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2021 (9) TMI 396 - AT - Income TaxAddition u/s 69C - Unaccounted expenditure paid to M/s Advaita Interiors - HELD THAT:- The assessee had supplied goods to that entity and M/s Advaita Interior was sundry debtors for the assessee. This being so, there could be no occasion to presume that there was payment in cash by the assessee to the said party. AO could not appreciate the issue properly and went on to making addition of double amount while framing the assessment. Therefore, this addition is not sustainable. We delete the same. The ground stand allowed. Unaccounted investment in Shares - Addition u/s 69 - seized documents reflected details of shares held by the assessee - HELD THAT:- We find that the assessee has declared Short-Term Capital gain on sale of shares for ₹ 3.88 Lacs in the return of income. Upon perusal of computations, we find that all these shares were sold by the assessee during this year and the resultant gain / loss were taken into account while computing short-term capital gains and the same has already been offered to tax. This being so, the investments as mentioned on the seized document could not be termed as unexplained investment. The gains / loss on shares very much formed part of the computation of income and therefore, this addition is not sustainable. By deleting this addition, we allow this ground of appeal. Estimation of business income - material available during the search and seizure operation for making an assessment of the undisclosed income of the assessee - HELD THAT:- For the purpose of computing income under section 153A / 153C of the Act, Ld. AO is required to confine himself only to the material found during the course of search or not. In reply to this question, the Hon’ble Court held that AO could take into consideration material other than what was available during the search and seizure operation for making an assessment of the undisclosed income of the assessee. Thus, this decision is distinguishable from assessee's case on facts - we find that the addition which could be made, was to be only with reference to incriminating material found during the course of search action. Since this addition is not with reference to any incriminating material, the same is not sustainable. By deleting the addition, we allow this ground of appeal. The appeal stand partly allowed in terms of our above order. Addition of estimation of business income in response to notice u/s 153A - HELD THAT:- The statutory time limit to issue notice u/s 143(2) had already expired and no proceedings were pending against the assessee on the date of search. Therefore, the additions which could be made was to be only with reference to incriminating material as found during the course of search action. We find that no such specific reference has been made by AO in the assessment order while making the addition - AO, at para-10, has simply alleged that the assessee has accepted accommodation entries for bogus loans and therefore, the loans could not be accepted as genuine - there is no specific reference to any seized material to show that the loans taken by the assessee from the lenders was its own unaccounted money. The unsecured loans very much formed part of the assessee’s financial statements as placed on record. Therefore, respectfully following the binding judicial precedents of CIT Vs. Continental Warehousing Corporation [2015 (5) TMI 656 - BOMBAY HIGH COURT] we delete both the additions. The appeal stands partly allowed. Assessment u/s 153A - Addition of unsecured loan & addition of estimation of business income - HELD THAT:- We find that this year is also a case of non-abated assessment year and therefore, the addition which could be made was to be with reference to incriminating material only. We find that no incriminating material has been found so far as the estimation of business income is concerned. Therefore, the addition of ₹ 2.50 Lacs is not sustainable.
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