2023 (7) TMI 976 - AT - Income Tax

Tribunal overturns undisclosed income addition, confirms interest charges.

The Tribunal allowed the appeal, vacating the addition of Rs. 15,65,000/- as undisclosed income. It upheld the legality of proceedings under Section 147 ... Undisclosed income (seized from the assessee) - No source of cash explained as seized - HELD THAT:- In the appeal before the ld. CIT(A), addition was confirmed observing that the aforesaid amount was released in favour of assessee and the same was deposited by the assessee in his bank account. But as argued that the ld. CIT(A) has not appreciated that the fact that the said some is repaid back by RTGS. It is not disputed by the revenue before us that pursuant to the seizure of this cash, case of Shri Ram Karan Kulhari and case of Shri Babulal Jat for an amouns respectively added. The bench also noted that the amount seized from the party are paid to the owner of the money so seized and since the fact that the said some has already been taxed in the hands of Shri Baulal Jat and Shri Ram Karan Kulhari we see no reason to confirm the said addition and therefore, the addition made by the ld. AO is vacated in the hands of the assessee.Decided in favour of assessee. Issues Involved:1. Legality of action under Section 147 read with Section 148.2. Addition of Rs. 15,65,000/- as undisclosed income.3. Charging of interest under Sections 234A, 234B, and 234C.Summary:1. Legality of Action under Section 147 read with Section 148:The appeal questioned the validity of proceedings initiated under Section 147 of the Income Tax Act for the assessment year 2007-08, contending that the action was 'bad in law without jurisdiction and being void ab-initio.' The Tribunal noted that proper reasons were recorded, and necessary approvals were obtained before issuing the notice under Section 148, which was duly served. The assessee did not attend or file any return of income in response to the notices issued under Sections 148 and 142(1). The Tribunal upheld the legality of the action taken under these sections.2. Addition of Rs. 15,65,000/- as Undisclosed Income:The assessee challenged the addition of Rs. 15,65,000/- made on account of undisclosed income, arguing that the amount belonged to his brother-in-law, Shri Babu Lal Jat, and another individual, Shri Ramkaran Kulhari. The Tribunal observed that the amount was seized from the assessee by the police and later released in his favor, which he deposited in his bank account. The assessee's claim was not supported by satisfactory evidence, and the lower authorities had added the amount to his income. However, the Tribunal noted that the same amount had already been taxed in the hands of Shri Babu Lal Jat and Shri Ramkaran Kulhari. Consequently, the Tribunal vacated the addition made by the Assessing Officer, stating that the same cash could not be added twice.3. Charging of Interest under Sections 234A, 234B, and 234C:The assessee contested the charging of interest under Sections 234A, 234B, and 234C. The Tribunal held that charging of interest is mandatory and consequential in nature. The assessee did not provide any submission to demonstrate incorrect calculation of interest. Therefore, the Tribunal directed the Assessing Officer to give effect to the interest on the income determined and dismissed the ground of appeal related to the charging of interest.Conclusion:The Tribunal allowed the appeal of the assessee, vacating the addition of Rs. 15,65,000/- and upholding the legality of the proceedings under Section 147 read with Section 148. The Tribunal also confirmed the mandatory nature of charging interest under Sections 234A, 234B, and 234C. The order was pronounced in open court on 02/06/2023.