2015 (5) TMI 676 - AT - Income Tax

Assessee's Appeals Partly Allowed, Revenue's Appeal Dismissed: Tribunal Directs Deletion of Additions

Shri Viren Ahuja And Other Versus The DCIT, CC-47, Mumbai

The appeals filed by the assessee were partly allowed, and the appeal filed by the Revenue was dismissed. The Tribunal directed the AO to delete the ... Addition u/s. 68 - Held that:- There is no dispute that the assessee has submitted Memorandum/Articles of Association of Companies, Board Resolution of the companies, Loan confirmations, Balance sheet, PAN details & Copies of I.T. returns.A perusal of these documents go to establish that the assessee has prima facie discharged the onus cast upon him by virtue of provisions of Sec. 68 of the Act.The AO drew support from the observations made in other group cases but that cannot be the sole basis for making the additions in the case in hand. We find that the transactions have been made by cheque. There is no direct evidence brought on record in the case of the assessee to show that the transaction is not genuine as no verification has been made in the case of the assessee from the related banks. We also find that all the lender companies are taxpayers and their PAN details are on record alongwith the copies of their income tax return. There is no evidence to show that the AO has made enquiries from the lender companies. Merely because the lender companies were found to be name lenders in other group companies would not empower the AO to make additions u/s. 68 of the Act in the hands of the present assessee. Thus keeping in mind the ratio laid down in the case of CIT Vs Orissa Corporation Pvt. Ltd. [1986 (3) TMI 3 - SUPREME Court], we have no hesitation to hold that the assessee has successfully discharged the onus cast upon him by virtue of Sec. 68 of the Act. No addition is therefore called for. We set aside the findings of the Ld. CIT(A) and direct the AO to delete the addition made u/s. 68 of the Act. - Decided in favour of assesse. Addition u/s. 69 - Held that:- AO has simply disbelieved the explanation of the assessee but at the same time has not brought any demonstrative material evidence on record to prove that there is an unexplained investment made by the assessee. The AO did not even care to verify from the said builder. The additions have been made purely on the strength of a piece of paper without any corroborative/demonstrative evidence therefore in our considered view, such additions cannot be sustained - Decided in favour of assesse. Addition holding that the transactions pertain to A.Y. 2007-08 - Held that:- We failed to persuade ourselves to give any logical conclusion/finding in respect of these documents on the basis of which the AO has made the addition. There is not even an iota of evidence to show that the AO has made an enquiry from the said Shri Vikramjee Agarwal. Merely because some figures were found to be written in some document, The AO cannot extrapolate 50 and interpret 50 as 50,00,000, 575 as 575 lakhs without any corroborative/demonstrative evidence. Without there being any corroborative evidence additions made merely on the basis of some illogical and irrelevant entry/jotting on a piece of paper cannot justify the actions of the AO and of the Ld. CIT(A). We, therefore, do not find any merit in the additions made by the AO on the basis of these documents. We direct the AO to delete the entire additions made on the basis of these two documents - Decided in favour of assesse. Addition made u/s. 68 - Held that:- The AO has simply mentioned that ₹ 5 crores in the name of Shri P. Anandam is not found reflected in the books. However, in respect of other entries relating to ₹ 16.75 crores, the AO has not pointed out in whose books these amounts have been found to be recorded. On the one hand, the AO has considered ₹ 5 crores as income of the assessee and on the other hand ₹ 4.85 crores found to be spent on the bungalow, as observed by the AO was not treated as unexplained investment. The AO cannot take two different views on the same set of documents. It is clear that the AO has made additions purely on the basis of surmises and conjunctures. We, therefore cannot sustain such additions made purely on assumption without there being any corroborative evidence brought on record. We set aside the finding of the Ld. CIT(A) and direct the AO to delete the addition of ₹ 5 crores - Decided in favour of assesse. Issues Involved:1. Jurisdiction of the Assessing Officer (AO) for making assessments under Section 143(3) read with Section 153A of the Income Tax Act.2. Addition of unsecured credits under Section 68 of the Income Tax Act.3. Addition of unexplained investment under Section 69 of the Income Tax Act.4. Levy of interest under Sections 234A, 234B, and 234C of the Income Tax Act.5. Treatment of certain transactions and documents found during the search.Issue-wise Detailed Analysis:1. Jurisdiction of the Assessing Officer (AO) for making assessments under Section 143(3) read with Section 153A of the Income Tax Act:- The assessee raised multiple grounds challenging the jurisdiction of the AO for making assessments under Section 143(3) read with Section 153A of the Income Tax Act. However, the assessee's counsel stated that these grounds were not being pressed. Consequently, these grounds were dismissed as not pressed.2. Addition of unsecured credits under Section 68 of the Income Tax Act:- For the assessment year 2006-07, the AO made an addition of Rs. 2,70,88,882 under Section 68, observing that the assessee received unsecured credits from various parties. The AO concluded these were bogus companies based on the Investigation Wing's findings. The CIT(A) upheld the AO's addition, stating the assessee failed to discharge the onus of proving the genuineness of the transactions.- Upon appeal, the Tribunal found that the assessee had submitted sufficient documentation, including Memorandum/Articles of Association, Board Resolutions, loan confirmations, balance sheets, PAN details, and copies of IT returns. The Tribunal held that the AO failed to provide direct evidence against the assessee and did not conduct proper verification from the related banks or lender companies. Therefore, the Tribunal directed the AO to delete the addition made under Section 68.- For the assessment year 2007-08, the Tribunal followed its findings from the previous year and directed the AO to delete the addition of Rs. 1.50 crores made under Section 68.3. Addition of unexplained investment under Section 69 of the Income Tax Act:- For the assessment year 2007-08, the AO added Rs. 25 lakhs under Section 69 based on a document found during the search, which the AO interpreted as evidence of unexplained investment. The CIT(A) upheld this addition.- The Tribunal, however, found that the document only contained some jottings and did not provide sufficient evidence to justify the addition. The Tribunal noted that the AO did not verify the details with the builder and had no corroborative evidence. Consequently, the Tribunal directed the AO to delete the addition of Rs. 25 lakhs.- For the assessment year 2008-09, the AO made an addition of Rs. 5 crores under Section 68 based on a loose paper found during the search. The Tribunal found that the paper did not contain the assessee's name and the AO's addition was based on assumptions without corroborative evidence. Therefore, the Tribunal directed the AO to delete the addition of Rs. 5 crores.4. Levy of interest under Sections 234A, 234B, and 234C of the Income Tax Act:- The Tribunal noted that the levy of interest under Sections 234A, 234B, and 234C is mandatory though consequential. The AO was directed to charge interest as per the provisions of the law.5. Treatment of certain transactions and documents found during the search:- For the assessment year 2007-08, the AO added Rs. 5.90 crores based on certain documents found during the search, which the AO interpreted as payments made by the assessee. The CIT(A) deleted the addition for 2007-08 but considered it for 2008-09 and 2009-10.- The Tribunal observed that the documents did not provide clear evidence to support the AO's interpretation. The Tribunal found no merit in making additions based on these documents without corroborative evidence and directed the AO to delete the additions for both assessment years 2007-08 and 2008-09.Conclusion:- The appeals filed by the assessee were partly allowed, and the appeal filed by the Revenue was dismissed. The Tribunal directed the AO to delete the additions made under Sections 68 and 69 and to levy interest as per the provisions of the law. The Tribunal emphasized the need for corroborative evidence before making additions based on documents found during searches.