Kaushal Mittal vs. DCIT, ITA Nos.1890 to 1893/De l/2021
In a recent decision, the Income Tax Appellate Tribunal (ITAT) Delhi in Kaushal Mittal vs DCIT, quashed additions made under Section 68 of the Income Tax Act for investment in share capital, citing absence of incriminating material found during search and due disclosure in books of account.
Facts of the Case:
- A search under Section 132 was conducted at the premises of the Vishnu Group, where the assessee Kaushal Mittal was also covered.
- The Assessing Officer made an addition of ₹10 lakhs under Section 68, alleging undisclosed investment in the share capital of M/s Indian Treat Ltd.
- The assessee explained that the said investment was made through M/s Kushal Impex and was duly recorded in its books of accounts.
- However, the AO proceeded with the addition, stating that the ledger was not supported by a bank statement and the source remained unexplained.
Legal Argument:
The assessee’s counsel strongly argued that the year in question was unabated, and in such cases, no addition can be made u/s 153A unless supported by incriminating material found during search. This view is well supported by the landmark Supreme Court ruling in PCIT vs Abhisar Buildwell (2023) and Delhi High Court judgment in CIT vs Kabul Chawla (2015).
Tribunal’s Ruling:
- The ITAT agreed that no reference to any incriminating material was made in the AO’s order.
- The investment was duly reflected in the assessee’s books, and the assessment was made without jurisdiction.
- Relying on binding precedents, the Tribunal quashed the assessment under Section 153A.
Key Takeaways:
- Additions under Section 68 for years not pending at the time of search (unabated years) require incriminating evidence found during search.
- Books of account disclosure plays a crucial role in justifying the genuineness of the transaction.
- Blanket additions without proper search-linked evidence will not stand judicial scrutiny.