Case Law Details
Sushil Singla Vs DCIT (ITAT Delhi)
Introduction: The case of Sushil Singla vs. DCIT is centered around an appeal filed with the Income Tax Appellate Tribunal (ITAT) in Delhi. The appeal pertains to the assessment years 2014-15, 2015-16, and 2016-17 and challenges the order of the Commissioner of Income Tax (Appeals) (CIT(A)) dated 22.03.2023. The primary issue in question is whether the addition of cash deposits in the bank account, totaling Rs. 45,000, Rs. 2,00,000, and Rs. 1,50,000 for the respective assessment years, is justified in the absence of incriminating material related to unabated assessments.
Detailed Analysis:
1. Background: The assessee had originally filed income tax returns for the assessment years 2014-15, 2015-16, and 2016-17. Subsequently, a search and seizure operation was conducted at the assessee’s premises on 06.06.2018. At the time of the search, no proceedings for the mentioned assessment years were pending. As a result, these assessments were considered unabated.
2. Unabated Assessment Rules: Section 153A of the Income Tax Act, 1961 deals with unabated assessments. It states that an assessment that has already been completed and is no longer pending can only be reopened during a search operation if there is incriminating material found during the search.
3. Assessment Findings: The Income Tax Officer (ITO) had conducted an assessment for the mentioned assessment years under Section 143(1) of the Act before the search operation. During these assessments, the ITO reviewed the bank account maintained by the assessee with the United Bank of India (UBI) and added the amounts related to cash deposits.
4. Issue of Incriminating Material: The crucial question in this appeal revolved around whether there was incriminating material found during the search that justified the addition of cash deposits to the unabated assessments. The ITAT noted that the bank account had already been disclosed and was not discovered during the search operation. Furthermore, the ITO had not referred to any seized document in the assessment order to substantiate the addition.
5. Legal Precedent: The ITAT referred to the decision of the Hon’ble Supreme Court in the case of PCIT vs. Abhisar Buildwell P. Ltd (reported in 454 ITR 212). The Supreme Court had clarified that for completed assessments and unabated assessments, no addition can be made by the Assessing Officer (AO) without incriminating material discovered during a search operation under sections 132 or 132A of the Act.
6. Conclusion: In alignment with the Supreme Court’s decision, the ITAT allowed the assessee’s appeal, emphasizing that the addition of cash deposits for unabated assessments without any incriminating material was unjustified. The ITAT’s ruling highlighted the importance of adhering to legal precedents and statutory provisions, particularly in the context of income tax assessments.
The case of Sushil Singla vs. DCIT underscores the significance of adhering to legal principles, especially when it comes to income tax assessments and the reopening of unabated assessments during search operations.
Please note that this case’s outcome is specific to the facts and legal framework at hand and may not be directly applicable to other situations.
FULL TEXT OF THE ORDER OF ITAT DELHI
1. The appeal in ITA No. 1557, 1558 & 1559/Del/2023 for AYs 2014-15 to 2016-17, arises out of the order of the Commissioner of Income Tax (Appeals)-3, Gurgaon [hereinafter referred to as ‘ld. CIT(A)’, in short] dated 22.03.2023 against the order of assessment passed u/s 153A of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 03.06.2021 by the Assessing Officer, DCIT, Central Circle-II, Faridabad (hereinafter referred to as ‘ld. AO’).
2. All these appeals are having identical issues and hence, taken up together and disposed of by this common order for the sake of convenience. The only core issue to the decided in this appeal is as to whether the addition towards cash deposits made in the bank account in the sums of Rs. 45,000/-, Rs. 2 lac and Rs. 1,50,000/- could be made in the hands of the assessee for AY 2014-15, 2015-16 and 2016-17 respectively in the absence of incriminating material found during the course of search in respect of unabated assessment.
3. We have heard the rival submissions and perused the materials available on record. The assessee has field the original return of income for the AY 2014-15 on 17.07.2014, for AY 2015-16 on 13.08.2015 and for AY 2016-17 on 19.07.2016. A search and seizure operation was carried out in the premises of the assessee on 06.06.2018. As on the date of search no proceeding for AY 2014-15, 2015-16 and 2016-17 were pending and hence, these three assessments become unabated assessments. The time limit for issuance of notice u/s 143(2) of the Act had already expired for aforesaid three assessments as on the date of search. Hence, as per section 153A of the Act, unabated assessment already concluded for AY 2014-15, 2015-16 and 2016-17 u/s 143(1) of the Act cannot be justified unless there is any incriminating material found during the course of search qua the addition made towards cash deposits in the bank account. We find that the ld AO in the search assessment u/s 143(1) of the Act for the aforesaid years had merely examined the bank account maintained by the assessee with UBI and had resorted to make addition towards cash deposit made in the said bank account. Admittedly this bank account disclosed bank account of the assessee and was not found during the course of search. Moreover, the ld AO while making an addition towards cash deposit in the bank account had not referred to any seized document in the assessment order. Hence, it could be safely concluded that the addition made towards cash deposit in bank account were made recuperation of any incriminating material found during the course of search. This issue is no longer res integra in view of the decision of the Hon’ble Supreme Court in the case of PCIT Vs. Abhisar Buildwell P. Ltd reported in 454 ITR 212 (SC) where it had been categorically held that in respect completed assessment/unabated assessments no addition can be made by AO in absence of any incriminating material found during the course of search u/s 132 or 132A of the Act. Respectfully, following the said decision the grounds raised by the assessee are allowed.
4. In the result, the appeals of the assessee are allowed.
Order pronounced in the open court on 10/10/2023.
