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Income Tax Appellate Tribunal, ALLAHABAD ‘SMC’ BENCH, ALLAHABAD
Before: SHRI VIJAY PAL RAO
O R D E R
PER SHRI VIJAY PAL RAO, JUDICIAL MEMBER:
These two set of six appeals by the assessee are directed against the respective orders of the CIT(A) passed under section 250 and 154 for the assessment years 2008-09 to 2013-14.
Assessee is an individual and derives income from house property, interest, salary and interest from partnership firm M/s Diamond Brick Field. There was a search and seizure action under section 132 of the Act at the residential and business premises of the assessee on 5.12.2013. Consequently, the AO initiated the proceedings under section 153A for six years i.e. assessment year 2008-09 to 2013- to 150/ALLD/2018 Asstt Years 2008-09 to 2013-14 ITA Nos. 353 to 358/ALLD/2018 Asstt Years 2008-09 to 2013-14 14 and passed the assessment order for these six years whereby the AO has made the additions on account of unexplained deposits in the bank account of the assessee under section 69 of the Income Tax Act. For each of six years, the AO had made the solitary addition on account of unexplained deposits in the bank account. The assessee challenged the action of the AO before the CIT(A) and also raised the issue of the validity of additions made by the AO in the absence of any incriminating material found or seized during the course of search and seizure action. The CIT(A) while passing the order under section 250 dated 26th February, 2018 dismissed the appeals of the assessee and confirmed the addition made by the AO. Since the CIT(A) has not adjudicated the issue of validity of the addition made by the AO in the absence of incriminating material therefore, the assessee filed petition under section 154 of the Act for adjudication of the said ground raised
by the assessee. The said application of the assessee was dismissed by the CIT(A) vide order dated 17.09.2018. Thus the assessee has filed these two set of six appeals one is against the order passed by the CIT(A) under section 250 and another against the order passed under section 154 of the Act. The assessee has raised the identical grounds in the set of six appeals each. The ground raised in the appeals in to 150/ALLD/2018 are as under:-
1. That in any view of the matter assessment as framed u/s 153 A r.w.s. 143(3) of the Act dated 18/03/2016 is bad both on the fact and in law and manner or basis in computing the income adopted by the assessing officer is not correct and his action as confirmed by the Commissioner of Income Tax (Appeal) is highly unjustified and unwarranted because basic and norms for framing search assessment has been totally ignored by the two lower authorities hence the assessment is liable to be declared invalid.
2. That in any view of the matter since the assessment framed u/s 153A r.w.s. 43(3) of the Act vide order dated 18/03/2016 is not based on settled law as the addition if any required to be made only on incriminatory material found in the course of search but in the present case since no incriminating material was found nor even discussed in the order about any incriminating material hence the addition so made and maintained are illegal therefore the assessment liable to be declared void. 2 ITA Nos.145 to 150/ALLD/2018 Asstt Years 2008-09 to 2013-14 ITA Nos. 353 to 358/ALLD/2018 Asstt Years 2008-09 to 2013-14
That in any view of the matter in the course of search no incriminating material was found and the return filed u/s 139 has already been accepted and no proceedings are pending therefore the entire approach of the assessing officer is without jurisdiction hence addition so made is liable to be deleted and also the assessment is liable to be abated.
That in any view of the matter before the CIT(A) a specific ground no.1 was taken by challenging the validity of assessment in absence of any search material but the learned Commissioner of Income Tax (appeal) in her order dated 26/02/2018 kept silence and no finding was recorded nor the specific ground was adjudicated hence the action of the Commissioner of Income Tax (appeal) is totally incorrect and against the laws. 5. That in any view of the matter addition of Rs. 12,84,211/- made by the assessing officer in the light of discussion in para 4 of the order on the basis of bank account by considering only credit entry ignoring debit entry as well as peak theory and his action as confirmed by the CIT(A) is highly unjustified and illegal hence the entire action of the two lower authority is wrong and illegal and therefore the addition is liable to be deleted in the facts and circumstances of the case. 6. That in any view of the matter addition of Rs. 12,84,211/- as made is highly unjustified and illegal because the deposit appearing in bank a/c were from definite source and plausible explanations filed and also evidences were brought on record, hence the addition so made and maintained is highly unjustified and wrong therefore the addition is liable to be deleted in interest of justice. 7. That in any view of the matter the addition of Rs. 12,84,211/- Made on the basis of bank account is nothing but a repetitive addition made year after year hence the addition is highly unjustified and incorrect. 8. That in any view of the matter finding and observations of the two lower authorities in their order for making & confirming the addition are incorrect and contrary to the actual fact of the case hence the same are liable to be sponged of. 9. That in any view of the matter penal interest charged u/s 234A of the Act amounting to Rs. 4,105/- is not correct at all because there was no delay in filing the original return hence the charge of interest is liable to be deleted. 10. That in any view of the matter interest charged u/s 234B of the Act amounting to Rs. 3,94,080/- is highly unjustified because the assessee never anticipated earlier about the said addition because the added amount is not the real income of assessee. 3 to 150/ALLD/2018 Asstt Years 2008-09 to 2013-14 ITA Nos. 353 to 358/ALLD/2018 Asstt Years 2008-09 to 2013-14
That in any view of the matter the appellant reserves his right to take fresh ground of appeal
before hearing of the appeal.”
