Addition cannot be made merely based on statement recorded U/s. 132(4)

By TG Team Income Tax Judiciary September 3, 2019

TaxGuru Citation: 2019 taxguru.in 1350
Case Name: B.R. Associates Pvt. Ltd. Vs ACIT (ITAT Delhi)
Appeal Number: Only available for paid members
Date of Judgement/Order: Only available for paid members
Related Assessment Year: 2005-06
Courts: All ITAT, ITAT Delhi

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B.R. Associates Pvt. Ltd. Vs ACIT (ITAT Delhi)

In absence of adverse material found during search, no addition could be made merely on the basis of statement recorded under section 132(4) of Income Tax Act, 1961 which did not constitute conclusive evidence and having been given under pressure was immediately retracted. Additions made u/s 153A of the Act, in the absence of incriminating material found as a result of search is outside the scope of section 153A of the Act

FULL TEXT OF THE ITAT JUDGEMENT

All these appeals have been filed by the assessee against separate orders passed by the ld. CIT(A)XXXII, New Delhi dated 13.08.2012 for the assessment years 2005-06 to 2007-08 on the following grounds :

Grounds raised in A.Y. 2005-06:

1. On the facts and in the circumstances of the case, Id. CIT (A) erred:-

i. in holding that there was no infirmity in the action of the A.O. assuming jurisdiction and passing order u/s 153A/143 (3) of the Income-tax Act despite the fact that there was no undisclosed income and no materials found during the search showing undisclosed income;

ii. in declining to justly and fairly adjudicate Appellant’s contention that since there was no separate search warrant in Appellant’s case the search operation u/s 132 was illegal;

iii. in holding that there was no violation of the principles of natural justice by the A.O in completing the assessment without giving adequate opportunity and issuing show cause regarding the additions made;

iv. in confirming the addition of Rs.2,05,00,742/- as unexplained cash credit u/s 68 of the I.T. Act ignoring the facts and material evidences to the effect that the amount was long term capital gain exempt u/s 10 (38) of the Act;

v. in confirming the interest charged by the AO u/s 234A and 234B of the Act.

Above actions being arbitrary, erroneous and unjust be quashed with directions for relief.

Grounds raised in A.Y. 2006-07:

1. On the facts and in the circumstances of the case, Id. CIT (A) erred:-

i) in holding that there was no infirmity in the action of the A.O. assuming jurisdiction and passing order u/s 153A/143 (3) of the Income-tax Act despite the fact that there was no undisclosed income and no materials found during the search showing undisclosed income;

ii. in declining to justly and fairly adjudicate Appellant’s contention that since there was no separate search warrant in Appellant’s case the search operation u/s 132 was illegal;

iv. in confirming the addition of Rs.86,15,583/- as unexplained cash credit u/s 68 of the I.T. Act ignoring the facts and material evidences to the effect that the amount was long term capital gain exempt u/s 10 (38) of the Act;

v. in confirming the interest charged by the AO u/s 234A and 234B of the Act;

Above actions being arbitrary, erroneous and unjust be quashed with directions for relief.

Grounds raised in A.Y. 2007-08:

1. On the facts and in the circumstances of the case, Id. CIT (A) erred:-

i) In holding that there was no infirmity in the action of the A.O. assuming jurisdiction and passing order u/s 153A/143 (3) of the Income-tax Act despite the fact that there was no undisclosed income and no materials found during the search showing undisclosed income;

ii. in declining to justly and fairly adjudicate Appellant’s contention that since there was no separate search warrant in Appellant’s case the search operation u/s 132 was illegal;

iv. in confirming the addition of Rs.5,21,88,167/- as unexplained cash credit u/s 68 of the I.T. Act ignoring the facts and material evidences to the effect that the amount was long term capital gain exempt u/s 10 (38) of the Act;

v. in confirming the disallowance of set off of short term capital loss of Rs. 1,42,66,800/-against the short term and long term capital gains ignoring the facts and material evidences proving the genuineness of the claims;

vi. in confirming the addition of Rs.43,25,000/-on account of deemed dividend u/s 2(22) (e) of the Act ignoring the facts and material to the effect that amount was advance for purchase of its manufacturing unit and was not loan or advance as such;

vii) in confirming the interest charged by the AO u/s 234A and 234B of the Act;

Above actions being arbitrary, erroneous and unjust be quashed with directions for relief.

2. Since most of the grounds are common in all the three appeals, the same are considered together and are disposed of by this common order.

3. The brief facts of the case are that the a search and seizure operation u/s. 132 of the Act was conducted in assessee’s case on 26.03.2010. Accordingly, notice u/s. 153A of the Act was issued on 20.04.2011 and other statutory notices were issued to the assessee. The returns were filed in compliance of the notice. The assessee was engaged in the business of hardware and steel goods. The assessee had shown income from business or profession and capital gains. During the course of assessment proceedings, it was noticed by the Assessing Officer that the assessee has shown Long-term capital gains on sale of shares of Rs.2,05,00,742/- and has claimed it exempt u/s. 10(38) of the IT Act. The details of long-term capital gains shown by the assessee are as under :

A.Y. 2005-06 :

Name	Purchase	Cost (Rs.)	Sold	Amount (Rs.)
Konark Commerce & Industries Ltd.	14.04.2003	1,21,200	3.11.2004	1,42,04,366
Limtex Investment Ltd.	23.06.2003	10,69,200	14.01.2005	74,86,776
	Total	Rs.11,90,400/-		Rs. 2,16,91,142/-

A.Y. 2006-07:

Name	Purchase	Cost (Rs.)	Sold	Amount (Rs.)
Sudama Trading & Investment Ltd.	15.04.2004	1,95,600/-	24.11.2005	47,03,772/-
			29.11.2005	41,07,409/-
	Total	Rs. 1,95,600/-		Rs.88,11,181/-