2020 (6) TMI 156 - AT - Income Tax

Tax Appeals Partially Allowed; Remanded for Fresh Consideration. Assessee's Claims Dismissed. Assessment Years Dismissed as Infructuous.

The Tribunal partly allowed the appeals, remanding certain issues back to the AO and CIT(A) for fresh consideration, while dismissing other grounds where ... Assessment u/s 153A - bank account unearthed during the course of search and seizure operation - HELD THAT:- We observe that in the assessment order the AO has mentioned that there was two bank account unearthed during the course of search and seizure operation which are supported by the statements recorded during the course of search and seizure procedings that there was two bank accounts have been maintained in the name of the assessee in Andhra Bank and State Bank of India. In the impugned assessment year, the assessee has deposited cash in both the bank accounts and has utilized for certain payments, which are evident from the cash-flow statements filed by the assessee along with date-wise cash book. - Decided against assessee. Addition of opening cash balance - HELD THAT:- On perusal of the assessment order, we find that the AO has considered the income for the assessment year 2009-2010 and has arrived at opening balance of ₹ 6,62,000/-. Further on perusal of the CIT(A)’s order, the assessee has filed return of income for the assessment year 2008-2009 also. This return of income has been accepted by the department but the CIT(A) has not given the effect of net cash accruals for the assessment year 2008-2009 for considering the return of income for the A.Y.2008-2009 and cash accruals during the assessment year 2008-2009, the assessee has not produced any balance sheet in the impugned assessment year as well as preceding assessment years. The assessee is directed to produce correct net cash accruals for the assessment year 2008-2009 only to which the assessee will get benefit from the additions made by the AO for doubting the opening cash shown by her. Further we noted from page No.16 of the paper book, the assessee has not shown the details of bank accounts which will effect the cash balance of the assessee. Accordingly, we restore the issue to the file of CIT(A) as per our observations made hereinabove. This ground of appeal of the assessee is allowed for statistical purposes. Sale of shares from hotel Sai International Private Limited - AO has made addition for want of supporting documents to substantiate the claim and the assessee was also unable to substantiate the same before the CIT(A) with supporting evidence - HELD THAT:- We observe from the paper book filed by the assessee before us containing page No.1 to 77, Annexure-6&7 which were not filed before the authorities below and Annexure-8 relates to the copy of the sale certificates regarding transfer of shares of Hotel Sai International Private Limited, which was also not produced before the authorities below. In the interest of justice, this issue is also sent back to the file of AO for proper adjudication of the case after affording reasonable opportunity of hearing to the assessee. The assessee is also directed to cooperate with the AO for early disposal of the case. This ground of appeal of the assessee is allowed for statistical purposes. Entire deposits into the bank account resulting into difference added to the total income of the assessee - HELD THAT:- The assessee has produced date-wise cash flow statement and related ledger accounts to substantiate the credit which has not been denied by the authorities below. If all the entries of bank statement are entered into the bank accounts then why the assessee could not explain the difference therefore, in the interest of justice one more opportunity should be given to the assessee to substantiate her claim before the AO. Accordingly, this matter is sent back to the file of AO to decide the same afresh after providing reasonable opportunity of hearing to the assessee. The assessee is also directed to substantiate her claim with sufficient evidence in respect of difference of accounts.This ground of appeal of the assessee is allowed for statistical purposes. Addition made on account of undisclosed investment in gold jewellery - HELD THAT:- CIT(A) held that the source of 100 gms. of gold jewellery belonging to the sister-in-law of the assessee, who resides at Rayagada is also treated as explained on the strength of her affidavit and for the reasons that she does not have locker at a place where she resides. Accordingly, the CIT(A) granted relief 1650 grams of gold and jewellery to the assessee. Further, we noted that the AO has also clearly mentioned in the assessment order that 682 grams of gold and jewellery has been explained by the assessee before him. Once the revenue authorities accept the source explained by the assessee, in such case there is no further room for treating the same as undisclosed investment of the assessee. Now, the remaining 85.29 grams of gold and jewellery has not been explained by the assessee. Therefore, we confirm 85.29 grams of gold and jewellery out of 767.29 grams upheld by the CIT(A) and direct the AO to delete the addition on the exact value of 682 grams gold and jewellery. Issues Involved:1. Jurisdiction and authority of the assessment orders under Section 153A read with Section 143(3) of the Income Tax Act.2. Validity of additions made in the absence of incriminating material found during the search.3. Explanation and acceptance of seized documents and their impact on completed assessments.4. Acceptance of additional grounds of appeal.5. Explanation and substantiation of opening cash balance.6. Explanation of bank deposits and unexplained investments.7. Treatment of capital gains and unexplained gold ornaments and jewelry.Issue-wise Detailed Analysis:1. Jurisdiction and Authority of Assessment Orders:The assessee challenged the jurisdiction and authority of the assessment orders passed under Section 153A read with Section 143(3) of the Act, arguing that they were without jurisdiction and not sustainable in the eye of law. However, the Tribunal dismissed these legal grounds, stating that the AO has the power to assess and reassess the total income for six years preceding the year of search, even if no incriminating material is found.2. Validity of Additions in Absence of Incriminating Material:The assessee contended that no incriminating material was found during the search, and thus, the completed assessments should not have been disturbed. The Tribunal referred to the case of Kabul Chawla and other relevant judgments, concluding that assessments can only be interfered with based on incriminating material found during the search. However, the Tribunal found that the AO had unearthed two undisclosed bank accounts and made additions based on unexplained credits, which constituted incriminating material. Thus, the legal grounds were dismissed.3. Explanation and Acceptance of Seized Documents:The assessee argued that seized documents were duly explained and accepted by the AO, and thus, the assessments should not have been disturbed. The Tribunal observed that the AO had made additions based on discrepancies in the bank accounts and unexplained cash deposits, which were not satisfactorily explained by the assessee. Therefore, the Tribunal upheld the additions made by the AO.4. Acceptance of Additional Grounds of Appeal:The assessee filed an application for acceptance of additional grounds of appeal, which were taken on record and heard on merits. The Tribunal allowed the consideration of these additional grounds.5. Explanation and Substantiation of Opening Cash Balance:The AO added Rs. 6,62,000 to the total income of the assessee as unexplained opening cash in hand, as the assessee failed to substantiate the opening cash balance with evidence. The Tribunal restored the issue to the file of the CIT(A) for reconsideration, directing the assessee to produce correct net cash accruals for the relevant years.6. Explanation of Bank Deposits and Unexplained Investments:The AO made additions based on unexplained deposits in the bank accounts and unexplained investments in land and stamp duty. The Tribunal restored these issues to the file of the AO for fresh adjudication, directing the assessee to substantiate her claims with sufficient evidence.7. Treatment of Capital Gains and Unexplained Gold Ornaments and Jewelry:The AO made additions on account of unexplained investment in gold jewelry and capital gains. The Tribunal observed that the AO had accepted part of the jewelry as explained but made additions for the remaining unexplained jewelry. The Tribunal directed the AO to delete the addition for the explained jewelry and upheld the addition for the remaining unexplained jewelry. Regarding capital gains, the Tribunal found that the CIT(A) had already granted relief to the assessee, making the ground infructuous.Conclusion:The Tribunal partly allowed the appeals for statistical purposes, remanding certain issues back to the AO and CIT(A) for fresh consideration, while dismissing other grounds where the assessee failed to substantiate her claims. The appeals for some assessment years were dismissed as they had become infructuous.