3. Similarly the grounds raised in the appeals against the order passed under section 54 in to 258/ALLD/2018 are as under:-
1. That in any view of the matter the order dated 17.09.2018 u/s 154 r.w.s. 250 of the IT Act passed by the Commissioner of Income Tax (Appeal)-III, Lucknow is totally unjustified, incorrect and illegal as she failed to consider the raised legal issue duly supported by settled law hence the said order is liable to be declared illegal and void.
2. That in any view of the matter it is an undisputed fact that in the course of search operation u/s 132 of the IT Act on 05/12/2013 no incriminating material was found nor any evidence had been unearthed to warrant any addition, hence the order passed by the first appellate authority is illegal and invalid therefore liable to be declared void in the facts and circumstances of the case.
3. That in any view of the matter , since no assessment is pending for the assessment year under consideration at the time of initiation of the proceedings u/s 153A of the IT Act nor any incriminating material was found during the course of search therefore finalized assessment shall not abate in the light of various decisions of the Hon’ble High Courts and ITAT Benches, hence the order dated 06.09.2018 passed by the Commissioner of Income Tax (Appeal)-III, Lucknow is liable to be declared invalid and void.
4. That in any view of the matter the allegation of Commissioner of Income Tax (Appeal)-III, Lucknow in para 7 of her order that a sum of Rs. 1,00,00,000/- had surrendered on account of income from Commission from land dealing and the appellant admitted in the statement as undisclosed income is totally incorrect, baseless as no investment was made nor any land dealing was done as well as no income was earned/assessed on account of land dealing an even no evidence/loose paper what so ever have been found and even no query made in assessment proceeding hence such allegation liable to be sponged as such question of giving any cognizance to such fact does not arise and the assessee is seriously objecting such finding/observation in the order.
5. That in any view of the matter application dated . 2 / 04/2018 u/s 154 of the IT Act filed before the Commissioner of Income Tax (Appeal)-III, Lucknow was not properly considered and more so the legal issue was also left from 4 ITA Nos.145 to 150/ALLD/2018 Asstt Years 2008-09 to 2013-14 ITA Nos. 353 to 358/ALLD/2018 Asstt Years 2008-09 to 2013-14 consideration as the application u/s 154 of the Act was rejected in arbitrary manner, hence the order dated 17.09.2018 passed by the Commissioner of Income Tax (Appeal)-III, Lucknow is liable to be declared invalid and void.
6. That in any view of the matter the appellant reserves his right to take any fresh ground before hearing of the appeal.”
4. At the time of hearing, the learned counsel for the assessee has submitted that the AO while making the additions on account of unexplained deposits has not considered the corresponding withdrawals by the assessee for each year and therefore this fact requires re-verification and adjudication at the level of the AO. He has further submitted that the addition if any could have been made only in respect of peak credits instead of the entire deposits made by the assessee during each year. Thus the learned AR has submitted that neither the AO nor the CIT(A) has considered this aspect. As regards the legal issue challenging the addition made by the AO in the absence of any incriminating material the learned AR has submitted that the CIT(A) has not disputed this fact that there was no incriminating material found during the search and seizure operation but the CIT(A) has rejected the application filed under section 154 by giving a finding that once a search and seizure operation is taken under section 132 of the Act the AO shall issue notice under section 153A for all six years immediately preceding to the assessment year relevant to the previous year in which search is conducted. Thus he has pleaded that the issue is pure legal in nature and may be kept open.
On the other hand, learned CIT DR has submitted that the withdrawals if any made by the assessee is required to be established a link between the withdrawal and subsequent deposits. However, this is a factual aspect and requires a proper verification of record. Thus the learned CIT DR has fairly submitted that the AO may examine the facts on this aspect.
ITA Nos.145 to 150/ALLD/2018 Asstt Years 2008-09 to 2013-14 to 358/ALLD/2018 Asstt Years 2008-09 to 2013-14
Having considered the rival submissions as well as the relevant record, it is noted that the Assessing Officer has made the addition for these six years on account of unexplained deposits in the bank account of the assessee. Now the assessee has contended that the additions were made by the AO by considering the deposits only made during the year without taking into account the corresponding withdrawals by the assessee. Thus it is pleaded that the addition if any can be made only for the peak credit in the bank account of the assessee. Since this issue of considering the withdrawals requires verification of the record and therefore, in view of the submissions of both the parties the matters for all these six years is remanded to the record of the Assessing Officer for re-adjudication of the issue of addition on merits after considering the explanation of the assessee including withdrawals made by the assessee from the bank account. Needless to say the assessee be given a proper opportunity of hearing.
As regards, the legal issue raised by the assessee challenging the validity of the addition made by the AO in the absence of any incriminating material found and seized during the course of search and seizure operation the same is kept open to be agitated by the parties, if need arises. However, the AO is directed to give finding of fact whether any incriminating material was found and seized during the course of search and seizure action disclosing any undisclosed income of the assessee on account of the deposits made in the bank account. 8. In result, all these appeals are allowed. Order pronounced in the open Court on 17/12/2020. Sd/- [VIJAY PAL RAO] JUDICIAL MEMBER sh DATED: 17/12/2020 to 150/ALLD/2018 Asstt Years 2008-09 to 2013-14 ITA Nos. 353 to 358/ALLD/2018 Asstt Years 2008-09 to 2013-14