ITAT Mumbai Deletes ₹50 Lakh Section 68 Addition In Absence Of Incriminating Material Found During Search

A Bench comprising Judicial Member Kavitha Rajagopal and Accountant Member Omkareshwar Chidara held that no addition could be sustained in a completed assessment in the absence of any incriminating material found during the course of search.

The assessee, a partnership firm engaged in construction and real estate development, had originally filed its return of income for AY 2017–18 declaring nil income. Subsequently, pursuant to a search conducted on the Patel RPL Realty Group, notice under Section 153C was issued to the assessee on the basis that certain documents allegedly pertained to it.

During assessment, the Assessing Officer added ₹50 lakh as unexplained cash credit under Section 68, treating unsecured loan received from Kesari Gems Pvt. Ltd. as non-genuine. The addition was later affirmed by the Commissioner of Income Tax (Appeals).

Allowing the appeal, the Tribunal noted that the only material relied upon by the Revenue was a ledger account extracted from Tally, which was already part of the assessee's regular books of account. The Bench emphasized that such material could not be treated as incriminating.

The Bench further observed that the assessee had duly discharged the primary onus under Section 68 by furnishing confirmation from the lender, bank statements evidencing transactions through banking channels, financial statements and return of income of the lender and evidence of repayment

The Bench recorded that neither the Assessing Officer nor the CIT(A) had disputed the authenticity of these documents.

The Bench relied on the Supreme Court decision in Abhisar Buildwell (P.) Ltd.(2023) 149 taxmann.com 399(SC), which categorically held that in cases of completed or unabated assessments, no addition can be made under search-related provisions unless supported by incriminating material found during search.

Applying this principle, the Tribunal held that since no incriminating material relating to the assessee was seized during the search, the addition of ₹50 lakh was unsustainable.

In view of the above, the ITAT set aside the order of the CIT(A) and directed deletion of the ₹50 lakh addition. The appeal filed by the assessee was accordingly allowed .

Case Title: M/s JS Infrastructure Vs. ACIT Central Circle-2

Case No.: IT(SS)A No. 3120/Mum/2025 A.Y. 2017-2018

Appearance for Assessee: Shri Vijay Patel

Appearance for Respondent: Shri Vivek Perampurna, CIT-DR