2012 (10) TMI 97 - AT - Income Tax

Tribunal dismisses Revenue's appeals, upholds CIT(A)'s decision due to lack of evidence and procedural issues.

The Tribunal upheld the CIT(A)'s decision to delete the additions on merits due to insufficient evidence and procedural lapses. The assessment was also ... Undisclosed investments - Investment in Vatsal Shiksha Samiti, Gwalior - search - CIT(A) deleted the addition - Held that:- AO made the additions on merits on account of investment made by the assessee in Vatsal Shiksha Samiti, Gwalior but is a fact that no search was conducted in the case of the assessee. Whatever seized material was found was recovered from the business cum residential premises of Shri Sunil Jain and Seema Jain. Nothing was brought on record if both these persons made any adverse statement against the interest of the assessee. No material has been brought on record by the AO to show that the assessee, in fact, made any investment in this Samiti. Whatever investment the assessee has made in the Samiti was duly declared and source of the same was also found explained. The amount declared by the assessee was taken back on his resignation from the Samiti. Thus, there was no evidence that the assessee made investment of any amount in the Samiti. Since the seized material was not recovered from the possession of the assessee, therefore, the assessee was not bound to explain the same. More so, when the details of seized material clearly show that it did not implicate the assessee of any investment made in the Samiti. As decided in CIT vs. Girsh Chaudhary [2007 (5) TMI 176 - DELHI HIGH COURT] that the seized paper would not indicate anything that the assessee made any undisclosed investment in Samiti and in absence of any specific material to link the assessee with any investment, no infirmity in the order of the CIT(A) - in favour of assessee. Issues Involved:1. Deletion of additions on account of investment in Vatsal Shiksha Samiti.2. Validity of assessment under sections 153C/153A of the I.T. Act, 1961.3. Nexus between the appellant and the individuals on whose premises the search was conducted.Detailed Analysis:1. Deletion of Additions on Account of Investment in Vatsal Shiksha Samiti:The Revenue challenged the deletion of additions amounting to Rs. 16,00,000/- for A.Y. 2001-02 and Rs. 23,00,000/- for A.Y. 2002-03 made by the Assessing Officer (AO) on account of alleged investment in Vatsal Shiksha Samiti, Gwalior. The AO based the additions on documents found during a search at the premises of Sunil Jain and Seema Jain, which indicated investments by three partners, including the appellant. The appellant denied the investments and provided an affidavit and income tax returns showing a declared investment of Rs. 4,79,550/-, which was returned upon his resignation from the Samiti.The CIT(A) found that the AO did not provide sufficient evidence linking the appellant to the alleged investments. The documents were not in the appellant's handwriting, and no inquiry was made to verify the claims. The Tribunal upheld the CIT(A)'s decision, citing the lack of material evidence and referencing the Delhi High Court's decision in CIT vs. Girsh Chaudhary, which deemed similar documents as 'dumb' and insufficient for making additions.2. Validity of Assessment under Sections 153C/153A of the I.T. Act, 1961:The appellant contested the jurisdiction and initiation of proceedings under sections 153C and 153A, arguing that the notice was issued beyond the limitation period. The CIT(A) agreed, noting that the AO received the seized documents on 19.02.2009 and issued notices on 20.10.2009, which was beyond the permissible period for the assessment years in question (2001-02 and 2002-03). The CIT(A) held that the assessment was null and void as the notice was barred by limitation, referencing the ITAT Ahmedabad decision in Vijay M. Vimawal vs. ACIT.3. Nexus Between the Appellant and the Individuals on Whose Premises the Search Was Conducted:The AO's additions were based on documents found at the premises of Sunil Jain and Seema Jain, which mentioned investments by 'Gupta Ji' (allegedly the appellant). The appellant denied any connection to the documents and stated that he had resigned from the Samiti in 2001. The CIT(A) found that the AO had not established a clear link between the appellant and the documents, nor provided the appellant an opportunity to cross-examine the individuals from whose premises the documents were seized. The Tribunal concurred, emphasizing the lack of direct evidence and the appellant's consistent denial of involvement.Conclusion:The Tribunal upheld the CIT(A)'s decision to delete the additions on merits due to insufficient evidence and procedural lapses. The assessment was also deemed invalid as it was barred by limitation. The appeals by the Revenue were dismissed, affirming that the documents found did not substantiate the alleged undisclosed investments by the appellant.