| The Tax Publishers2021 TaxPub(DT) 0255 (Chen-Trib) INCOME TAX ACT, 1961
Section 153A Section 153C
As additions made towards enhancement of assessment and cash credit and interest income was on the basis of bank account which was the basis for making additions towards peak credit and hence, argument of the assessee that enhancement made by the CIT(A) was not on the basis of any incriminating material found during the course of search was unfounded, the ground taken by the assessee as such, was, therefore, rejected.
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Search and seizure - Assessment under section 153A/153C - Computation of undisclosed income - Unexplained cash credits found in bank account
Assessee belonged to Challani group of companies and was subjected to search and seizure operation under section 132 on 19-4-2012. From the audited accounts was seen that there was no profit and loss account indicating that no activities have been undertaken by the company during the year. The share capital was Rs.1,00,00,000 and there were no loan funds etc. However from part of the Statement of bank account filed along with audit report it is seen that there are many credits and debit in the bank account, which indicated that business activities have been undertaken by the assessee company. Peak credit in the bank account during period is Rs. 8,90,00,000. In the absence of any explanation the peak credit was taken to be its income from undisclosed sources and was added to the total income, more so because the transactions in the bank account indicated much more funds available than the funds available according to balance sheet. The case was taken up for scrutiny and assessment had been completed under section 153C read with section 144 on 30-3-2015 determining total income of Rs. 8,90,00,000, after making addition towards unexplained credits found in bank account on peak credit basis. CIT(A) deleted all additions but made certain enhancement. Assessee had taken legal ground challenging enhancement of assessment towards cash credit of Rs. 15,000 and interest income of Rs. 47,093 without any reference to the incriminating materials found during the course of search under section 153A/153C(1). Held: When the AO had made additions towards cash credit of Rs. 8,90,00,000 which was on the basis of same bank account where the AO had found credit of Rs. 15,000 and interest income of Rs. 47,053 and hence, at this stage, assessee cannot take ground challenging validity of additions made in absence of seized material in the assessment framed under section 153A/153C(1). In the present case fact with regard to abatement and unabatement of assessments was not forthcoming from the records as well as additions made towards enhancement of assessment and cash credit and interest income was on the basis of bank account which was the basis for making additions for Rs. 8,90,00,000 on peak credit and hence, argument of the assessee that enhancement made by the CIT(A) was not on the basis of any incriminating material found during the course of search was unfounded. The ground taken by the assessee was therefore, rejected.
REFERRED : CIT v. Promy Kuriakose (2016) 386 ITR 597 (Ker) : 2016 TaxPub(DT) 4081 (Ker-HC)CIT v. M/s. Renu Constructions Pvt. Ltd. (2017) 399 ITR 262 (Del) : 2017 TaxPub(DT) 4877 (Del-HC) and CIT v. Singad Technical Education Society (2017) 397 ITR 344 (SC) : 2017 TaxPub(DT) 3941 (SC).
FAVOUR : Against the assessee.
A.Y. : 2007-08 & 2013-14
INCOME TAX ACT, 1961
Section 153C
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