PCIT Vs E-City Projects Lucknow Private Limited (Orissa High Court)
The Orissa High Court dismissed two Revenue appeals concerning additions made under Section 68 of the Income Tax Act, 1961 in the case of E-City Projects Lucknow Private Limited for AYs 2012-13 and 2013-14. The Revenue questioned whether the Income Tax Appellate Tribunal (ITAT) was justified in deleting additions relating to unsecured loans received from M/s. Uniworth Agency Pvt. Ltd. (UAPL), which the Revenue alleged was a paper company engaged in providing bogus accommodation entries.
The assessee was engaged in construction of residential and commercial buildings, complexes and malls and real estate development. It had originally returned Nil income for both assessment years. Following a search and seizure operation under Section 132 on 6 August 2014, notices under Section 153A were issued on 29 April 2015. The assessee again filed returns declaring Nil income. The Assessing Officer subsequently determined total income at Rs.6.92 crores for AY 2012-13 and Rs.3.06 crores for AY 2013-14, including the disputed loan amounts as unexplained cash credits under Section 68. The CIT(A) upheld the additions, but the ITAT deleted them.
For AY 2012-13, the ITAT found that the original assessment had become final before the search because the time limit for issuing notice under Section 143(2) had expired on 30 September 2013. Consequently, the assessment was unabated. The tally account found during the search itself evidenced that the loan from UAPL had already been disclosed through banking channels before the search. The Tribunal therefore held that, absent incriminating material found during the search, the addition could not be made in the Section 153A proceedings. The principles concerning Section 153A and incriminating material have also been discussed by TaxGuru in its material on Section 153A. ([TaxGuru][1])
