2023 (4) TMI 1103 - AT - Income Tax

Tribunal Invalidates Assessment under Section 153A & Rejects Reliance on Retracted Confessions

Agrim Infraproject Private Limited, C/o. Rahul Raj Jain & Co. Versus Deputy Commissioner of Income Tax, Circle-3, Guwahati

Agrim Infraproject Private Limited, C/o. Rahul Raj Jain & Co. Versus Deputy Commissioner of Income Tax, Circle-3, Guwahati - TMI Issues Involved:1. Violation of principles of natural justice.2. Validity of assessment under section 153A of the IT Act, 1961.3. Addition under section 68 of the IT Act, 1961.4. Disallowance of provisions and expenses.5. Reliance on statements and evidence collected during search.Summary:Violation of Principles of Natural Justice:The assessee contended that the CIT(A) failed to consider the written submissions filed online and dismissed the case without proper consideration, violating natural justice principles.Validity of Assessment under Section 153A:The assessee argued that the assessment under section 153A was bad in law due to lack of satisfaction by the Assessing Officer and absence of incriminating material found during the search. The Tribunal agreed, stating that no fresh material was found during the search to justify disturbing the already assessed income.Addition under Section 68:The Assessing Officer added Rs. 4,70,00,000/- as unexplained cash credit under section 68, considering transactions with certain companies as bogus. The Tribunal deleted this addition, noting that the share application money was already in the books and no incriminating material was found during the search to support this addition.Disallowance of Provisions and Expenses:The Assessing Officer disallowed provisions amounting to Rs. 2,07,20,125/-, considering them as unascertained liabilities. The Tribunal remitted this issue back to the Assessing Officer for fresh adjudication, emphasizing that if provisions are included in the work-in-progress (WIP), they should be excluded from the WIP if disallowed as expenses.Reliance on Statements and Evidence Collected During Search:The addition of Rs. 1,75,00,000/- was based on the assessee's disclosure during the search. The Tribunal held that such additions should not be made solely on the basis of retracted confessions without corroborative evidence. The Tribunal deleted the addition, noting that the company's name was not mentioned in the statements and no corroborative evidence was provided.Conclusion:The Tribunal allowed the appeal for ITA No. 219/GAU/2019, allowed ITA No. 224/GAU/2019 for statistical purposes, and partly allowed ITA No. 222/GAU/2019.