2023 (10) TMI 649 - AT - Income Tax

Tribunal remits addition issue under Section 69C for fresh examination, dismisses appeals on depreciation and ESOP expenses.

The Tribunal remitted the issue of addition under Section 69C back to the AO for fresh examination for all assessment years under consideration. The ... Unexplained expenditure u/s. 69C - settlement before the Settlement Commission - double taxation - onus of proof on the Assessing Officer - remand for fresh verificationUnexplained expenditure u/s. 69C - settlement before the Settlement Commission - double taxation - remand for fresh verification - Whether the additions made by the AO under section 69C based on Cash Transaction Record (CTR) could be sustained in the assessee's hands where the same entries were part of applications disposed by the Settlement Commission - HELD THAT: - The Tribunal noted that the AO made additions under section 69C relying on entries in a Cash Transaction Record (CTR) seized during search and on bank withdrawals reflected in the assessee's accounts, recording AO's view that the assessee had not satisfactorily explained the cash outgoings. The assessee produced the CTR and showed that the entries had been submitted and partly settled by multiple applicants before the Settlement Commission. The CIT(A) deleted the addition by following an appellate order in another group-company's case, but did not independently examine how the settlement covered the entries in the assessee's hands or address the AO's finding on bank withdrawals. The Tribunal found that the record did not make it clear whether the amounts added in the assessee's assessment were explained by the Settlement Commission's order and that the AO had not been given an opportunity to verify documentary particulars from the assessee. For these reasons the Tribunal remitted the issue to the AO to verify whether the source for the additions in the assessee's hands is explained by the settlement, directing the assessee to cooperate and furnish relevant details. The remand was ordered for all the assessment years under consideration. [Paras 15, 16]Issue remitted to the Assessing Officer for fresh examination and verification whether the additions under section 69C are explained by the settlement proceedings; remand directed for AY 2013-14, 2014-15, 2015-16 and 2017-18.Disallowance of additional depreciation - ESOP expenses - Whether the revenue's grounds challenging deletion of disallowance of additional depreciation and deletion of ESOP expenses should be pursued before the Tribunal - HELD THAT: - The Departmental Representative did not advance arguments at the hearing on the grounds relating to disallowance of additional depreciation and ESOP expenses. The Tribunal therefore recorded that those grounds were not pressed and dismissed the revenue's grounds accordingly. [Paras 7]Grounds relating to additional depreciation and ESOP expenses dismissed as not pressed.Final Conclusion: The Tribunal remitted the question of additions under section 69C to the Assessing Officer for fresh verification in light of the Settlement Commission proceedings, with directions to the assessee to furnish details; grounds on additional depreciation and ESOP expenses were dismissed as not pressed. Appeal allowed for statistical purposes for AY 2013-14, 2014-15, 2015-16 and 2017-18. Issues Involved:1. Deletion of addition made under Section 69C by the CIT(A).2. Deletion of disallowance of additional depreciation by the CIT(A).3. Disallowance of ESOP expenses deleted by the CIT(A).Summary:1. Deletion of Addition Made Under Section 69C by the CIT(A):The assessee, engaged in stock and share brokerage, was subjected to a search operation on 13/07/2016, leading to the issuance of a notice under Section 153A. The Assessing Officer (AO) made additions under Section 69C for unexplained expenditure and unaccounted receipts, which were contested by the assessee. The CIT(A) deleted these additions, referencing a similar case involving M/s Indiabulls Financial Services Ltd. The Tribunal noted that the additions were based on a Cash Transaction Record (CTR) seized during the search, which had already been addressed in settlement proceedings involving 16 entities of the Indiabulls group. The Tribunal remitted the issue back to the AO for fresh examination to verify if the additions were covered by the settlement, emphasizing that the AO must establish if the impugned additions were already accounted for in the settlement.2. Deletion of Disallowance of Additional Depreciation by the CIT(A):During the hearing, the Department's Representative did not present arguments regarding the deletion of disallowance of additional depreciation. Consequently, the Tribunal dismissed the grounds related to this issue as not pressed.3. Disallowance of ESOP Expenses Deleted by the CIT(A):Similarly, no arguments were presented by the Department's Representative concerning the deletion of ESOP expenses disallowance. The Tribunal dismissed the grounds related to this issue as not pressed.Conclusion:The Tribunal remitted the issue of addition under Section 69C back to the AO for fresh examination for all assessment years under consideration (2013-14, 2014-15, 2015-16, and 2017-18). The appeals concerning additional depreciation and ESOP expenses were dismissed as not pressed. The appeals were allowed for statistical purposes.