AO's appeal dismissed as no incriminating documents seized and assessee proved transaction genuineness under section 68

The ITAT Mumbai dismissed the AO's appeal in an assessment under section 153A for AY 2017-18, 2019-20, and 2020-21. The AO had made additions under section 68 alleging seizure of incriminating material and failure to prove transaction genuineness. However, the CIT(A) deleted the additions, which the ITAT upheld. The tribunal found that no incriminating documents were actually seized during the search, and the assessee had properly disclosed income from facilitator agreements in original returns with supporting documentation. The assessee discharged the burden of proof by providing confirmations, agreements, invoices, and board meeting minutes, while the AO failed to conduct adequate enquiries to disprove the transactions' genuineness.

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Issues Involved:
1. Deletion of addition under Section 68 of the Income Tax Act, 1961 for A.Y. 2017-18.
2. Deletion of addition under Section 68 of the Income Tax Act, 1961 for A.Y. 2019-20.
3. Deletion of addition under Section 68 of the Income Tax Act, 1961 for A.Y. 2020-21.

Summary:

Issue 1: Deletion of Addition for A.Y. 2017-18

The learned Assessing Officer (AO) raised grounds challenging the deletion of an addition of Rs. 13.95 crores under Section 68 of the Income Tax Act, 1961, arguing that the learned CIT(A) erred by not considering the incriminating material seized and the failure of the assessee to prove the genuineness of the transaction. The learned CIT(A) held that the assessment year 2017-18 was a concluded assessment and could not be disturbed without incriminating material found during the search. The facilitation agreement and reconciliation statement were part of the regular records and not incriminating material. The Tribunal upheld the CIT(A)'s decision, finding no infirmity in the order and dismissing the appeal.

Issue 2: Deletion of Addition for A.Y. 2019-20

For A.Y. 2019-20, the AO added Rs. 13.55 crores under Section 68, questioning the genuineness of the facilitation fee received by the assessee. The learned CIT(A) deleted the addition, noting that the income was for services rendered as per an agreement with Omkar Realtors and Developers Ltd. The CIT(A) relied on several documents, including tax invoices and minutes of meetings, to support the genuineness of the transactions. The Tribunal confirmed the CIT(A)'s order, emphasizing that the AO did not conduct any inquiries to disprove the assessee's claims and dismissed the appeal.

Issue 3: Deletion of Addition for A.Y. 2020-21

For A.Y. 2020-21, the AO added Rs. 1.45 crores under Section 68, questioning the receipt from Omkar Realtors Developers Private Limited. The learned CIT(A) deleted the addition, citing similar reasons as for A.Y. 2019-20, and noted that the income was for services rendered per the agreement. The Tribunal upheld the CIT(A)'s decision, reiterating that the AO failed to conduct necessary inquiries to challenge the assessee's evidence and dismissed the appeal.

Conclusion:

The Tribunal dismissed all three appeals filed by the learned Assessing Officer, confirming the orders of the learned CIT(A) for A.Y. 2017-18, 2019-20, and 2020-21, and upheld the deletion of additions made under Section 68 of the Income Tax Act, 1961. The Tribunal emphasized the importance of incriminating material in disturbing concluded assessments and the necessity for the AO to conduct thorough inquiries when challenging the genuineness of transactions.

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