2025 (2) TMI 1094 - AT - Income Tax

Additions under section 69A upheld based on documents seized under section 153C after assessee failed to rebut evidence

Asstt. Commissioner of Income Tax Circle–2 (1), Nagpur Versus Unique Realities Builders & Developers

ITAT upheld the AO's additions under section 69A based on documents seized under section 153C, setting aside the CIT(A)'s deletion. The tribunal found the ... Validity of Proceedings u/s 153C - addition u/s 69A - Reliance on documents seized during the search and seizure operations - CIT(A) deleted addition - HELD THAT:- The impounded documents have been verified by us from the assessment order wherein the name of the assessee is clearly visible. Assessee failed to give any information as to whether the transactions were at all recorded in the books of account. In fact, she did not submit any documentary evidences to buttress her case. CIT(A) has merely relied on certain case laws, but without realising that how the same are applicable in assessee’s case. CIT(A) failed to perform his statutory function to act judiciously by not correlating the additions made with the corresponding assessment orders of AVC Homes, Saptagiri Builders. He was swayed that there is no exchange of money as submitted by the learned Counsel for the assessee. But here it is beyond comprehension that why cash details are mentioned in the print–out obtained which is stark reality glaring at the face. It is also surprising that there has been no participation by the assessee before the AO to effectively explain the documents in its entirety. Addition made u/s 69A has been assailed that the circumstances are not applicable. Nevertheless, the same is undisclosed income, which has been rightly added. There is no requirement that the assessee has to sign these documents because they are designed to be hidden and shrouded. Mere mentioning an inapplicable proviso will hardly dislodge the addition and the logic adopted by the learned CIT(A) is palpably erroneous. Assessee has tried to create a confusion that in view of multiple entities with prefix unique relationship with Unique Realities Builders and Developers is not established. We fail to understand that how such an issue can be raised once the challenge to 153C proceedings is absent. The diametric opposite stand of the assessee is ergo jettisoned. The recalcitrant stand of the assessee before the Assessing Officer further creates doubt that perhaps the assessee is not coming with clean hands. It is worthwhile to note that even before the remand proceedings, the assessee failed to make any submissions to improve his case. Assessee failed to justify that additions are not sustainable based on impounded documents. More denial of the transaction by raising a cobweb of nebulous assertions without backing up by strong evidence to repudiate the same is unconscionable. Hence we set aside the impugned order passed by the learned CIT(A) and inclined to uphold the assessment order passed by the Assessing Officer. - Decided against assessee. ISSUES PRESENTED and CONSIDEREDThe core legal issues considered in this judgment include:Whether the proceedings under section 153C of the Income Tax Act were initiated with corroborative evidence.Whether the additions made by the Assessing Officer under sections 69A and 69C of the Income Tax Act were justified based on the evidence available.Whether the documents seized during the search and seizure operations could be considered as valid evidence to support the additions made by the Assessing Officer.Whether the learned CIT(A) was correct in deleting the additions made by the Assessing Officer.ISSUE-WISE DETAILED ANALYSIS1. Proceedings under Section 153C of the Income Tax ActRelevant legal framework and precedents: Section 153C of the Income Tax Act pertains to the assessment of income of any person other than the person searched, based on evidence found during a search.Court's interpretation and reasoning: The Tribunal noted that the proceedings under section 153C were initiated based on documents seized during a search operation, which allegedly pertained to the assessee.Key evidence and findings: The documents included statements and materials that allegedly linked the assessee to undisclosed income.Application of law to facts: The Tribunal found that the initiation of proceedings under section 153C was justified as the documents seized were deemed to pertain to the assessee.Treatment of competing arguments: The assessee argued that the documents were not conclusive evidence and did not pertain to them. However, the Tribunal found that the evidence was sufficient to initiate proceedings.Conclusions: The Tribunal upheld the initiation of proceedings under section 153C.2. Additions under Sections 69A and 69C of the Income Tax ActRelevant legal framework and precedents: Section 69A pertains to unexplained money, while section 69C pertains to unexplained expenditure.Court's interpretation and reasoning: The Tribunal examined whether the additions made under these sections were supported by evidence.Key evidence and findings: The Assessing Officer made additions based on documents seized, which allegedly showed undisclosed income and expenditure.Application of law to facts: The Tribunal found that the evidence, including payment vouchers and statements, supported the additions made by the Assessing Officer.Treatment of competing arguments: The assessee argued that the documents were dumb and did not conclusively prove the additions. The Tribunal, however, found the documents to be credible evidence.Conclusions: The Tribunal upheld the additions made under sections 69A and 69C.3. Validity of Evidence from Seized DocumentsRelevant legal framework and precedents: The evidentiary value of documents seized during search operations is often scrutinized in tax proceedings.Court's interpretation and reasoning: The Tribunal considered whether the documents could be deemed dumb or if they had evidentiary value.Key evidence and findings: The documents included payment vouchers and statements linking the assessee to undisclosed income.Application of law to facts: The Tribunal found that the documents were not dumb and had sufficient evidentiary value to support the additions.Treatment of competing arguments: The assessee argued that the documents were not valid evidence, but the Tribunal disagreed, citing the clear linkage to the assessee.Conclusions: The Tribunal ruled that the documents were valid evidence.4. Deletion of Additions by the Learned CIT(A)Relevant legal framework and precedents: The CIT(A) has the authority to delete additions made by the Assessing Officer if found unjustified.Court's interpretation and reasoning: The Tribunal reviewed whether the CIT(A) was correct in deleting the additions.Key evidence and findings: The CIT(A) had deleted the additions, considering the documents as dumb and lacking corroborative evidence.Application of law to facts: The Tribunal found that the CIT(A) did not adequately consider the evidentiary value of the documents.Treatment of competing arguments: The Tribunal disagreed with the CIT(A)'s assessment and found that the documents did support the additions.Conclusions: The Tribunal overturned the CIT(A)'s decision and reinstated the additions made by the Assessing Officer.SIGNIFICANT HOLDINGSThe Tribunal held that the initiation of proceedings under section 153C was justified and that the additions made under sections 69A and 69C were supported by valid evidence. The Tribunal found that the documents seized during the search were not dumb and had sufficient evidentiary value to support the additions. The Tribunal disagreed with the CIT(A)'s decision to delete the additions, finding that the CIT(A) did not adequately consider the evidence. The Tribunal reinstated the additions made by the Assessing Officer, allowing the Revenue's appeals for the assessment years 2018-19 and 2019-20.