Case Number: ITA 963/DEL/2021
Appellant: Jakhotia Plastics Pvt. Ltd., Telangana
Respondent: ACIT, CC-26, New Delhi
Assessment Year: 2010-11
Result: 2010-11
Case Filed on: 2021-08-12
Order Type: Final Tribunal Order
Date of Order: 2022-10-21
Pronounced on: 2022-10-21
Tribunal: IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH, ‘C’: NEW DELHI
Before: Shri Shamim Yahya, Accountant Member and Shri Anubhav Sharma, Judicial Member
Introduction
This case involves Jakhotia Plastics Pvt. Ltd. appealing against the Assistant Commissioner of Income Tax (ACIT), CC-26, New Delhi, regarding the addition under section 153A based solely on the declaration made before the Income Tax Settlement Commission (ITSC) for the assessment year 2010-11.
Background
The appellant, Jakhotia Plastics Pvt. Ltd., is a private limited company engaged in the business of manufacturing polypropylene woven sack bags. A search under section 132 of the Income Tax Act was carried out at the residential and business premises of the appellant on 20.01.2012. During the search, the appellant admitted undisclosed income of Rs. 21.42 crores for the assessment years 2011-12 and 2012-13. Subsequently, the appellant filed a settlement application before the ITSC disclosing additional income, which included Rs. 55,000 for the assessment year 2010-11.
The ITSC passed a final order on 26.11.2014, settling the undisclosed income of the appellant. However, the Department challenged the ITSC order before the Delhi High Court, which quashed the ITSC order and directed the Assessing Officer (AO) to complete the assessments afresh.
Key Issues and Arguments
The primary issue was whether the addition under section 153A can be made solely based on the declaration before the ITSC without any incriminating material found during the search.
The appellant argued that the additional income of Rs. 55,000 was offered in the settlement application merely to qualify for the admission of the settlement application and was not backed by any incriminating evidence. The appellant contended that no addition can be made under section 153A without any incriminating material found during the search, relying on various judicial pronouncements, including CIT vs. Maruti Fabrics and other ITAT decisions.
The Department, on the other hand, argued that the declaration made before the ITSC should be treated as an admission of undisclosed income, and the AO was justified in making the addition based on this declaration.
Tribunal’s Analysis and Findings
The tribunal noted the following key points:
Judgment
The tribunal ruled in favor of the appellant, Jakhotia Plastics Pvt. Ltd., and quashed the addition made by the AO under section 153A. The tribunal held that the addition could not be made solely based on the declaration before the ITSC without any incriminating material found during the search.
Conclusion
The appeal filed by Jakhotia Plastics Pvt. Ltd. was allowed. The tribunal quashed the addition made by the AO under section 153A based solely on the declaration before the ITSC.
Final Judgment
Order pronounced in the open court on 21.10.2022.
Signed:
Shri Shamim Yahya, Accountant Member
Shri Anubhav Sharma, Judicial Member
Dated: 21.10.2022
Copy forwarded to:
Assistant Registrar, ITAT, New Delhi
Relevant Legal Provisions and Precedents
This case centered around the procedural aspects of making additions under section 153A based solely on declarations made before the ITSC without any incriminating material found during the search.
Impact of the Judgment
This judgment reinforces the principle that additions under section 153A cannot be made solely based on declarations made before the ITSC without any supporting incriminating evidence found during the search. It highlights the importance of adhering to procedural fairness and the need for substantiating additions with credible evidence.
Key Takeaways
The case underscores the significance of following judicial precedents and ensuring that additions under section 153A are backed by incriminating material found during the search. It serves as a precedent for similar cases, emphasizing the necessity of procedural fairness in tax assessments.
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