Assessee wins as addition under section 153A deleted without incriminating documents from search proceedings

ITAT Delhi ruled in favor of the assessee regarding addition under section 153A without incriminating documents. The only seized document was a shareholders list available in public domain, which CIT(A) correctly determined was not incriminating. The addition under section 56(2)(viii)(c) for share pricing differences lacked supporting incriminating material from search proceedings. Following Supreme Court precedent in Abhisar Buildwell, assessments under section 153A for unabated years require incriminating material found during search. Since no such material existed, ITAT directed deletion of the addition.

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Issues:
Revenue's appeal against deletion of addition made under section 153A of the Income-tax Act, 1961 due to lack of incriminating material found during search.

Analysis:
The Revenue appealed against the deletion of an addition of Rs. 6,87,75,000/- made under section 153A of the Income-tax Act, 1961. The key issue was the absence of incriminating documents/material found during the search. The search and seizure operation under section 132 of the Act was conducted on the residential and office premises of the assessee and the Mapsko Group, leading to the addition based on the alleged colorable transaction involving shares of M/s Confident Distributors Pvt Ltd. The Assessing Officer added the amount to the assessee's income under section 56(2)(viii)(c) without any reference to incriminating material found during the search.

The assessee challenged the addition before the ld. CIT(A) citing the lack of incriminating material as per the decision in Kabul Chawla case. The ld. CIT(A) allowed the appeal, emphasizing the absence of incriminating material referred to by the Assessing Officer. During the ITAT proceedings, the Assessing Officer's findings were supported by the ld. DR, while the assessee's counsel relied on the Supreme Court's decision in Abhisar Buildwell.

The ITAT analyzed the factual matrix and documents on record, noting that the only seized document mentioned in the assessment order was publicly available and not incriminating. The addition under section 56(2)(viii)(c) lacked any reference to incriminating material, and the genuineness of the transaction was not questioned by the AO. It was highlighted that the assessment year was unabated, and the principles laid down in Abhisar Buildwell case regarding the necessity of incriminating material for section 153A assessments were applicable.

The ITAT referred to the Supreme Court's decision in Abhisar Buildwell, which clarified the jurisdiction of the AO in cases of search and seizure operations, emphasizing the requirement of incriminating material for additions in unabated assessments. The ITAT dismissed the Revenue's appeal, directing the deletion of the impugned addition due to the absence of incriminating material. The judgment aligned with the principles established in Abhisar Buildwell, emphasizing the importance of incriminating material for additions in unabated assessment years.

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