2023 (4) TMI 855 - AT - Income Tax

Tribunal affirms CIT(A)'s decisions on key issues; emphasizes need for corroborative evidence

A.C.I.T, Central Circle-1 (2), Ahmedabad Versus Shri Mihir Subodhbhai Shah And (Vice-Versa) Mihir Subodhbhai Shah Versus ACIT Central Circle-1 (2), Ahmedabad And (Vice-Versa)

A.C.I.T, Central Circle-1 (2), Ahmedabad Versus Shri Mihir Subodhbhai Shah And (Vice-Versa) Mihir Subodhbhai Shah Versus ACIT Central Circle-1 (2), ... Issues Involved:1. Addition during assessment under section 153A based on incriminating material.2. Addition of unaccounted receipts and payments based on loose papers and diaries.3. Unexplained credit entries in bank accounts.4. Unexplained cash based on seized material.Summary:Issue 1: Addition during assessment under section 153A based on incriminating materialThe Revenue contended that additions during assessment under section 153A should not be confined to incriminating material found during the search. The Tribunal upheld the CIT(A)'s decision, emphasizing that in the absence of incriminating material found during the search, no addition can be made for completed/unabated assessments. The Tribunal referred to the settled legal position, including the Gujarat High Court's decision in CIT vs. Saumya Construction Pvt Ltd, which states that completed assessments can only be disturbed based on incriminating material unearthed during the search.Issue 2: Addition of unaccounted receipts and payments based on loose papers and diariesThe Tribunal addressed the addition of unaccounted receipts and payments based on loose papers and diaries found during the search. The Tribunal held that such documents are considered 'dumb documents' unless corroborated by independent evidence. The Tribunal emphasized that noting or jotting on loose sheets or diaries cannot be used for making assessments unless they are corroborated with independent cogent material giving rise to undisclosed income. The Tribunal upheld the CIT(A)'s detailed analysis and findings, which were not controverted by the Revenue, and confirmed the deletion of additions based on such documents.Issue 3: Unexplained credit entries in bank accountsThe Tribunal addressed the addition of unexplained credit entries in the assessee's bank accounts. The assessee provided PAN details, confirmation letters, and bank statements of the creditors to establish the identity, genuineness, and creditworthiness of the transactions. The Tribunal held that once the assessee discharges the primary onus by providing necessary documents, the onus shifts to the Revenue to conduct further inquiries. The Tribunal upheld the CIT(A)'s decision to delete the additions, except for the amount credited from Jalaram Finvest Ltd, which was remanded for fresh adjudication.Issue 4: Unexplained cash based on seized materialThe Tribunal addressed the addition of Rs. 70,00,000/- representing unexplained cash based on seized material found on the premises of the assessee. The Tribunal noted that the AO had taken contradictory stands in the assessment order and the remand report. The Tribunal held that the seized documents were 'dumb documents' and could not be used for making assessments without corroborative material. The Tribunal also noted that the affidavit of Shri Ashitbhai Vora, denying any financial involvement of the assessee, was not controverted by the AO. The Tribunal upheld the CIT(A)'s decision to delete the addition.Conclusion:The Tribunal dismissed the appeals of the Revenue and the assessee for various assessment years, except for the appeal of the assessee for A.Y. 2014-15, which was partly allowed for statistical purposes. The Tribunal upheld the CIT(A)'s decisions on the issues of additions based on incriminating material, unaccounted receipts and payments, unexplained credit entries, and unexplained cash.