Tribunal partially allows appeal, orders fresh adjudication on Section 68 addition, upholds Sections 69B & undisclosed income

Smt. Aruna Sankhla Versus The DCIT  Central Circle – 1, Jaipur 

Smt. Aruna Sankhla Versus The DCIT  Central Circle – 1, Jaipur  - TMI Issues Involved:
1. Legality of search proceedings under Section 132 and subsequent assessment under Section 153A.
2. Addition of Rs. 13,00,000 under Section 69B of the Income Tax Act, 1961.
3. Addition of Rs. 34,500 as undisclosed income from other sources.
4. Addition of Rs. 1,38,00,000 under Section 68 of the Income Tax Act, 1961.

Detailed Analysis:

1. Legality of Search Proceedings and Assessment under Section 153A:
The assessee did not press this ground during the hearing, and hence, it was dismissed as not pressed.

2. Addition of Rs. 13,00,000 under Section 69B and Rs. 34,500 as Undisclosed Income:
- The Assessing Officer (AO) made the addition based on undisclosed investment through finance broker Sh. Manish Tambi and the interest earned thereon.
- The AO relied on incriminating documents seized during the search operation on Sh. Manish Tambi, which included names of various individuals, including the assessee.
- The AO's findings were based on statements and documents that suggested undisclosed investments and interest earned.
- The assessee argued that transactions with Sh. Manish Tambi were through banking channels and no documents were found during the search at the assessee's premises.
- The assessee also contended that the seized documents were not made available for cross-examination and the AO's reliance on these documents was misplaced.
- The Tribunal referred to previous judgments, including those involving Sh. Manish Tambi, where it was held that only commission income should be taxed and not the transactions recorded in seized documents.
- The Tribunal upheld the AO's addition, emphasizing that the assessee did not effectively counter the AO's findings and circumstantial evidence.

3. Addition of Rs. 1,38,00,000 under Section 68:
- The AO treated the cash receipts of Rs. 1.38 crores as unexplained, based on agreements found during the search.
- The AO's findings included discrepancies in the existence and addresses of the companies involved, non-existence of directors at the time of the transaction, and insufficient cash balances in the companies.
- The assessee argued that there was no prohibition on receiving cash advances, the transactions were recorded in the cash book, and the agreements were notarized.
- The assessee also contended that the companies were incorporated under the Companies Act and any change in address could be verified from the Registrar of Companies.
- The Tribunal noted that the AO did not provide the assessee with the ACB report or an opportunity to cross-examine the findings, violating principles of natural justice.
- The Tribunal restored the issue to the AO for fresh adjudication, directing that the ACB report be made available to the assessee for contesting the case.

Conclusion:
- The appeal was partly allowed for statistical purposes, with the Tribunal directing a fresh adjudication on the addition of Rs. 1.38 crores under Section 68, while upholding the additions under Sections 69B and undisclosed income from other sources.