessees considered by the Hon'ble High Court are members of same group. Therefore, respectfully following the aforementioned judgment of the Hon'ble Jurisdictional High Court of Delhi, we have no hesitation in quashing the captioned assessment orders and decide the appeals in favour of the assessees. Addition based upon some loose sheet found at the time of search from the premises of Indo Autotech Ltd. - As explained hereinabove, first the Assessing Officer proceeded by treating the entries as unexplained expenditure and sought explanation from the assessee. Then the Assessing Officer took the view that the assessee has made investments and sought clarification from the assessee, and without any further ado, he made the addition as accommodation entries received by the assessee. The conduct of the Assessing Officer is not only uncertain but full of jigsaw puzzles. As no concrete evidence has been brought on record to justify the addition, we have no hesitation in deleting the same. Accordingly, the captioned assessment orders are quashed following the judgment of the Hon'ble Jurisdictional High Court of Delhi [supra]. Appeal of assessee allowed. Issues:Validity of assessment framed under section 153A r.w.s 143(3) of the Income-tax Act, 1961.Analysis:The judgment by the Appellate Tribunal ITAT Delhi involved multiple appeals by different assessees against the orders of the ld. CIT(A) pertaining to various Assessment Years. The common challenge in these appeals was regarding the validity of the assessments framed under section 153A r.w.s 143(3) of the Income-tax Act, 1961. The appeals were disposed of by a common order due to the common and identical underlying facts. These facts stemmed from a search and seizure operation under section 132 of the Act conducted on Sajan Kumar Group of cases and Shri Pradeep Kumar Jindal Group of cases on the same date. The Revenue believed that Shri Pradeep Kumar Jindal provided accommodation entries to Sajan Kumar group companies based on seized documents. The impugned additions were made on the basis of alleged accommodation entries received through share/share premium and commission paid for procuring accommodation entries. Additionally, certain additions were made based on documents found during the search proceedings from the office premises of Indo Autotech Ltd.The Appellate Tribunal carefully examined the impugned assessment orders framed under section 153A r.w.s 143(3) of the Act. It was noted that the assessments were based on alleged incriminating material found from Shri Pradeep Kumar Jindal, which may have belonged to the appellants and their group companies. The Tribunal highlighted the importance of following the provisions of section 153C of the Act when framing assessments based on material belonging to a third party. The Tribunal referenced a judgment of the Hon'ble High Court of Delhi that emphasized the necessity of adhering to the procedural requirements under section 153C. As the facts and basis of addition were similar to the cases considered by the High Court, the Tribunal quashed the assessment orders and decided in favor of the assessees.Regarding specific additions made, the Tribunal reviewed the rationale behind the additions, including the treatment of certain amounts as unexplained investments and commissions. The Assessing Officer's changing views and lack of concrete evidence to justify the additions led the Tribunal to delete the additions. Ultimately, the Tribunal quashed the assessment orders following the High Court's judgment and allowed the appeals of the assessees.In conclusion, the Appellate Tribunal allowed the appeals of the assessees, quashed the assessment orders, and did not delve into the merits of the case due to the assessment orders being invalidated.