Revenue's appeal dismissed in search assessment under section 153A for unexplained cash receipts and expenditure

ITAT Guwahati dismissed revenue's appeal in search assessment under section 153A. The tribunal upheld CIT(A)'s deletion of additions for unexplained cash receipts under section 69A, finding no independent third-party inquiry was conducted and additions were based on conjectures without credible material. For unexplained expenditure under section 69C, the tribunal allowed telescoping benefit against additional income offered by assessee. Regarding bogus purchases, the tribunal sustained CIT(A)'s approach of disallowing only 5% of total purchases, noting sales were undisputed and executed through proper banking channels. The tribunal confirmed that incriminating digital evidence provided jurisdiction for section 153A assessment proceedings.

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Issues Involved:
1. Deletion of addition under unexplained cash receipt u/s 69A.
2. Assumption of jurisdiction u/s 153A.
3. Deletion of addition under unexplained expenditure u/s 69C.
4. Setoff of unexplained expenditure with undisclosed income.
5. Deletion of addition under undisclosed profit.
6. Deletion of addition under bogus purchase billing.

Summary:

Issue 1: Deletion of addition under unexplained cash receipt u/s 69A

The revenue contested the deletion of Rs. 2,41,28,500/- added as unexplained cash receipt. The ITAT upheld the CIT(A)'s decision, noting the AO's failure to conduct any independent third-party enquiry or provide evidence of the actual sale of land. The addition was deemed based on conjectures and surmises rather than tangible material.

Issue 2: Assumption of jurisdiction u/s 153A

The assessee challenged the jurisdiction u/s 153A, arguing it was not based on incriminating material. The ITAT dismissed this ground, citing the presence of incriminating digital evidence (MB/HD/01) justifying the AO's jurisdiction.

Issue 3: Deletion of addition under unexplained expenditure u/s 69C

The revenue appealed against the deletion of Rs. 4,09,27,220/- out of Rs. 4,71,13,264/- added as unexplained expenditure. The ITAT upheld the CIT(A)'s decision, noting the audited financial statements and the assessee's disclosure of additional income. The ITAT agreed with the CIT(A) on providing telescoping benefit for unexplained expenditure against additional undisclosed income.

Issue 4: Setoff of unexplained expenditure with undisclosed income

The ITAT upheld the CIT(A)'s decision to allow setoff of Rs. 1,11,56,044/- (Rs. 49,70,000/- + Rs. 61,86,044/-) against the additional undisclosed income, noting the absence of any specific findings by the AO to the contrary.

Issue 5: Deletion of addition under undisclosed profit

The revenue contested the deletion of Rs. 2,34,36,359/- added as undisclosed profit. The ITAT upheld the CIT(A)'s decision, noting that the assessee had offered income more than the income as per the seized tally data, and there was no evidence of suppressed sales or inflated expenditure.

Issue 6: Deletion of addition under bogus purchase billing

The revenue appealed against the deletion of Rs. 7,85,09,268/- added as bogus purchase billing. The ITAT upheld the CIT(A)'s decision to disallow only 5% of the total purchases, noting the consistent business operations, turnover, and profit trends of the assessee.

Conclusion:

The ITAT dismissed all appeals filed by the revenue for Assessment Years 2017-18 to 2021-22 and the cross-objections filed by the assessee for Assessment Years 2017-18 to 2020-21, upholding the CIT(A)'s decisions on all issues.

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