2020 (8) TMI 851 - AT - Income Tax

Assessing Officer's additions invalidated, lack of evidence, loans issue remanded, Tribunal partially allows appeals.

The Tribunal held that additions made by the Assessing Officer without incriminating material in unabated assessments were invalid. Additions based on low ... Assessment u/s 153A - whether in the case of unabated assessments? - additions made by the AO in the absence of any incriminating material or seized documents are valid or not? - HELD THAT:- Unabated assessment and completed assessment cannot be disturbed dehors the incriminating material while making the assessment u/s 153 A of the Act. Respectfully following the ratio laid down MEETA GUTGUTIA PROP. M/S. FERNS ‘N’ PETALS [2017 (5) TMI 1224 - DELHI HIGH COURT] and KABUL CHAWLA [2015 (9) TMI 80 - DELHI HIGH COURT] we hereby hold that the assessments completed for the unabated years cannot be held to be valid in the absence of any seized material. Hence, the additions made for the assessment years 2009 - 10 to 2013-14 are liable to be deleted. Addition on account of salary of drivers, expenditure on festivals, petrol- diesel expenses etc. - AO has made this addition on estimate basis without bringing any cogent material on record - HELD THAT:- We are of the firm opinion that the addition on account of low withdrawals cannot be made in the hands of the assessee as the revenue has not brought anything on record regarding incurring of such expenses. We note that no evidence was brought on record by the Revenue which may prove that the assessee has incurred expenses on the household drawing much more than what has been shown by her family members. The household drawing has merely been estimated by the AO without pointing out any specific expenditure being incurred by the assessee. We have gone through the provisions of section 69C of the Income Tax Act and we note that there must be evidence on record which may prove that the assessee had incurred expenses much more than what has been shown by the family members. It is for the revenue to prove that the expenses have indeed been incurred and then the onus shifts to the assessee to prove that the assessee has enough sources to incur such expenses or to prove that such expenses have not been incurred. Our aforesaid view is duly supported by the decision of the Hon' ble Supreme Court in the case of CIT Vs. Daulat Ram Rawatmall [1972 (9) TMI 9 - SUPREME COURT]. Hence, we hereby delete the addition made on account of household withdrawals. Issues Involved:1. Validity of additions in the absence of incriminating material in unabated assessments.2. Validity of additions on account of low household withdrawals.3. Validity of additions related to investments in shares and loans.Issue-wise Detailed Analysis:1. Validity of Additions in the Absence of Incriminating Material in Unabated Assessments:The primary issue is whether additions made by the Assessing Officer (AO) in the absence of any incriminating material or seized documents are valid in the case of unabated assessments. The Tribunal examined various case laws, including the Delhi High Court's decision in Pr. CIT Vs. Meeta Gut Gutia and the Supreme Court's affirmation of the decision in Pr. Commissioner of Income Tax v. Kurele Paper Mills P. Ltd., which held that completed assessments can only be disturbed based on incriminating material found during the search. Consequently, it was held that the assessments for the years 2009-10 to 2013-14 could not be held valid in the absence of any seized material, and the additions for these years were deleted.2. Validity of Additions on Account of Low Household Withdrawals:For the assessment years 2014-15 and 2015-16, the AO made additions on account of low household withdrawals. The Tribunal found that these additions were made on an estimated basis without any cogent material or evidence. The Tribunal emphasized that the revenue must provide evidence that the assessee incurred expenses higher than reported. Following the Supreme Court's decision in CIT Vs. Daulat Ram Rawatmall, the Tribunal held that the addition on account of low household withdrawals could not be sustained, and these additions were deleted for the relevant assessment years.3. Validity of Additions Related to Investments in Shares and Loans:For the assessment years 2014-15 and 2015-16, the Tribunal also addressed the issue of loans and investments. In the case of loans from Fair Plan Agency (FPA), the Tribunal found that the assessee had provided sufficient documentation to prove the identity, genuineness, and creditworthiness of the lender. The revenue failed to bring any evidence to the contrary. Thus, the Tribunal directed the deletion of the additions made by the AO on account of loans from FPA.For the assessment year 2015-16, the Tribunal also addressed the issue of unsecured loans amounting to Rs. 5,77,929/-. The Tribunal noted that the assessee had provided confirmations from the loan parties, who were assessed by the same AO. The Tribunal remanded the matter back to the CIT(A) for the limited purpose of admitting additional evidence and passing a speaking order after due verification.Conclusion:The Tribunal concluded that the assessments for the unabated years could not be held valid in the absence of any seized material. Additions on account of low household withdrawals were deleted due to the lack of evidence. The Tribunal also directed the deletion of additions related to loans from FPA and remanded the issue of unsecured loans back to the CIT(A) for further verification. The appeals of the assessee were partly allowed for some years and fully allowed for others. The order was pronounced in the open court on 03/08/2020.