2013 (4) TMI 65 - AT - Income Tax

Appeal on Sec. 153C Reopening & Assessments: ITAT Decision on Loans & Interest

Shri Paresh M. Patel Versus Deputy Commissioner of Income Tax

The appeal before the Appellate Tribunal ITAT Ahmedabad involved issues such as the invocation of Sec. 153C, reopening of assessments without ... Cash credit - addition u/s 68 - addition on account of loan received - Held that:- Before the CIT (A), in respect of Kokilaben Patel it was submitted that she is a non resident and the amount was given by her from account payee cheque and the copy of account of her bank account was also submitted and thus the assessee had discharged the initial onus cast upon. These facts could not be disputed by Revenue by bringing any contrary material on record. In the case of Alkaben Vasudev, the amount of ₹ 2,50,000/- was received by cheque and the copy of the Bank account of Alkaben along with the confirmation was also filed. As the assessee has discharged the initial onus cast upon it. The Revenue could not controvert the submissions of the assessee. CIT (A) while confirming the addition in the case of Alkaben Vasudev Patel has mainly relied on her bank statement. It is a settled law that the assessee can only be asked to prove source of credits in its books of accounts and not the source of the source of deposit. Further there is nothing on record to prove that summons was issued to Alkaben by the Revenue or explanation was sought from her with respect to the cash deposits. Another reason for confirming the addition of loan from Alkaben was that the signature on the copy of confirmation was not authenticated. Nothing has been brought on record by Revenue the provisions which requires for authentication of the signature and the authority who was required to authenticate the signature of the depositor. Thus the addition made on account of cash credit needs to be deleted. In favour of assessee Issues:1. Invocation of provisions of Sec. 153C r.w.s. 153A2. Reopening of assessments without incriminating material3. Justification of assessment under Sec. 153C r.w.s. 153A4. Scrutiny under Sec. 143(3) vs. Sec. 153C r.w.s. 153A5. Addition of loans from Alkaben & Kokilaben6. Levy of interest u/s. 234A & 234BIssue 1: Invocation of provisions of Sec. 153C r.w.s. 153AThe appeal was against the order of Ld. CIT (A) for the assessment year 2003-04 invoking Sec. 153C. A search operation under Sec. 132(1) revealed transactions related to the assessee's family members. Proceedings under Sec. 153C read with sec.153A were initiated, leading to an assessment of income at Rs. 20,19,229/-. The CIT (A) partly allowed the appeal, leading to further appeal by the assessee.Issue 2: Reopening of assessments without incriminating materialThe appellant contended that no incriminating material was found for the six assessment years preceding the search, questioning the justification for invoking Sec. 153C/153A. The CIT (A) partly allowed the appeal, leading to the assessee's further appeal challenging the reopening of assessments without any undisclosed assets or incriminating material.Issue 3: Justification of assessment under Sec. 153C r.w.s. 153AThe appellant argued that the A.O. was not justified in embarking on assessment under Sec. 153C r.w.s. 153A, emphasizing the lack of incriminating material or undisclosed assets for the relevant assessment years. The CIT (A) confirmed additions, leading to the appellant's appeal before the tribunal.Issue 4: Scrutiny under Sec. 143(3) vs. Sec. 153C r.w.s. 153AThe appellant contested the A.O.'s approach in assessing income under Sec. 153C r.w.s. 153A instead of Sec. 143(3), highlighting procedural discrepancies. The CIT (A) upheld certain additions, prompting the appellant to challenge the assessment methodology before the tribunal.Issue 5: Addition of loans from Alkaben & KokilabenThe A.O. added Rs. 10,10,925/- as unexplained cash credit, leading to an appeal by the assessee. The CIT (A) restricted the addition to Rs. 4 lakhs, citing lack of evidence to prove the creditworthiness and genuineness of the transactions. The appellant further contested the addition before the tribunal, providing details and explanations regarding the loans.Issue 6: Levy of interest u/s. 234A & 234BThe appellant disputed the levy of interest under Sec. 234A & 234B, arguing that it was not a fit case for such imposition. The tribunal allowed the appeal, directing the A.O. to delete the addition made on account of cash credit. Other grounds not pressed were dismissed as consequential in nature.This detailed analysis covers the various issues involved in the legal judgment before the Appellate Tribunal ITAT Ahmedabad, providing insights into the arguments, decisions, and appeals made by the parties involved.