Manjeet Kaur Saran Vs ACIT (ITAT Delhi)
ITAT Delhi held that addition made by the A.O. in the absence of any incriminating material found during the search operation conducted u/s 132 of the Income Tax Act is liable to be deleted.
Facts- A search and seizure operation u/s 132 of the Income Tax Act, 1961 was carried out in HBN Group. The group was engaged in diverse businesses ranging from dairy development and marketing of dairy products; real estate development, home loan finance, and running a broadcast channel under the brand ‘CNEB’, through various companies.
The group was mainly controlled by Sh. Harmender Singh Saran, who was the Chairman of HBN group. Assessee is the wife of Sh. Harmender Singh Saran. Search & seizure proceedings u/s 132 of the Act were initiated against the assessee also. Notice u/s 153A of the Act was issued on 02-06-2010 requiring the assessee to file her return of total income. In response thereto, return declaring income of Rs. 2,76,980/- was filed.
During the year assessee declared income from salary received from M/s HBN Dairies & Allied Ltd. On 16-122011, the AR of the assessee filed a copy of personal cash book of the assessee before the A.O. Unexplained shortage of cash in the cash book has been worked out at Rs. 14,25,000/-. Thus, the A.O. made addition of Rs. 14,25,000/- to the total income of the assessee on account of income from undisclosed sources vide Assessment order u/s 153A of the Act. Aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A), CIT(A) dismissed the Appeal filed by the assessee.
Conclusion- Addition made by the A.O. which was sustained by the CIT(A) is without their being any incriminating material found during the search and the addition has been made only based on the personal cash book produced by the AR of the Assessee during the assessment proceedings.
Held that addition made by the A.O. in the absence of any incriminating material found during the search operation conducted u/s 132 of the Act is liable to be deleted.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal is filed by the assessee against the order dated 31/12/2013 passed by the CIT(A)-XXXIII, (hereinafter referred to ‘CIT(A)’)New Delhi for assessment year 2007-08.
2. The assessee has raised the following ground of appeal :-
1. “Under the facts and circumstances of the case, the addition of Rs.14,25,000/- on account of unexplained cash shortages made by the Ld. Assessing Authority and confirmed by Id. First Appellate Authority is grossly injudicious and bad at law.
2. Under the facts and circumstances of the case, the assessment made u/s 153A of the Act is injudicious and not in accordance with the provisions of the Income Tax Act, 1961 as the case of the appellant for the relevant year is a completed assessment case and during the course of search operation conducted u/s 132 of the Act, the appellant was not found to be in possession of any undisclosed money or other valuables nor any incriminating documents were found which could form the basis for the assessment of undisclosed income of Rs. 4,25,000/- in the case of the assessee.
3. Under the facts and circumstances of the case, the allegation of the ld. first appellate authority that no return u/s 139 was filed by the appellant and the only return filed by the assessee was under section 153A of the Act, is against the facts of the case and without verification of complete records.
4. Under the facts and circumstances of the case, the ld. first appellate authority has grossly erred in concluding that the case of the appellant for the relevant year is not a completed assessment case.
5. Under the facts and circumstances of the case, the ld. first appellate authority has grossly erred in alleging based on incriminating documents found in the cases of other assessees belonging to HBN group that the use of unaccounted income for source of unexplained cash credit in appellant’s hands cannot be ruled out, without pointing out any incriminating document in the case of appellant which could form the basis of addition of 214,25,000/- in the case of the appellant.”
3. Brief facts of the case as per the records, a search and seizure operation u/s 132 of the 1ncome Tax Act, 1961 (‘Act’ for short) was carried out in HBN Group on 20-11-2009. The group was engaged in diverse businesses ranging from dairy development and marketing of dairy products; real estate development, home loan finance, and running a broadcast channel under the brand ‘CNEB’, through various companies. The group was mainly controlled by Sh. Harmender Singh Saran, who was the Chairman of HBN group. Assessee is the wife of Sh. Harmender Singh Saran. Search & seizure proceedings u/s 132 of the Act were initiated against the assessee also. Notice u/s 153A of the Act was issued on 02-06-2010 requiring the assessee to file her return of total income. In response thereto, return declaring income of Rs. 2,76,980/- was filed on 22/11/2010. During the year assessee declared income from salary received from M/s HBN Dairies & Allied Ltd. On 16-122011, the AR of the assessee filed a copy of personal cash book of the assessee before the A.O. Unexplained shortage of cash in the cash book has been worked out at Rs. 14,25,000/- on 12-12-2006. Thus, the A.O. made addition of Rs. 14,25,000/- to the total income of the assessee on account of income from undisclosed sources vide Assessment order dated 23/12/2011 u/s 153A of the Act. Aggrieved by the assessment order dated 23/12/2011, the assessee preferred an appeal before the CIT(A), the Ld.CIT(A) vide order dated 31/12/2012 dismissed the Appeal filed by the assessee.
4. As against the dismissal of the Appeal by the CIT(A), the assessee preferred the present appeal on the grounds mentioned above. The Ld. Counsel for the assessee argued on the ground No. 2 and contended that there is no incriminating material found during the search and the addition made by the A.O. which has been sustained by the CIT(A) in the absence of any incriminating material found during the search, invoking the provisions of Section 153A for the year under consideration is illegal. Further Ld. AR relied on the judgment of the Hon’ble Supreme Court in the case of Principal Commissioner of Income Tax Vs. Abhisar Build Well Pvt. Ltd. Civil Appeal No. 6580/Del/2021 dated 24/04/2023.
5. Per contra, the Ld. DR vehemently contended that the order of the CIT(A) is well reasoned which requires no interference.
6. We have heard both the parties, perused the material available on record and gave our thoughtful consideration.
7. During the assessment proceedings while making the addition the Ld. A.O. has not referred to any incriminating material found during the search, the addition has been made based on the cash books produced by the Assessee during the assessment proceedings which reads as follows:-
“A search and seizure operation u/s 132 of the I.T Act, 1961 was carried out in HBN Group on 20-11-2009. The group is engaged in diverse businesses ranging from dairy development and marketing of dairy products; real estate development, home loan finance, and running a broadcast channel under the brand ‘CNEB’, through various companies. The group is mainly controlled by Sh. Harmender Singh Saran, who is the Chairman of HBN group. Assessee is the wife of Sh. Harmender Singh Saran. Search & seizure proceedings u/s 132 of the Act were initiated against the assessee also.
2. Notice u/s 153A was issued on 02-06-2010 requiring the assessee to file her return of total income. In response thereto, return declaring income of Rs. 2,76,980/- was filed on 22/11/2010. During the year assessee has declared income from salary received from M/s HBN Dairies & Allied Ltd.
3. On 16-12-2011, the AR of the assessee filed a copy of personal cash book of the assessee. Unexplained shortage of cash in the cash book has been worked out at Rs. 14,25,000/- on 12-122006.I therefore made an addition of Rs. 14,25,000/- to the total income of the assessee on account of income from undisclosed sources.”
8. The Ld.CIT(A) while dismissing the Appeal has observed as under:-
”3.3.Decision
“I have perused the assessment order, written submission of Ld. AR along with the paper book and her arguments. The main argument is nutshell is that the addition be made u/s 153A without any incriminating materials gathered during the search and seizure operation u/s 132 as no notice u/s 143(2) was issued within the prescribed period of 12 months, on original return filed u/s 139. Therefore, the assessment proceedings, u/s 143(3) comes to an end and matter becomes final and hence cannot be reopened u/s 153A unless incriminating material is found during the search and seizure operation. I have perused the paper book which contains the copy of acknowledgments of return of income filed. The date was filing of such return of income is as under-
