Olive Overseas Private Limited Vs DCIT (ITAT Delhi)
Conclusion: Merely relying on the statement of a third party without any corroborating evidence could not justify income tax additions. In the absence of incriminating material found during a search, AO could not enhance the taxable income in proceedings under section 153A.
Held: Search and seizure operation was conducted on LARA Group of cases under section 132. Notice under section 153A was issued and the assessment proceedings under section 153A were set in motion. Assessee filed return of income under section 153A declaring total income at Rs.35,16,760/- which was the same as ROI dated 30.09.2012 filed under section 139(1) prior to search. AO framed assessment order under section 153A wherein AO alleged that assessee company was involved in providing accommodation entries in consideration of commission income. AO estimated commission income @ 3% on alleged entries provided towards purchase and sales. The commission income was estimated at Rs.1,71,10,259/- towards such alleged entries. AO thus made an addition of Rs.1,35,93,504/- on account of unaccounted commission income over and above the income returned. Resultantly, the income was assessed at Rs.1,71,10,260/- as against the returned income of Rs.35,16,760/-. Assessee contended that additions made in Section 153A proceedings in question were beyond the remit of AO to make such additions solely based on a sketchy statement of accountant under Section 132(4) which statement was, in turn, based on confessional statement of the director Shri Praveen Kumar Jain in the previous search carried out on 01.10.2013 in the case of Shri Praveen Kumar Jain. It was further case of the assessee that the statement of Shri Praveen Kumar Jain given were irrelevant for the assessment years subsequent to the date of search and the averments made therein could not be applied to the subsequent years. It was held that in the absence of incriminating material found in the course of search, the legal foundation for making additions under section 153A in unabated assessment did not exist. Mere statement of a person under section 132(4) in the course of search, by itself, could not be regarded as incriminating material found in the course of search as held in the case of Pavitra Realcon Pvt. Ltd. and Anand Kumar Jain (HUF). The additions made on the basis of confessional statement without other material was thus unsustainable in law.
