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2019 (5) TMI 539 - AT - Income TaxAssessment u/s 153A - disallowance of short payment of TDS u/s. 40(a)(ia) - proof of incriminating material as found against the assessee in search - two searches happened - HELD THAT:- The second search happened on 18.02.2013, undisputedly no assessment was pending before the AO and therefore this assessment year is an unabated assessment. Settled position of law is that no addition can be made for an unabated assessment unless incriminating material is unearthed during search qua the assessment year under consideration. Our aforesaid finding is fortified by the decision of KABUL CHAWLA [2015 (9) TMI 80 - DELHI HIGH COURT] Thus in the absence of any incriminating materials, the completed assessment cannot be disturbed Disallowance u/s 40(a)(ia) - HELD THAT:- Only information on the basis of which the addition was made was ITS data for the FY 2006-07 and nothing else. The said ITS data for the relevant year was available to the AO even at the time of original assessment dated 31.12.2009 and therefore it was not a case that any new and incriminating material was unearthed as a consequence of the second search carried out against the assessee u/s 132 in February 2013. We therefore find merit in the contention of the Ld. AR that no incriminating material was found against the assessee which was unearthed qua this assessment year for making the impugned disallowance - Decided in favour of assessee. Addition u/s 68 - whether there was any incriminating materials unearthed during the search qua the assessment year ? - HELD THAT:- no evidence was brought on record to prove that the cash deposited in bank accounts of entities forming part of this trail either belonged to the assessee company or originated from the assessee. Moreover, no material whatsoever was brought on record to demonstrate that the alleged cash deposit made in the bank accounts of third parties actually belonged to the assessee company or was provided by the assessee company. No opportunity to cross-examine any of these entities was provided to the assessee. The bank statements based on which the cash trail was prepared were part of the disclosed documents/accounts and therefore cannot be held as incriminating material. Thus, we note that during the search and seizure operation conducted u/s. 132of the Act, no incriminating documents/papers in respect to additions made were seized or found. We therefore find merit in the AR’s argument that the addition of ₹ 90,00,000/- [reduced to ₹ 70,00,000/- after verification] made u/s 68 in impugned order was without the aid of any incriminating material and therefore unsustainable in law. - Decided in favour of assessee. Disallowance u/s 40(a)(ia) - HELD THAT:- We also find merit in the primary contention of the assessee that such disallowance was legally untenable as the AO was unable to correlate the same with any incriminating document or evidence found in the course of search. We therefore hold that the impugned addition was both legally as well as factually unsustainable. Addition on account of undisclosed interest on deposits - HELD THAT:- Issue involved stands in favour of the assessee in view of the factual findings given by the AO in his order u/s 251 of the Act. We also find merit in the primary contention of the assessee that such addition was legally untenable as the AO was unable to correlate the same with any incriminating document or evidence found in the course of search. We therefore hold that the impugned addition was both legally as well as factually unsustainable. - Decided in favour of assessee. Disallowance of loss on sale of fixed assets - HELD THAT:- The impugned order of the CIT(A) that in arriving at the returned income the assessee had suomoto added back the loss on sale of fixed assets which was added back again by the AO while passing the order u/s 153A. Taking note of the double disallowance, the CIT(A) directed the AO to delete the same. At the time of hearing the Ld. CIT, DR could not controvert this factual finding of the CIT(A) and in that view of the matter we find no reason to interfere with the order of the CIT(A). This ground therefore stands dismissed. Addition u/s 68 - receipt of share application monies from four bodies corporate which inter alia included sum of ₹ 64,45,11,500/- received from M/s. Mundat Securities & Services Pvt. Ltd. - AO disbelieved the genuineness of the transaction principally because in his opinion payer of the application monies was not a group entity belonging to the promoter - HELD THAT:- The AO’s action to single out the subscription monies received from M/s. Mundat Securities & Services Pvt. Ltd for differential treatment. For the reasons discussed in detail in the foregoing therefore we also do not find any merit in the Ld. DR’s pleading to the effect that the matter needs to be restored to the file of the AO for decision afresh. This is particularly in view of the fact that in the orders u/s 153C/143(3), the AO of M/s. Mundat Securities & Services Pvt. Ltd had accepted the genuineness of the transaction and therefore it was not open for the same AO to question the genuineness of the receipt of monies in the hands of the appellant. We therefore direct the AO to delete the addition - Decided in favour of assessee. Addition of commission paid on obtaining accommodation entries in the form of share capital. - HELD THAT:- The impugned addition was made by the AO purely on suspicion and there was no material available on record to justify the same. We note that the AO was unable to correlate them with any incriminating document or evidence found in the course of search. Instead the addition was made purely on conjecture. We note that there is nothing on record to suggest that such expenditure was actually incurred by the assessee. The impugned addition is therefore deleted - Decided in favour of assessee.
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