SMT. MADHU VIJAY,KOTA vs. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTA

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ITA 1255/JPR/2018Status: DisposedITAT Jaipur03 October 2019AY 2011-126 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that additions made under Section 153C without any incriminating material found during the search belonging to the assessee are not sustainable. Consequently, the additions on account of FDR interest and Post Office/Savings Bank interest were deleted.

What were the facts?

The assessee's appeals concerned additions made by the AO under Section 153C for assessment years 2011-12, 12-13, and 13-14. The additions were primarily for FDR interest and Post Office/Savings Bank interest. The assessee did not press grounds related to the validity of the Section 153C assessment.

What were the issues?

Whether additions made under Section 153C are valid without incriminating material belonging to the assessee. Whether interest income on FDRs and Post Office accounts can be added without supporting evidence found during a search.

Which sections of the Income-tax Act were involved?

Section 153C,Section 143(3),Section 68,Section 115BBE

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JAIPUR BENCH ’SMC’, JAIPUR

Before: SHRI SHRI VIJAY PAL RAOvk;dj vihy la-@ITA No. 1255, 1256 & 1257/JP/2018

For Appellant: Shri B. V. Maheshwari (CA) jktLo dh vksj ls@

“ 1. That the ld. A.O. grossly erred on law to assess the income u/s 153C in case of Appellant and carried the assessment u/s 153C/143(3) of the Income Tax Act. That the ld.CIT (A) also erred in sustaining the said order.

2. That the ld. AO grossly erred on law and facts in making the addition of FDR interest income Rs. 64,844/-. That the ld. CIT (A) also erred in sustaining the said order.

3. That the ld. AO grossly erred on law and facts in making addition of Post Office interest Rs. 14,400/- & SB A/c in Trust Rs. 1200/- & The ld. CIT (A) also erred in sustaining the said order.

4. The assessee craves to leave, add, alter amend the grounds of appeal at the time of hearing.”

Ground No. 1 is regarding validity of assessment framed under section 153C read with section 143(3).

2.

At the time of hearing, the ld. A/R of the assessee has stated that the assessee does not press ground no. 1 of the appeal and the same may be dismissed as not pressed. The ld. D/R has raised no objection if the ground no. 1 of the assessee’s appeal is dismissed as not pressed. Accordingly, ground no. 1 of the assessee’s appeal is dismissed being not pressed.

Ground No. 2 is regarding addition on FDR interest.

3.

I have heard the ld. A/R as well as the ld. D/R and considered the relevant material on record. The AO has made the addition on account of interest on FDR of Rs. 64,844/- which was not declared by the assessee in the return of income filed under section 139(1) of the IT Act. Thus in the proceedings under section 153C, the AO on examination of the FDR statement produced by the assessee noted that the assessee has not included the interest on the FDR in the return of income filed.

There is no incriminating material found which belong to the assessee disclosing the income on account of interest on FDR. Therefore, when no reference is made by the AO of any document found during the course of search and seizure action carried out in the case of Kota Dal Mill under which the husband of the assessee was covered, the addition made by the AO while framing the assessment under section 153C is not justified. Accordingly the said addition is deleted. Even otherwise, the interest on FDR in case of Individual may be considered either on receipt basis or on accrual basis, if assessee is following a practice of recognizing the income on receipt basis then no addition can be made on this account and that too in the proceedings under section 153C of the Act.

Ground No. 3 is regarding interest on Post Office and Savings Bank account.

4.

I have heard the ld. A/R as well as the ld. D/R and considered the relevant material on record. This addition has been made by the AO in the proceedings under section 153C without making any reference to any material found or seized during the course of search belonging to the assessee and disclosing such income.

Hence in the absence of any material, the addition made by the AO is not sustainable.

For the assessment years 2012-13, the assessee has raised the following grounds :-

“ 1. That the ld. AO grossly erred on law and facts in issuing the notice u/s 153C in case of Appellant and carried the assessment u/s 153C/143(3) of the Income Tax Act. That the ld. CIT(A) also erred in sustaining the said order.

2. That the ld. AO grossly erred on law and facts in charging tax on FDR interest Rs. 52,208/-. That the ld. CIT (A) also erred in sustaining the said order.

3. The assessee craves to leave, add, alter amend the grounds of appeal at the time of hearing.”

5. At the time of hearing, the ld. A/R of the assessee has stated that the assessee does not press ground no. 1 of the appeal and the may be dismissed as not pressed. The ld. D/R has raised no objection if the ground no. 1 of the assessee’s appeal is dismissed as not pressed. Accordingly, ground no. 1 of the assessee’s appeal is dismissed being not pressed.

Ground No. 2 is regarding interest on FDR.

6.

The issue raised in Ground No. 2 is common to issue raised in Ground No. 2 for the assessment year 2011-12. In view of the findings of the Tribunal for the assessment year 2011-12, the addition made by the AO is deleted.

For the assessment years 2013-14, the assessee has raised the following grounds :-

“1. That the ld. AO grossly erred on law and facts in issuing the notice u/s 153C in case of Appellant and carried the assessment u/s 153C/143(3) of the Income Tax Act and the ld. CIT(A) also erred in sustaining the findings of ld. AO.

2. That the ld. AO grossly erred on law and facts in making the addition of FDR interest income Rs. 47,746/-. That the ld. CIT (A) also erred in sustaining the said addition made ld. AO.

3. That the ld. AO grossly in stating the tuition income as unexplained u/s 68 and levied tax u/s 115BBE. This is wrong, there should be the regular tax only on the income declared earlier and which not a part of search.

4. The assessee craves to leave, add, alter amend the grounds of appeal at the time of hearing.”

Ground Nos. 1 & 3 not pressed.

Ground No. 2 is against interest on FDR

7.

The issue raised in Ground No. 2 is common to issue raised in Ground No. 2 for the assessment year 2011-12. In view of the findings of the Tribunal for the assessment year 2011-12, the addition made by the AO is deleted.

8.

In the result, all the appeals of the assessee are partly allowed.

Order is pronounced in the open court on 04/10/2019.

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