Assessee's Appeals Granted, Additions Deleted

Shri Sanjay Kohli Versus Asstt. Commissioner of Income Tax –CC-25, Mumbai.

Shri Sanjay Kohli Versus Asstt. Commissioner of Income Tax –CC-25, Mumbai. - TMI Issues Involved:
1. Validity of additions made under Section 153A for Assessment Year (AY) 2003-04.
2. Validity of additions made for undisclosed investment in flats for AY 2007-08.
3. Validity of additions made for undisclosed investment in flats for AY 2008-09.

Detailed Analysis:

1. Validity of Additions Made Under Section 153A for AY 2003-04:
The assessee had originally filed the return of income on 25.10.2002, and the assessment was completed under Section 143(3) on 30.01.2006. As the assessment year 2003-04 was a concluded assessment as of the date of search, it would not be abated under Section 153A of the Act. The assessee received a sum of Rs. 50.00 lakhs as a gift from a Dubai National, which was already declared in the original return. The assessing officer assessed the gift as income during the Section 153A proceedings, which was confirmed by the CIT(A).

The assessee argued that no incriminating material was found during the search to suggest the gift was bogus. The assessing officer had previously accepted the gift as genuine during the original assessment, supported by letters from the donor and the assessing officer. The assessee contended that the AO was not justified in re-examining the concluded matter in the absence of incriminating material. The department had accepted the deletion of a similar addition for AY 2004-05 by the CIT(A).

The Tribunal agreed with the assessee, stating that the gift confirmation letter found during the search was not incriminating material. The AO revisited a concluded matter without new grounds emanating from the search. The Tribunal cited the decision of the Bombay High Court in the case of Murali Agro Products Ltd., supporting the view that concluded assessments should not be disturbed without incriminating material. The Tribunal set aside the CIT(A)'s order and directed the AO to delete the addition of Rs. 50.00 lakhs.

2. Validity of Additions Made for Undisclosed Investment in Flats for AY 2007-08:
During the search, it was found that the assessee had purchased two flats with unaccounted consideration of Rs. 49.09 lakhs. The assessee agreed to offer Rs. 21.00 lakhs in AY 2007-08 and Rs. 28.09 lakhs in AY 2008-09 but did not include these amounts in the returns filed under Section 153A. The AO and CIT(A) made additions based on the assessee's sworn statement.

The assessee argued that the addition was made solely on the basis of the sworn statement without corroborating evidence. The assessee retracted the statement and provided detailed reasons and evidence to show the admission was incorrect. The Tribunal noted that the assessee demonstrated reasons for reducing the agreed sale consideration with documentary evidence. The tax authorities did not rebut these evidences. The Tribunal held that the sworn statement could be rebutted with cogent evidence and set aside the CIT(A)'s order, directing the AO to delete the addition of Rs. 21.00 lakhs.

3. Validity of Additions Made for Undisclosed Investment in Flats for AY 2008-09:
For AY 2008-09, the AO made an addition of Rs. 28.09 lakhs towards undisclosed investment in Flat No.6, based on the assessee's admission during the search. The CIT(A) confirmed the addition. The assessee argued that the agreed consideration was reduced due to encumbrances and issues with the property, supported by documentary evidence.

The Tribunal found the facts and circumstances relating to Flat No.6 identical to those of Flat No.5 for AY 2007-08. The Tribunal reiterated that the sworn statement could be rebutted with evidence and noted that the tax authorities did not conduct necessary enquiries to rebut the assessee's evidence. The Tribunal set aside the CIT(A)'s order and directed the AO to delete the addition of Rs. 28.09 lakhs.

Conclusion:
In conclusion, the Tribunal allowed the appeals filed by the assessee for all three assessment years, directing the deletion of additions made under Section 153A and for undisclosed investments in flats. The Tribunal emphasized the importance of incriminating material for revisiting concluded assessments and the need for corroborating evidence when relying on sworn statements.