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CA Ayushi Goyal | May 20, 2022 | Views 29325

No addition if no incriminating material found during search: Section 153A

No addition if no incriminating material found during search: Section 153A

The assessee Company is engaging with business of Civil Construction, maintenance and running of the dwelling units, flats, house and commercial complex. A search and seizure operation u/s 132 of the Income Tax Act, 1961 (The Act) was carried out on 11/03/2011 in M/s Paramount, Gulshan & Ajnara group of cases. The case of the assessee was also covered u/s 132(1) of the Act. The assessee company belongs to Paramount Group of Companies.

Paramount group is engaged in residential and commercial projects in Uttar Pradesh. A notice u/s 153A was issued to the assessee on 06/03/2012 in response to the same, a return declaring total income of Rs.2,67,220/- was filed on 20/12/2012. During the course of assessment proceedings, it was found by the A.O that, the assessee has failed to establish the genuineness of transaction of share application money/share capital and also fail to providing creditworthiness of the alleged subscribers to the share capital. The share capital of Rs. 2,89,50,000/- received by the assessee Company has been treated as income of the assessee on account of unexplained cash credit u/s 68 of the Act.

Against the assessment order, assessee has preferred an appeal before the CIT(A). The Ld.CIT(A) has sustained the addition only to the extent of Rs. 40,00,000/- u/s 68 of the Act and the balance addition of Rs. 2,49,50,000/- has been deleted. As against sustaining the addition of Rs. 40,00,000/- u/s 68 of the Act, the assessee has preferred the appeal and as against the deletion of Rs. 2,49,50,000/-, the Revenue has preferred an appeal before the tribunal. ITAT observed that making addition u/s 68 of the Act, the Ld. A.O has not referred any incriminating material/document found at the time of search which relate to the impugned addition. The said fact has been also accepted by Ld. CIT(A). It stated that the ratio laid down by the Jurisdictional High Court in the case of CIT Vs Kabul Chawla reported in (2016) 380 ITR 573 is squarely applicable, wherein it is held that when there is no incriminating material was unearthed during the course of search in respect of an issue, then no addition in respect of such an issue can be made in the assessment u/s 153A & 153C of the Act. Accordingly, ITAT deleted the addition made by AO and allowed the appeal filed by assessee.

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