2021 (9) TMI 1223 - AT - Income Tax

Tax Appeals: Mixed Outcome - Deletions Allowed for Some Years, Additions Upheld for Others

The appeals for Assessment Years 2003-04 and 2004-05 were allowed, leading to the deletion of the additions made by the Assessing Officer. However, the ... Assessment u/s 153A - unexplained investment - HELD THAT:- As on the date of search, assessment for assessment year 2003 – 04 was not pending. Such assessment could have been disturbed only based on incriminating material found during the course of search. However, the learned assessing officer has made addition based on his statement recorded during the course of assessment proceedings and there is no reference of any incriminating material found during the course of search. Therefore, the issue is squarely covered in favour of the assessee by the decision of Kabul Chawla 2015 (9) TMI 80 - DELHI HIGH COURT] - the fact also shows that the assessee has not purchased this vehicle during the impugned assessment year. Therefore, we reverse the order of the lower authorities and direct the ld AO to delete the addition - Decided in favour of assessee. Addition on purchase of car - HELD THAT:- As addition has been made in the hands of the assessee based on statement recorded during the course of assessment proceedings. There is no reference of any incriminating material found during the course of search - even otherwise the assessee has shown that the Maruti Zen Car was purchased on 01.03.2005 and therefore, could not have been added in the hands of the assessee even otherwise for Assessment Year 2004-05. Thus no addition can be made in the case of concluded assessment pursuant to search in absence of any incriminating material. No incriminating material is shown to us by the learned departmental representative and not referred by the learned assessing officer in the assessment order. Addition on account of purchase of one Maruti car - HELD THAT:- As in the present case the learned assessing officer was having a power to make an addition based on examination of the return of income by the assessee. In the present case, the learned AO recorded the statement of the assessee on 11/12/2008 by issue of summons u/s 131 of the act - AO was having almost seven vehicles out of which the assessee could not give the adequate evidence with respect to the purchase of Maruti 800 car - AO made the addition of the above sum estimating the cost of the vehicle of ₹ 185,000. As before the lower authorities the assessee could not furnish any explanation with respect to the source of the fund available for purchasing the above car, no evidences are also furnished before us. Even out of the declared income in the return of an assessee as well as his wife, it could not be explained that the car was purchased from the declared source of income of the assessee. It was merely an argument made by the assessee, which is not supported by any documentary evidence - Decided against assessee. Addition of foreign tour of the minor son of the assessee - HELD THAT:- In this case, the assessee was issued notice on 3/11/2008 for giving the complete details. Further, during the course of search, the assessee was examined and he disclosed in a statement u/s 132 of the income tax act on 12/12/2016 that he has invested approximately ₹ 15 lakhs on complete renovation of the house including furniture and fixtures. Further, the statement was also corroborated when it was taken during the course of assessment proceedings on 11/12/2008. The assessee once again confirmed the same. There is no evidence of any retraction made by the assessee. Merely because the assessee has not offered the above income in the return of income, it cannot be stated that the assessee has retracted the above statement. No evidences produced before us that the statement given by the assessee during the course of search as well as during the course of assessment proceedings was because of any threat/coercion. Therefore it can be merely an argument for deletion of the addition which needs to be brushed aside - We do not find any infirmity in the orders of the lower authorities. Issues Involved:1. Addition of Rs. 1,85,000/- for the purchase of a Maruti 800 car in Assessment Year 2003-04.2. Addition of Rs. 16,25,000/- for the purchase of multiple vehicles in Assessment Year 2004-05.3. Addition of Rs. 1,85,000/- for the purchase of a Maruti 800 car in Assessment Year 2005-06.4. Addition of Rs. 15,00,000/- for renovation expenses and Rs. 68,500/- for a foreign tour in Assessment Year 2007-08.Issue-wise Detailed Analysis:Assessment Year 2003-04:1. Addition of Rs. 1,85,000/- for Maruti 800 Car:- The assessee's return of income filed on 17/02/2004 declared Rs. 7,02,000/- with no undisclosed income.- During the search on 12/12/2006, no incriminating material was found.- The Assessing Officer (AO) made an addition based on a statement recorded on 11/12/2018, presuming the ownership of a Maruti 800 car.- The Tribunal noted that the car was purchased on 24/06/2005 and not during the assessment year 2003-04.- The Tribunal held that the addition was not based on any incriminating material found during the search and thus directed the deletion of Rs. 1,85,000/- following the Delhi High Court's decision in CIT vs. Kabul Chawla.Assessment Year 2004-05:2. Addition of Rs. 16,25,000/- for Multiple Vehicles:- The return of income filed on 22/03/2005 declared Rs. 6,50,000/-.- The AO made an addition based on the statement recorded during the assessment proceedings, not on any incriminating material found during the search.- The Tribunal found that the Maruti Zen car was purchased on 01/03/2005, and no incriminating material was found during the search.- Following the decision in CIT vs. Kabul Chawla, the Tribunal directed the deletion of the addition.Assessment Year 2005-06:3. Addition of Rs. 1,85,000/- for Maruti 800 Car:- The return of income filed on 28/02/2006 declared Rs. 6,90,000/-.- The AO made an addition based on the statement recorded on 11/12/2008, without any incriminating material found during the search.- The Tribunal noted that the assessment for 2005-06 was not concluded and could be disturbed based on inquiries made during the assessment.- The Tribunal found no infirmity in the AO's addition as the assessee could not provide evidence for the source of funds used for purchasing the car.- The appeal for this assessment year was dismissed.Assessment Year 2007-08:4. Addition of Rs. 15,00,000/- for Renovation Expenses and Rs. 68,500/- for Foreign Tour:- The assessee filed a return of income on 28/11/2008 declaring Rs. 96,000/-.- The AO made an addition based on the assessee's statement during the search, where he admitted to spending Rs. 15,00,000/- on renovation.- The Tribunal found no evidence of retraction of the statement and upheld the addition as there was no corroborative evidence of coercion.- The Tribunal also upheld the addition of Rs. 50,000/- for the foreign tour, reducing the original addition of Rs. 68,500/-.- The appeal for this assessment year was dismissed.Conclusion:- The appeals for Assessment Years 2003-04 and 2004-05 were allowed, resulting in the deletion of the additions.- The appeals for Assessment Years 2005-06 and 2007-08 were dismissed, upholding the additions made by the AO.