2014 (4) TMI 630 - AT - Income Tax

ITAT upholds CIT(A)'s decision on unexplained balance addition under section 153A

Dy. Commissioner of Income-tax Versus Sri Grosu Murali Krishna, Nellore.

The ITAT upheld the CIT(A)'s decision to delete the addition of unexplained opening balance, emphasizing the Assessing Officer's inability to make such ... Addition made towards unexplained opening balance – Held that:- The decision in Smt. Surapu Indira Devi Vs. ACIT [2014 (3) TMI 679 - ITAT HYDERABAD] followed – The finding given by the CIT(A) is justified as there is no seized material to disturb the opening capital balance, which was accepted by the Department in the original return of income filed – the order fo the CIT(A) upheld – Decided against Revenue. Condonation of delay – Delay of 109 days for filing cross objection – Held that:- Assessee submitted that once there is no warrant in the hands of the cross objector, the assessment made de hors of materials is bad in law and should have been annulled - The reasons advanced by the assessee are not acceptable – thus, the petition for condonation of delay in filing the C.O. by 109 days is rejected and the C.O. is unadmitted – Decided against Assessee. Issues:1. Addition of unexplained opening balance by the Assessing Officer.2. Validity of the assessment under section 153A based on search material.3. Delay in filing cross objection by the assessee.Issue 1: Addition of Unexplained Opening BalanceThe Revenue appealed against the CIT(A)'s order allowing the assessee's appeal regarding the addition made towards the unexplained opening balance for the assessment year 2002-03. The Assessing Officer added the amount to the income returned as the assessee failed to provide evidence for the opening capital balance. However, the CIT(A) deleted this addition stating that there was no seized material indicating income suppression, and the opening balance was accepted by the Department during the original return filing. The ITAT upheld the CIT(A)'s decision, emphasizing that the Assessing Officer cannot disturb the opening capital balance without seized material, as confirmed in previous ITAT decisions. The ITAT dismissed the Revenue's appeal, affirming the deletion of the addition.Issue 2: Validity of Assessment under Section 153AThe assessee raised a cross objection challenging the assessment under section 153A, contending that the search was conducted in the cross-objector's father's case, not directly in the cross-objector's case. The cross objection was filed with a delay of 109 days, citing reasons for the delay. However, the ITAT rejected the condonation of the delay in filing the cross objection, deeming it unadmitted. Consequently, the ITAT dismissed the cross objection without considering its merits, as the delay was not condoned. The assessment under section 153A was upheld, and the cross objection was dismissed.Issue 3: Delay in Filing Cross ObjectionThe delay in filing the cross objection by the assessee was not condoned by the ITAT, leading to the dismissal of the cross objection without consideration of its merits. The reasons provided by the assessee for the delay were deemed unacceptable, resulting in the rejection of the condonation petition. As a result, the ITAT did not adjudicate on the grounds raised in the cross objection due to its unadmitted status. The appeal of the Revenue and the cross objection by the assessee were ultimately dismissed by the ITAT.This summary provides a detailed analysis of the legal judgment, addressing each issue involved comprehensively while maintaining the key legal terminology and significant details from the original text.