DAMODAR DHARA, ,KOLKATA vs. ACIT,CIR-27(1), HALDIA

Assessment Year: 2014-2015 Damodar Dhara Delhi dated 27.02.2023 passed under section 250 of the Income Tax Act, 1961 for A.Y. 2014-15.

The issue raised in Ground No. 1 by the assessee is against the confirmation of addition of Rs.57,24,140/- by the ld. CIT(Appeals) as made by the ld. Assessing Officer under section 56(2)(vii)(b) of the Act, whereas the issue raised in Ground No. 2 is against the order of ld. CIT(Appeals) confirming the disallowance of Rs.58,61,170/- as made by the ld. Assessing Officer on account of undisclosed income being the residue amount out of the disclosure made.

Brief facts of the case are that the assessee filed his return of income on 30.11.2014 declaring total income of Rs.82,53,190/-. The case of the assessee was selected for scrutiny and statutory notices were duly issued and served upon the assessee. It is pertinent to state that the assessee is a proprietor of M/s. Ramkrishna Cement Works, a trading concern of ceramic tiles and sanitary wares. During the year, a survey under section 133A of the Act was conducted on the assesee on 11.12.2013 and it was found that the assessee has made investments in various lands over a period of time. After the survey, the assessee vide letter dated 17.03.2014 disclosed additional income equal to Rs.4,16,00,000/- in three different years, namely for A.Y. 2012-13 at Assessment Year: 2014-2015 Damodar Dhara Rs.50,00,000/-, for A.Y. 2013-14 at Rs.1,66,00,000/- and for A.Y. 2014-15 at Rs.2,00,000/- and, therefore, the assessee voluntarily disclosed income to the tune of Rs.2,00,00,000/- during the instant assessment year. However, there was no basis for disclosure of this amount during the instant financial year by the assessee. Therefore, the ld. Assessing Officer, vide letter dated 12.02.2015 called upon the assessee to furnish information as to how the amounts have been disclosed in the returns of income. The ld. Assessing Officer noticed that the assessee has only voluntarily offered Rs.45,08,350/- in the current assessment year, which was discussed by the ld. Assessing Officer in para no. 2 and in para no. 3 the assessing officer added Rs.39,06,340/- on the basis of letter of the assessee dated 08.11.2016 wherein ld. A.R. admitted the income of assessee to the tune of Rs.39,06,340/- as inadvertently not shown in the return of income and thus total income disclosed worked out to Rs.84,40,690/-. However, in respect of the remaining amount of Rs.1,15,85,310/- was added in the assessment framed under section 143(3) dated 30.12.2016. The addition was made on two counts, namely - (i) balance amount of Rs.58,61,170/- and (ii) under section 57(2)(vii)(b) Rs.57,24,140/-.

The assessee has challenged the said addition before the ld. CIT(Appeals). However, the ld. CIT(Appeals) has Assessment Year: 2014-2015 Damodar Dhara dismissed the appeal of the assessee on the ground that the assessee has suo motu declared this amount post survey proceedings u/s 133A of the Act on the assessee.

We have heard the rival submissions and perused the relevant material placed before us. So far as the addition of Rs.57,24,140/- is concerned, we observe that the addition was made by the ld. Assessing Officer in the assessment framed under section 57(2)(vii)(b) of the Act as additional income. The ld. Assessing Officer has not discussed anything that on what account, this income has been added whereas during the course of hearing, the ld. A.R. pointed out that there is no such section in the Statute Book applicable and if at all the income was to be added it had to done under section 56(2)(vii)(b) of the Act, which was effective from the current assessment year, which provides that in case of purchase of any asset by the assessee by way of land and building for a consideration, which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the income should be added to the income of the assessee as deemed income under section 56(2)(vii)(b) of the Act. The ld. A.R. contended before us that the disclosure was made by the assessee during the year suo motu to the tune of Rs.84,40,690/-, which is not represented by any undisclosed income or undisclosed asset or unexplained credits on the part of the assessee. The ld. A.R. contended that the addition, if any, is to be Assessment Year: 2014-2015 Damodar Dhara made under section 56(2)(vii)(b) of the Act, which was not the case of the Revenue in the assessment proceeding as there was no discussion at all qua the difference between the purchase consideration paid and stamp duty valuation of the asset. Therefore, the confirmation of addition by the ld. CIT(Appeals) under section 56(2)(vii)(b) of the Act is not acceptable and is against the facts of the case. We observe that the observation of the ld. Assessing Officer that the amount represented as additional income under section 57(2)(vii)(b) is untenable . Considering the overall scenario and facts that the assessee has disclosed Rs.84,40,690/- without any basis and which was just a suo motu voluntary disclosure and the ld. Assessing Officer has also not found any unexplained credit or source of money or asset to back such disclosure. Under these circumstances, we are of the view that the addition under section 56(2)(vii)(b) has to be adjusted and telescoped out of this suo motu voluntary disclosure of Rs.84,40,690/-. Therefore, we are inclined to allow the Ground No. 1 of the assessee by setting aside the order of ld. CIT(Appeals) and directing the ld. Assessing Officer to give telescopic effect of Rs.57,24,140/- out of the suo motu disclosure of Rs.84,40,690/-. Ground No. 1 is allowed.

In so far as the second issue of confirmation of the addition of Rs.58,61,170/- is concerned, we have already narrated the facts in the foregoing paras. As we have Assessment Year: 2014-2015 Damodar Dhara discussed above that disclosure is made by the assessee without any basis in the form of undisclosed assets or undisclosed income or any unexplained credit in the books of the assessee. This addition has been made by the ld. Assessing Officer on the ground that the assessee has surrendered Rs.2,00,00,000/- in the instant assessment year vide letter dated 17.03.2014 filed after the survey operation was conducted on 11.12.2013. We are of the considered view and opinion that any disclosure made in the survey proceedings merely on the basis of statement recorded during survey is not enough to make the addition. There has to be corroborating material to make the addition. Accordingly, we are inclined to set aside the order of ld. CIT(Appeals) on this issue by allowing the ground no 2 of the appeal of the assessee.