Additions Can’t Be Made In Absence Of Incriminating Material: ITAT Deletes Income Tax Addition
25 May 2023 5:10 PM GMT
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has held that the additions could not have been made in the absence of any incriminating material.
The bench of Kavitha Rajagopal (Judicial Member) and B.R. Baskaran (Accountant Member) observed that the additions made by the Assessing Officer under Section 68 of the Act towards the sale of shares and also estimated commission expenditure are liable to be deleted since they are not based on any incriminating material found during the course of the search.
The assessee, along with other family members and group companies, was subjected to search operations under Section 132 on February 4, 2016. Consequently, the assessment for AY 2014–15 was completed in the hands of the assessee under Section 143(3) read with Section 153A, in which long-term capital gains declared by the assessee were disallowed, holding them to be bogus in nature. The Assessing Officer, however, assessed the sale proceeds of shares sold by the assessee under Section 68. The AO made an addition to the estimated commission expenses incurred in procuring bogus capital gains.
The assessee submitted that the assessments already completed prior to the date of the search do not abate. He submitted that, in the case of unabated assessments, the assessing officer can make any addition only on the basis of any incriminating material found during the course of the search.
The tribunal held that the addition relates to the sale of shares already recorded in the books, and the commission expenses have been made on an estimated basis. Hence, it cannot be said that the additions have been made on the basis of incriminating materials.
Case Title: DCIT Versus Bhavya Pankaj Shah
Case No.: I.T.A. No. 901/Mum/2022 (A.Y. 2014-15)
Counsel For Appellant: Mani Jain and Patreek Jain
Counsel For Respondent: Riddhi Mishra