Case Law Details
Mahalaxmi Buildwell India Pvt. Ltd. Vs DCIT (ITAT Delhi)
We find, the AO, in the instant case, has made addition of Rs.17,15,113/- for assessment year 2009-10 and Rs.30 lacs for assessment year 2010-11 in the orders passed u/s 153A r.w. section 143(3). A perusal of the assessment order shows that the addition of Rs.16,77,983/- out of the total addition of Rs.17,15,110/- for A.Y. 2009-10 and Rs.30 lacs in A.Y. 2010-11 is not based on any incriminating material found during the course of search. The addition has been made on the basis of post search enquiries. W e find the Hon’ble Delhi High Court in the case of PCIT vs. SMC Power Generation Limited (supra) had an occasion to decide an identical issue where the addition was made not on the basis of incriminating material found during the course of search, but, addition was made on the ground that the assessee had not established the genuineness, identity and credit worthiness of the entities from whom it had received share premium. The Hon’ble High Court, following the decision of the Hon’ble Supreme Court in the case of CIT vs. Singhad Technical Education Society, 397 ITR 344, held that the requirement that the incriminating material to have the correlation to the particular addition sought to be made is a logic that will hold good not only for Section 153C of the Act, but, in relation to Section 153A of the Act as well. The relevant observation of the Hon’ble High Court at para 9 and 10 of the order reads as under:-
“9. The fact remains that the Revenue itself is not disputing that in respect of the share capital no incriminating documents were found in the search proceedings. The Court’s attention has been drawn to the decision of the Supreme Court in CIT v. Singhad Technical Education Society (2017) 397 ITR 344 (SC) where in the context of Section 153C of the Act it was held that the incriminating material which was seized had to pertain to the AY in question. It is further held that documents seized had to establish a co-relation documents wise with the assessment years for which the addition was sought to be made.
10. The requirement that the incriminating material to have the co-relation to the particular addition sought to be made is a logic that will hold good not only for Section 153 C of the Act but in relation to Section 153A of the Act as well. Consequently, this Court does not find any error having been committed by the ITAT in accepting the plea of the Assessee that there is no incriminating document which was seized in the course of search relating to the addition sought to be made on account of the share capital. Therefore, the jurisdictional requirement of Section 153 A of the Act was not satisfied.”
So far as the decision relied on by the ld.CIT(A) in the case of E.N. Gopakumar is concerned, no doubt, the Hon’ble Kerala High Court has held that assessment proceedings generated by issuance of a notice under section 153A(1)(a) can be concluded against the interest of the assessee including making addition even without any incriminating material being available against the assessee in search under section 132 on the basis of which notice was issued under section 153A(1)(a). However, there is no decision against the assessee of the jurisdictional High Court. It is the settled proposition of law that when there are divergent views on a particular issue the view which is favorable to the assessee has to be followed as held by the Hon’ble Supreme Court in the case of CIT vs Vegetable Products Ltd. 88 ITR 192. Therefore, respectfully following the decision of the Hon’ble Delhi High Court in the case of SMC Power Generation Ltd. cited (supra), we hold that additions made under section 153A in the orders passed under section 153/143(3) of the Act are not in accordance with the law and, therefore, the addition of Rs.16,77,983/- for 2009-10 and Rs.30 lacs for assessment year 2010-11 are directed to be deleted.
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