AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2022 (8) TMI 268
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.... June, 2021 passed by the Income Tax Appellate Tribunal (hereinafter referred to as 'ITAT'), Delhi in ITA 5280/Del/2018. The facts, in brief are that the Investigation Wing of the Income Tax Department conducted a search & seizure and survey operations under Section 132/133A of the Income Tax Act, 1961 (hereinafter referred to as the 'Act') on 8^th July, 2015 against M/s K.R. Pulp & Papers Ltd. and its group at various residential and business premises. During post-search investigations, Sh. Madho Gopal Agarwal, Managing Director of M/s K.R. Pulp & Papers Ltd. made a statement. It is the case of the Revenue that Sh. Madho Gopal Agarwal, Managing Director of M/s K.R. Pulp & Papers Ltd. admitted that undisclosed income has been routed in the ....
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....cial Year (FY) 2010-11 for a sum of Rs. 3,62,996/-. It is submitted that the assessee had earned capital gain of Rs. 3,61,496/- on the sale of the said shares. However, LTCG of Rs. 3,61,496/- was claimed by the assessee as an exempt income under Section 10(38) of the Act. The Assessing Officer (AO) relying upon the letter dated 31st July, 2015 and statement by Sh. Madho Gopal Agarwal dated 3rd August, 2015 held that the amount of gain of Rs. 3,61,496/- is an accommodation entry, therefore, rejected the return filed by the assessee and treated the amount of Rs. 3,61,496/- as an unexplained credit received by the assessee under Section 68 of the Act and added the same to the total income of the assessee. 3. The assessee filed an appeal aga....
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....opal Agarwal has on same reasoning allowed the appeal of the respondent/assessee since it contained identical grounds for challenge. The ITAT concluded that the additions made by the AO for the assessment under consideration is not based on any incriminating material found during the course of search from the premises of the assessee. The ITAT concluded that the AO had made the additions solely relying on the disclosures made by the Managing Director, Sh. Madho Gopal Agarwal. The ITAT after finding that there was no incriminating material found as a result of the search conducted against the assessee on record, allowed the appeal and set aside the addition made by the AO. The ITAT has relied upon the judgment of this Court in PCIT v. Anand ....
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....(38) of the Act and paid taxes on the said amount. It was, thus, submitted that in view of the statement of Sh. Madho Gopal Agarwal and the corroborative conduct of the other family members, the ITAT fell in error and the reliance placed on the judgment of this Court in CIT v. Best Infrastructure India Pvt. Ltd. (supra) is erroneous. 7. The addition has been made by the AO with respect to the LTCG earned on sale of shares of M/s KGN Industries Limited. 8. We have perused the statement dated 3rd August, 2015 and the contents of the letter dated 31st July, 2015, both authored by Sh. Madho Gopal Agarwal. There is no reference to M/s KGN Industries Ltd. in either of the said documents. No other material found during search pertaining to M....
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.... of Madho Gopal Agarwal and M/s Kapis Impex LLP (supra). 11. A predecessor Division Bench of this Court in Kabul Chawla (supra) has held that if no incriminating material is found during the course of the search in respect of an issue, then no addition in respect of such an issue can be made in the assessment under Sections 153A and 153C of the Act. The legal position summarized in the subsequent decision of Meeta Gutgutia (supra) is reproduced hereinbelow:- "37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice ....