2017 (1) TMI 1685 - AT - Income Tax

Assessment u/s 153A - as argued assessment done by AO without any incriminating documents - HELD THAT - The assessment proceedings were completed before the date of search. Besides the time limit to issue notice u/s.143(2) was also expired. In order to initiate assessment proceedings u/s.153A there should be a new or incriminating document. The assessment which is already completed u/s.143(3)/143(1)should not be reopened. Therefore considering the scheme of Section 132 and Section 153A we are of the view that there should be some new document/incriminating document to invoke the provisions of Section 153A. DR for the revenue had pointed out that there is a direct nexus among the companies which has been established by the statement of Mr.Naresh Kumar Chhaparia which cannot be relied on as he was a double speaking person. Therefore considering the factual position and the judgments cited by ld. AR we are of the view that the additions made by the AO u/s.153A and confirmed by the ld. CIT(A) needs to be deleted. Therefore we delete the addition. Addition u/s.68 (cash credit) on account of share application money/share capital - HELD THAT - There is merit in the submissions of the assessee as the propositions canvassed by the ld. AR for the assessee are supported by the judgments of the ITAT and Hon ble High Courts. AR pointed out that statement of Shri Naresh Kumar Chhaparia should not be relied on because he was a double speaking person and later on he reiterated the statement by filing the affidavit. The share applicants have submitted the required document and evidences. The addition made by the AO u/s.68 is without any basis and without any incriminating material. The assessee has proved the identity creditworthiness and genuineness of the transactions. Therefore considering the factual position and the case law cited by ld. AR we are of the view that the addition made by the AO u/s.68 and confirmed by the ld. CIT(A) needs to be deleted. - Assessee appeal allowed.

Summary

Issues Involved:
1. Validity of Assessment under Section 153A without Incriminating Material.
2. Addition under Section 68 on Account of Share Application Money based on Statement of Entry Operator.

Detailed Analysis:

1. Validity of Assessment under Section 153A without Incriminating Material:
The primary issue raised by the assessee was the validity of the assessment under Section 153A of the Income Tax Act, 1961, where no incriminating documents were found during the search and seizure operations. The assessee argued that the assessments for various group concerns were completed before the date of the search and that no new or incriminating material was found during the search, except for the statement of Shri Naresh Kumar Chhaparia, which was later retracted by an affidavit.

The tribunal examined several judgments, including those from the jurisdictional ITAT and High Courts, which supported the view that for assessments under Section 153A, there should be some new or incriminating material found during the search. It was emphasized that the assessment should not be reopened if it was already completed under Section 143(3) or 143(1) without any new incriminating material. The tribunal concluded that the additions made by the AO under Section 153A without any incriminating documents were invalid and needed to be deleted.

2. Addition under Section 68 on Account of Share Application Money based on Statement of Entry Operator:
The second issue pertained to the addition of Rs. 10,00,000/- under Section 68 on account of share application money received by the assessee, based on the statement of Shri Naresh Kumar Chhaparia, who was identified as an entry operator. The assessee contended that the statement of Shri Naresh Kumar Chhaparia, which was the basis for the addition, should not be relied upon as he had retracted his statement by an affidavit, claiming it was made under coercion.

The tribunal noted that the assessee had provided sufficient evidence to prove the identity, creditworthiness, and genuineness of the transactions related to the share application money. The tribunal also observed that the AO did not bring any corroborative material to support the statement of Shri Naresh Kumar Chhaparia. It was highlighted that the share applicants had responded to notices under Section 133(6) with supporting documents, and no incriminating documents were found during the search.

The tribunal referred to various judgments, including those of the jurisdictional High Court and ITAT, which supported the assessee's position that no addition under Section 68 could be made without any incriminating material. The tribunal concluded that the addition made by the AO under Section 68, based solely on the retracted statement of Shri Naresh Kumar Chhaparia, was not justified and needed to be deleted.

Conclusion:
In conclusion, the tribunal allowed the appeals filed by the assessee on both grounds. The assessment under Section 153A was deemed invalid due to the absence of any incriminating material, and the addition under Section 68 on account of share application money was deleted due to lack of corroborative evidence and reliance on a retracted statement.