Tribunal upholds decision to delete Rs.2.5 crore tax addition under IT Act The Tribunal upheld the decision of the ld. CIT (Appeals) to delete the addition of Rs.2,50,00,000/- made under section 68 of the Income Tax Act, 1961. ...
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Tribunal upholds decision to delete Rs.2.5 crore tax addition under IT Act
The Tribunal upheld the decision of the ld. CIT (Appeals) to delete the addition of Rs.2,50,00,000/- made under section 68 of the Income Tax Act, 1961. The Tribunal found no fault in the deletion of the addition, emphasizing that assessments without incriminating material are not valid. The appeal filed by the Revenue was dismissed, and the decision in favor of the assessee was upheld.
Issues: The appeal filed by the Revenue against the deletion of addition made under section 68 of the Income Tax Act, 1961 for assessment year 2013-14.
Summary:
Issue 1: Addition under section 68 of the Income Tax Act
The Revenue challenged the deletion of the addition of Rs.2,50,00,000/- made under section 68 of the Income Tax Act, 1961. The ld. DR argued that the Assessing Officer treated the forfeited sum as unexplained income of the assessee due to lack of verification of the agreement authenticity and non-response from the party Mahagauri Estates Pvt. Ltd. The ld. Counsel for the assessee relied on the decision in the case of CIT Vs. Kabul Chawla to support the deletion of the addition.
Issue 2: Legal Position on Assessments without Incriminating Material
The Assessing Officer treated the forfeited amount as unexplained income under section 68 of the Act, while the ld. CIT (Appeals) deleted the addition stating that the transaction was accounted for in the books of accounts and was not incriminating material found during the search operation. The ld. CIT (Appeals) referred to the legal position established in various court decisions, including CIT vs. Kabul Chawla, emphasizing that assessments without incriminating material are invalid.
Decision:
After careful perusal, the Tribunal found no infirmity in the order passed by the ld. CIT (Appeals) and sustained the decision to delete the addition made under section 68 of the Income Tax Act. The Tribunal rejected the grounds raised by the Revenue and dismissed the appeal.
Order pronounced in the open court on: 25/05/2023.
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