Assessment orders quashed after Rs. 2 crore additions on share capital without incriminating search material under section 153A

The ITAT Gauhati quashed assessment orders under section 153A where the AO made additions of Rs. 2 crore treating share capital as unexplained credit under section 68. The tribunal held that since no incriminating material was found during search operations for the unabated assessment year, and the AO's observations were routine based on regular accounts, no additions could be made. Following the SC precedent in Abhisar Buildwell Pvt. Ltd., the tribunal ruled that without incriminating material discovered during search, assessment orders cannot sustain additions. The assessee's appeal was allowed and assessment orders were quashed.

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Issues involved:
The appeal concerns the deletion of additions under the head of bogus share capital received from various entities, challenging the orders of Ld. CIT(A) for AYs 2013-14 and 2016-17 u/s. 153A of the Income-tax Act, 1961.

AY 2013-14:
The revenue raised grounds against the deletion of Rs. 2,00,00,000/- addition for bogus share capital received from M/s Shri Sai Megha Alloys Ltd. The Ld. CIT(A) was criticized for not considering incriminating documents and retraction statements of the assessee. The revenue's contentions were based on judicial precedents, which the Ld. CIT(A) did not find valid.

AY 2016-17:
Similar to AY 2013-14, the revenue contested the deletion of additions totaling Rs. 3,20,00,000/- for bogus share capital received from Karzel Kholie & Nabam Yani. The Ld. CIT(A) was accused of not considering incriminating documents and retraction statements. The revenue relied on judicial precedents, but the Ld. CIT(A) ruled in favor of the assessee.

Common Issues:
Both appeals shared common issues, disposed of by a consolidated order. The case involved a search and seizure operation u/s. 132(1) at the assessee's establishments related to the "Niraj Sharma Group." The Ld. AO made additions towards share capital as unexplained credit u/s. 68 of the Act. The Ld. CIT(A) deleted the additions, emphasizing the absence of incriminating material found during the search.

Decision and Analysis:
The Tribunal dismissed the revenue's appeals, citing the Hon'ble Supreme Court's decision in the case of Abhisar Buildwell Pvt. Ltd. The Court emphasized that additions without reference to incriminating material found during a search u/s. 153A are liable to be quashed. As no incriminating material was unearthed, the AO's additions were deemed unwarranted. The Court upheld the Ld. CIT(A)'s decision, leading to the quashing of assessment orders for the impugned years.

Conclusion:
Based on the lack of incriminating material found during the search, the Tribunal dismissed the revenue's appeals for both AYs 2013-14 and 2016-17. The assessment orders were quashed in line with the decision of the Hon'ble Supreme Court, resulting in the deletion of the disputed additions.

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