INCOME TAX ACT, 1961

Section 153A

Search and seizure - Assessment under section 153A - No incriminating material discovered during search - Unabated assessment

AO, pursuant to search conducted at assessee's premises, framed assessment under section 153A and made addition under section 68 as regards unexplained cash credit by treating the long-term capital gain on sale of shares as non-genuine. Assessee challenged this on the ground of no incriminating material found during search. Held: No incriminating material was found during the course of search in relation to the purchase and sale of penny stocks and AO relied on the general investigation that assessee had made purchase and sale in penny stocks on the basis of documents which were already on records and made huge addition of bogus long-term capital gain. Return of income was filed by assessee for the instant year on 30-7-2012 declaring an income of Rs. 18,79,100 which was processed under section 143(1). Search and seizure action was conducted on 6-10-2017 and thus, on the date of search, assessment had attained finality and was an unabated assessment as on date of search. Therefore, in the absence of incriminating material, concluded assessment could not be interferred with and, therefore, addition under section 68 was deleted, which was not sustainable even on merits also.

Followed:CIT v. Continental Warehousing Corporation (Nhava Sheva) Ltd. (2015) 374 ITR 645 (Bom-HC) : 2015 TaxPub(DT) 2182 (Bom-HC), Smt. Kalpana Mukesh Ruia v. Dy. CIT [ITA No. 6519/M/2019, Assessment Year 2012-13 & Ors., Order, dated 31-12-2020].

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2012-13 & 2013-14

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