INCOME TAX ACT, 1961

Section 153A Section 68

Search and seizure - Assessment under section 153A - Addition under section 68 - Unsecured loan and partner's capital--No incriminating material found

The assessment on the original return of income filed under section 139(1) was not pending on the date of search under section 132 conducted on 2-7-2015. Common facts and disputes running through all the assessments framed under section 153A were that the AO proposed to make the addition under section 68 in respect of the unsecured loans and partners' capital received by the assessee. The AO relied upon the information/details and statement recorded by the Investigation Wing, Kolkata in case of third party. The assessee had received unsecured loans and partners' capital from NBFC and other companies.Held: The addition to the income that had already been assessed can be made only on the basis of incriminating material. In the absence of any incriminating material the completed assessment can only be reiterated. AO has proposed to make the addition on account of unsecured loans and partners' capital under section 68 being unexplained cash credit solely on the basis of the information received from Investigation Wing Kolkata. There was no dispute that these transactions of unsecured loans and partners' capital contribution were duly recorded in the books of account and disclosed in the return of income which were already completed as the assessments for these four assessment years were not pending on the date of search, therefore, it is manifest from the record that during the course of search and seizure under section 132 in the case of the assessee no material much less the incriminating material was unearthed or any undisclosed income which was not disclosed in the books of account was detected or found. The AO had solely relied upon the report of the Investigation Wing, Kolkata and statement of one A recorded by the Investigation Wing during the survey under section 133A. In the case, in, hand, the AO himself had not claimed any incriminating material found during the search and seizure in the case of the assessee. The additions made by the AO while passing the assessment orders under section 153A for the assessment years 2010-11 to 13-14 were therefore not sustainable and accordingly the assessment on the original return of income filed under section 139(1) was not pending on the date of search under section 132 conducted on 2-7-2015. the same were liable to be deleted.

Relied:Kabul Chawla, (2016) 380 ITR 573 (Del-HC) : 2015 TaxPub(DT) 3486 (Del-HC)Pr. CIT v. Kurele Paper Mills (P) Ltd. (2016) 380 ITR 571 (Del-HC) : 2016 TaxPub(DT) 1068 (Del-HC)SLP filed before the Hon'ble Supreme Court was dismissed vide Order, dt. 7-12-2015.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2010-11 to 2016-17

INCOME TAX ACT, 1961

Section 68

SUBSCRIBE FOR FULL CONTENT