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2022 (9) TMI 1364 - AT - Income TaxAssessment u/s 153A - Addition of client code modification - Addition on account of fictitious loss obtained by the assessee by misuse of CCM facility made by the AO - HELD THAT:- As undisputed that when there is no incriminating material was found no addition could be made in the order passed u/s. 153A of the r.w.s. 143(3) of the Act. Addition made on account of alleged client code modification there were search actions at the business premises of the assessee company and at the residence of the director of the company. In this search there is no incriminating evidence or any connected information found and seized is also not noted and reflected. It is the only the third-party information based upon which the AO has made the addition on account of Client Code Modification on the ground that the assessee has shifted its profit to other clients or shifted loss to its sister concerns as alleged by the I&CI Mumbai. The ld.CIT(A) deleted the addition on the ground that additions NOT based on incriminating material found during the search is settled based on that technical ground deleted the addition. The requirement that the incriminating material to have the co-relation to the particular addition sought to be made is a logic that will hold good as it is held in number of cases decided by this coordinate bench and the jurisdictional High Court. Consequently, in our considered view we do not find any error having been committed by the ld. CIT(A) in accepting the plea of the Assessee that there is no incriminating document which was seized in the course of search relating to the addition sought to be made on account of the CCM reflected in the return of income filed by the assessee. Therefore, the jurisdictional requirement of Section 153 A of the Act was not satisfied. Even on merits assessee submitted various decisions that without any finding merely on the third party information no addition can be made. We find, identical issue come up in the case of PCIT Central -3 Vs. Jaypee Financial Services Ltd. [2021 (2) TMI 1186 - DELHI HIGH COURT] - we are of the considered opinion that there is no perversity in the order of the CIT(A) deleting the addition. Accordingly, the same is upheld and the grounds raised by the revenue are dismissed. In the result the appeal of revenue dismissed. PEN drive find during the search proceeding no questions raised to the parties not only that the employee from this PEN drive found, his statement is also not recorded - The amount in dispute is nothing but the amount of the additional interest demanded and not paid by the assessee as claimed by the ld. AR of the assessee. The ld. DR did not oppose this contention and has also not pointed out any incriminating material or a statement on this PEN drive. This based on these set of facts before us and based on the decision relied upon by the ld. AR and on careful consideration of the said decision with that of the facts in this case, we hold that the addition is without any supporting contentions, enquiry or confirmation of the party we have received the additional interest or not. The AO is supposed to point out the name of the assessee who may be the owner of such income. It is common ground that in the present case, till this date, the authorities below did not bring on record any material to show that the unexplained expenditure in question really belongs to some other assessee as income or not. The ld. DR honestly conceded that till this date no proceedings in respect of the disputed income have been made against any other assessee and the same is also confirmed by the AO in the report presented before us. There cannot be any unexplained expenditure without making the unexplained income and Revenue did not controvert the argument of the AR of the assessee and has also not supported by any judicial decision so as to confirm the order of the lower authorities. Thus, the interest which is actually paid is duly recorded in the books of accounts and there is no other material which is found even the person under whose possession the PAN Drive is found his statement is not recorded. This action itself shows that department find this evidence as dump documents and is not evidence relied upon. The statement of the person from whom the evidence his found is also not checked on its correctness and veracity. Therefore, based on the finding that the revenue has not made any unexplained income addition in the persons in whose name the interest as alleged addition income is not added and the ld. AR of the assessee categorically proved that there is no incriminating other document found recording the payment of the additional interest paid by the assessee and thus the addition made on account unexplained expenditure is required to be deleted. Appeal of assessee allowed.
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