Additions made under Section 69 on alleged share investments at face value vis-a-vis book value of shares being substantially more - No incriminating evidences found during search and seizure operations

Facts: 

Assessee had invested in certain shares at their face value. It was found out that prior to these investments those companies had issued shares at a premium and using those amounts had acquired substantial immovable properties thereby having a book value much larger to the face value. Subsequent search and seizure operations were carried out wherein no incriminating material against the assessee could be unearthed. Nonetheless the AO in the block assessment made additions under Section 69 as unexplained investment of the difference between the face value of the shares and their book values alleging that this was a conduit way for shoring unaccounted money. On appeal CIT(A) dropped the additions citing no incriminating evidences being in possession of revenue to justify the additions made. Aggrieved revenue went in higher appeal -

Held against the revenue that in the absence of any incriminating documents unearthed/evidenced during the search and seizure operations, no additions can be made on completed assessments.

Applied: Kabul Chawla (2016) 380 ITR 573 (Delhi) : 2015 TaxPub(DT) 3486 (Del-HC)

Ed. Note: The verdict of Kabul Chawla is under appeal before the Supreme court though no stay has been granted so will continue to apply in such cases.

Case: ACIT v. Atul Kumar Gupta 2023 TaxPub(DT) 1116 (Del-Trib)