2023 (10) TMI 301 - AT - Income Tax

Appeal partly allowed: Section 153A proceedings invalid. AO additions deleted, penalty premature.

Anoop Kumar Gupta Versus ACIT Circle Circle-07 New Delhi

Anoop Kumar Gupta Versus ACIT Circle Circle-07 New Delhi - TMI Issues Involved:1. Validity of proceedings under Section 153A.2. Time-barred assessment.3. Incriminating material and preponderance of probability.4. SEBI's findings and their impact.5. Addition of commission expenses.6. Initiation of penalty proceedings under Section 271(1)(c).7. Charging of interest under the Income-tax Act.Summary of Judgment:1. Validity of Proceedings under Section 153A:The Tribunal found that no incriminating documents were found during the search at the assessee's premises. The search warrant was issued based on information from other sources, not directly implicating the assessee. The Tribunal emphasized that the assessment could not be based on materials found during searches on other persons unless proceedings were initiated under Section 153C.2. Time-Barred Assessment:The assessee argued that the assessment order was time-barred under Section 153B. However, this ground was not pressed by the assessee during the hearing and was dismissed as not pressed.3. Incriminating Material and Preponderance of Probability:The Tribunal noted that the report from the DIT Investigation Wing, Kolkata, did not find any material against the assessee. The principle of 'preponderance of probability' was discussed, but the Tribunal concluded that the addition could not be based on materials found in third-party searches without following Section 153C procedures.4. SEBI's Findings and Their Impact:The Tribunal observed that SEBI's investigation did not find any material against the assessee. The SEBI order dated 30.8.2019 did not mention the assessee or his broker in connection with artificial rigging of share prices. Thus, the Tribunal held that the assessee's transactions could not be deemed bogus based on SEBI's findings.5. Addition of Commission Expenses:The Tribunal found no evidence to support the addition of commission expenses at 6% of the exempt Long Term Capital Gain. The assessee had made payments through regular banking channels and there was no money trail proving the alleged commission expenses.6. Initiation of Penalty Proceedings under Section 271(1)(c):The Tribunal deemed the initiation of penalty proceedings under Section 271(1)(c) as premature and dismissed this ground.7. Charging of Interest under the Income-tax Act:This ground was considered consequential and did not require specific adjudication.Conclusion:The Tribunal allowed the appeal in part, holding that the proceedings under Section 153A were invalid without incriminating material found during the search at the assessee's premises. The additions made by the AO were deleted, and the penalty proceedings were deemed premature. The appeal was partly allowed.