2023 (12) TMI 1253 - AT - Income Tax

ITAT dismisses revenue appeal on unexplained share capital addition under Section 68 following Abhisar Buildwell precedent

The ITAT Delhi dismissed the revenue's appeal regarding unexplained share capital addition u/s 68 in assessment u/s 153A. Following the SC judgment in ... Assessment u/s 153A - Unexplained share capital - Addition u/s 68 - incriminating material found during search or not? - HELD THAT:- The entire issue stands settled by the judgment of M/s. Abhisar Buildwell P. Ltd. [2023 (4) TMI 1056 - SUPREME COURT] wherein held that in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Hence, respectfully following the judgment of Hon’ble Apex Court, we hold that no addition can be made in the case of the assessee sans seized material u/s 153A. Hence, keeping in view, the pertinent facts of the case, we affirm the order of the ld. CIT(A) to the extent of non- availability of relevant seized material which could have lead to the addition by the AO, hence, the appeal of the revenue stands dismissed. Issues involved:The appeals were filed by the assessee and the Revenue against the orders of ld. CIT(A)-25, New Delhi dated 28.03.2017 and 01.12.2017. The issues involved in all these appeals were similar and were heard together and adjudicated by a common order.ITA No. 4279/Del/2017:The Revenue raised grounds challenging the deletion of the addition of unexplained share capital amounting to Rs. 3,20,00,000. The CIT(A) was criticized for ignoring the findings of the inquiry establishing that the investor companies were mere paper companies and for holding that the seized document related to share capital expenses was not relevant for that year.ITA No. 4280/Del/2017:Similar to the previous appeal, the Revenue contested the deletion of the addition of unexplained share capital amounting to Rs. 21,10,75,120. The CIT(A) was accused of disregarding the inquiry findings and the relevance of the seized document related to share capital expenses for that year.ITA No. 1262/Del/2018:The Revenue challenged the deletion of the addition of Rs. 10,00,00,000 made on account of share capital under section 68. Issues included the relevance of inquiry findings, the legality of the assessment order, and the applicability of the judgment in the case of Kabul Chawla.The main facts of the case were that the assessee company filed its return of income declaring total income, and proceedings under different sections of the Income Tax Act were initiated and dropped at various stages. The Assessing Officer made additions under section 68 for share capital received, which the CIT(A) subsequently deleted based on lack of incriminating evidence and non-compliance with legal procedures.The key issues addressed in the judgment were whether a search was conducted under section 132A and if incriminating material was found to justify the additions made. The Tribunal found errors in the CIT(A)'s decision regarding the search and the lack of seized material supporting the additions. The Tribunal cited relevant case laws and the judgment in the case of Kabul Chawla to support its decision.In conclusion, the Tribunal dismissed the Revenue's appeals, affirming the CIT(A)'s order due to the absence of relevant seized material to support the additions made by the Assessing Officer. The decision was in line with the legal principles outlined in the judgments of the Jurisdictional High Court and the Apex Court.