2019 (5) TMI 1550 - AT - Income Tax

Tribunal remits issues back to Assessing Officer for fresh consideration in tax appeal case

Smt. Jalaja Nair Versus The Asst. Commissioner of Income-tax (Inv. Circle), Central Circle-2, Trivandrum

The Tribunal remitted the issues back to the Assessing Officer for fresh consideration in all three assessment years, as the CIT(A) failed to adjudicate ... Assessment u/s. 153C - unexplained investment - HELD THAT:- As additional ground with regard to jurisdiction in framing the assessment u/s. 153C which was remitted to CIT-A by the Tribunal for fresh consideration. The CIT(A) observed that there was incriminating information obtained from the Bank statements of the assessee unraveled during the search u/s. 132 of the Act in the relevant assessment years. In view of the above facts, the CIT(A) confirmed the initiation of assessment proceedings u/s. 153C in all the assessment years. However, he has not at all adjudicated the additions made by the Assessing Officer on merits. Hence, we are inclined to remit the issue to the file of the Assessing Officer for fresh consideration in all the three assessment years as the order of the Assessing Officer was passed ex parte u/s 144 . The appeals of the assessee are partly allowed for statistical purposes. Issues Involved:1. Validity of search proceedings initiated under section 132 of the Income Tax Act.2. Jurisdiction in framing the assessment under section 153C of the Income Tax Act.3. Sustenance of additions made by the Assessing Officer on merits for the assessment years 2004-05, 2005-06, and 2007-08.Detailed Analysis:1. Validity of Search Proceedings Initiated Under Section 132:The Tribunal addressed the legal plea raised by the assessee regarding the validity of the search proceedings initiated under section 132 of the Income Tax Act. The assessee contended that the search was conducted in violation of the provisions of section 132, as there was no material or evidence seized during the search indicating undisclosed income. The Tribunal, referencing the Hon’ble Supreme Court's decision in NTPC Ltd, admitted the additional grounds raised by the assessee for adjudication. The Tribunal directed the CIT(A) to examine the search folder to determine if any incriminating material was found during the search. The CIT(A) was instructed to admit the additional grounds and adjudicate the issue as per law.2. Jurisdiction in Framing the Assessment Under Section 153C:In the second round of appeals, the CIT(A) considered the additional ground regarding jurisdiction in framing the assessment under section 153C, as remitted by the Tribunal. The CIT(A) observed that the bank statements found during the search revealed substantial cash deposits, which constituted incriminating information. Consequently, the CIT(A) confirmed the initiation of assessment proceedings under section 153C for all the relevant assessment years. During the hearing, the assessee's representative endorsed that the legal grounds regarding jurisdiction were not being pressed before the Tribunal, leading to the dismissal of these grounds for all assessment years.3. Sustenance of Additions Made by the Assessing Officer on Merits:Assessment Year 2004-05:The assessee challenged the addition of Rs. 16.50 lakhs made by the Assessing Officer. The CIT(A) had previously deleted additions of Rs. 3.50 lakhs, Rs. 2.50 lakhs, and Rs. 1 lakh based on the explanations and supporting documents provided by the assessee. However, the addition of Rs. 9 lakhs was sustained by the CIT(A) due to the assessee's inconsistent explanations and failure to establish the existence of the firm M/s. Ahamed & Company or the identity and creditworthiness of Mrs. Kalpana, from whom the assessee claimed to have borrowed the amount.Assessment Year 2005-06:The assessee contested the estimation of short-term capital gain amounting to Rs. 29,22,500/-. The Assessing Officer had enhanced the sale consideration from Rs. 19.50 lakhs to Rs. 35 lakhs and disallowed the claimed cost of improvement. The CIT(A) confirmed these findings. The assessee argued that the enhancement was contrary to the registered sale deed and that the cost of improvement should have been considered. The Tribunal noted that the CIT(A) failed to adjudicate the merits of the additions and remitted the issue back for fresh consideration.Assessment Year 2007-08:The Assessing Officer made additions of Rs. 6,03,950/- and Rs. 1,55,925/- for unexplained investments. The CIT(A) confirmed these additions. The assessee argued that the actual cost of the land was lower than estimated and that the advance of Rs. 5 lakhs for a property purchase did not materialize. The Tribunal observed that the CIT(A) did not adjudicate the merits of the additions and remitted the issue back for fresh consideration.Conclusion:The Tribunal concluded that the CIT(A) had only addressed the jurisdictional issue under section 153C and failed to adjudicate the merits of the additions made by the Assessing Officer. Consequently, the Tribunal remitted the issues back to the Assessing Officer for fresh consideration in all three assessment years. The appeals of the assessee were partly allowed for statistical purposes.Order Pronounced:The order was pronounced in the open Court on 22nd May 2019.