2024 (12) TMI 382 - AT - Income Tax

Revenue's appeal dismissed in Section 153A assessment - no additions without incriminating material from search

DCIT, Central Circle-1, Noida Versus M/s. ABA Builders Ltd, JCIT (OSD), Central Circle-I, Noida Versus IV County Pvt. Ltd, IV County Pvt. Ltd Versus DCIT, Central Circle-I, Noida And Country Infrastructures Pvt Ltd Versus DCIT, Central Circle-I, Noida, JCIT (OSD) And Central Circle-I, Noida Versus Country Infrastructures Pvt Ltd And (Vice-Versa)

DCIT, Central Circle-1, Noida Versus M/s. ABA Builders Ltd, JCIT (OSD), Central Circle-I, Noida Versus IV County Pvt. Ltd, IV County Pvt. Ltd Versus DCIT, ... Issues Involved:1. Validity of assessment under section 153A without incriminating material.2. Application of section 69C for additions based on bogus purchases.3. Retraction of statements made during search under section 132(4).Detailed Analysis:1. Validity of Assessment under Section 153A Without Incriminating Material:The primary issue across multiple appeals was whether the Assessing Officer (AO) could make additions under section 153A of the Income Tax Act in the absence of incriminating material found during a search. The Tribunal noted that for the assessment year (AY) 2014-15, the assessment was completed without any incriminating material, as per the Supreme Court's decision in PCIT v. Abhisar Buildwell (P.) Ltd., which mandates the presence of incriminating material for additions in unabated assessments. Consequently, the Tribunal quashed the assessments for AYs 2013-14 and 2014-15, as no incriminating material was found during the search, rendering the additions invalid.2. Application of Section 69C for Additions Based on Bogus Purchases:In the case of County Infrastructure Pvt. Ltd for AY 2016-17, the AO made additions under section 69C for alleged bogus purchases. The Tribunal examined whether these additions were justified under section 69C, which pertains to unexplained expenditure. It was noted that the purchases were recorded in the books of accounts, and payments were made through disclosed bank accounts, indicating that the source of expenditure was explained. The Tribunal relied on the Bombay High Court's decision in PCIT Vs. Sanjay Dhokad, which held that section 69C cannot be applied when the expenditure is recorded in the books and the source is explained. Thus, the Tribunal deleted the addition made under section 69C.3. Retraction of Statements Made During Search under Section 132(4):For AY 2017-18, the issue was whether the retraction of statements made under section 132(4) of the Act, which were later used to make additions, was valid. The AO had made additions based on a statement given during the search, which was later retracted by the assessee. The Tribunal considered the assessee's argument that the initial statement was made under duress and that the retraction was supported by evidence. The Tribunal also noted the CBDT Circular requiring corroborative evidence for confessions of additional income. The Tribunal found that the retraction was justified and that the actual undisclosed income was correctly offered in the return of income, leading to the deletion of the addition by the CIT(A).Conclusion:The Tribunal dismissed the revenue's appeals where the additions were made without incriminating material or where the retraction of statements was justified. It allowed the assessee's appeals where the assessments were quashed due to lack of incriminating material or where section 69C was inapplicable. The Tribunal's decisions were primarily guided by established judicial precedents and the requirement of incriminating material for additions in unabated assessments.