Addition is unsustainable if no incriminating material found during search

DCIT Vs Mapsa Tapes Pvt. Ltd. (ITAT Delhi)

Facts-Assessment u/s 153C was challenged on the grounds that assessment order dated 31.3.2016 u/s 153C/143(3) was passed without dropping the proceedings initiated vide notice dated 8.9.2015 under section 153A of the Act and disposing off the objection filed by the assessee to initiation of assessment proceedings. Further, it was alleged that in absence of any satisfaction note recorded in the case of searched person, the assumption of jurisdiction to initiate proceedings under section153C of the Act against the assessee was illegal, invalid and untenable.

Conclusion- We are inclined to agree with the view of the Ld. CIT(A)that since the assessment based on the original return of income filed under sec. 139 of the Act was not pending as on the date of search as such, the additions made by the Assessing Officer in the absence of any incriminating material found during the course of search belonging to the assessee for the assessment year under consideration is legally unsustainable.

Without prejudice to the legal grounds, we are inclined to hold that even on merits the assessee had discharged onus cast upon him under the law by furnishing evidence to the effect that all the shareholders in the assessee company were corporate entities, duly assessed to tax and, had subscribed to share-capital by account payee cheques and supported by necessary evidence including their permanent account numbers, confirmations, addresses, etc. All shareholders were not only identifiable companies but also had requisite credit worthiness. It is also worth noting that notices sent by the AO to all these shareholders u/s 133(6) of the Act were duly served, which proved the existence of these shareholders. This shows that assessee has prima facie discharged its burden and onus was on the AO/revenue to rebut the evidences furnished by the assessee which the revenue has failed to do, as such, even on merits addition made by the AO cannot be sustained.

FULL TEXT OF THE ORDER OF ITAT DELHI

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