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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: HON’BLE KUL BHARAT & HON’BLE MANISH BORAD
O R D E R PER MANISH BORAD, AM.
The above captioned appeals filed at the instances of the assessee pertaining to Assessment Years 2008-09, 2010- 11 and 2014-15 are directed against the orders of Ld. Commissioner of Income Tax (Appeals)-3 (in short ‘Ld.CIT(A)’], Bhopal which is arising out of the order u/s 153A r.w.s. 143(3) of the Income Tax Act 1961(In short Smt. Alamail Raju Income-tax Act, 1961.(SS) No.319 & 320/Ind/17 & ITANo.831/17 the ‘Act’) dated 15.03.2014 framed by ACIT (Central)-II, Bhopal.
Registry has informed that all these three instant appeals are time barred by 76 days. The assessee referred to the condonation application and the affidavit filed in support thereof. From perusal of the same, we observe that due to incorrect contract no. the relevant appeal forms and records were not delivered to the counsel by the courier company. We, therefore, are of the view that the assessee had reasonable cause which lead to delay in filing appeal and in the interest of justice same needs to be condoned. We accordingly condone the delay of 76 days made in filing these three appeals and admit them for adjudication.
As the issues raised in these appeals are common, therefore, these were heard together and are being disposed off by this common order for sake of convenience and brevity.
Briefly stated facts as culled out from the records are that the assessee is an individual and engaged in the business as transport contractor. Search u/s 132 of the Act was conducted at the residential and business Smt. Alamail Raju Income-tax Act, 1961.(SS) No.319 & 320/Ind/17 & ITANo.831/17 premises of the assessee on 29.01.2014 being part of the “Signature Group”. Notices u/s 153A of the Act dated 12.09.2014 was served upon the assessee to file return for A.Yrs. 2008-09 to 2013-14. Except for A.Y. 2010-11 assessee has been filing return of income regularly u/s 139(1) of the Act. After, considering the submissions of the assessee, assessments were completed after making certain additions. The assessee challenged the additions before the Ld. CIT(A) on various years and partly succeeded.
Aggrieved the assessee is in appeal before the Tribunal against the finding of the Ld. CIT(A) challenging the additions confirmed for A.Ys. 2008-09, 2010-11 & 2014-15 raising following grounds of appeal: ITA(SS) No.319/Ind/2017 Assessment Year 2008-09 1.That on the facts and in the circumstances of the case the Ld. Commissioner of Income Tax(A) was not justified in holding that the AO was justified in making any addition in the years where the assessment proceedings were not pending and no incriminating material was found during the course of search. 2.That on the facts and in the circumstances of the case the Ld. Commissioner of Income Tax(A) was not justified in holding that the AO was justified in making addition of Rs. 3,11,465/- towards investment made in purchase of Plot B-128 treating the same as having been made out of 3. Smt. Alamail Raju Income-tax Act, 1961.(SS) No.319 & 320/Ind/17 & ITANo.831/17 unexplained sources ITA(SS) No.320/Ind/2017 Assessment Year 2010-11 1.That on the facts and in the circumstances of the case the Ld. Commissioner of Income Tax(A) was not justified in holding that the AO was justified in making any addition in the years where the assessment proceedings were not pending and no incriminating material was found during the course of search. 2.That on the facts and in the circumstances of the case the Ld. Commissioner of Income Tax(A) was not justified in holding that the AO was justified in making addition of Rs. 1,60,1201- towards investment made in purchase of flat at sarvdharm colony treating the same as having been made out of unexplained sources. 3.That' on the facts and in the circumstances of the case the Ld. Commissioner of Income Tax(A) was not justified in holding that the AO was justified in making addition of Rs. 72,000/- towards unexplained cash. Assessment Year 2014-15
1. That on the facts and in the circumstances of the case the Ld. Commissioner of Income Tax(A) was not justified in confirming the addition of Rs.98,000/- towards unexplained cash. 6. Ld. Counsel for the assessee argued at length pleading for deletion of the addition referring to the following written submissions placed on record.
The assessee is an individual deriving income from profits from civil contractors, salary from firms and rental income 4 Smt. Alamail Raju Income-tax Act, 1961.(SS) No.319 & 320/Ind/17 & ITANo.831/17 and capital gains. Regular returns are being filed. The returns were filed as under.
ASSESSMENT DATE OF FILING INCOME RETURNED YEAR OF RETURN 2008-09 30.03.2009 Rs.1,28,010/ - 2009-10 31.03.2011 Rs.l,63,OOO/- 2010-11 11.03.2016 Rs.5,l1,OOOj- 2011-12 30.03.2012 Rs.l,89,OOO/- 2012-13 17.01.2014 Rs.2,Ol,240/- 2013-14 17.01.2014 Rs.2,OO,OOO/- 2014-15 11.03.2016 Rs.1,82,OO/- 2.A search took place at the residence of the assessee as well as on the business premises of other related concerns on 29.01.2014. No incriminating material was found during the course of the search in respect of any transaction of the assessee. In response to notice u/s 153A the assessee filed the returns declaring the same income as disclosed in the original return, and no additional income was offered.
3. It was submitted before the Ld. A.O. that no addition/ disallowances can be made in the assessment passed u/s 153A since no incriminating material was found and seized. The Ld. A.O. from Pg.3 onwards in para 6 dealt with the objections of the assessee and came to the conclusion that plea of the assessee is not acceptable, and that even if no incriminating documents are found during the course of the search the addition can be made. He further observed that 5 Smt. Alamail Raju Income-tax Act, 1961.(SS) No.319 & 320/Ind/17 & ITANo.831/17 during the course of the assessment proceedings the A.O. is empowered to conduct enquiries and make the additions or disallowances, in the assessment made u/s 153A. The A.O. cannot be restricted or limited to incriminating seized material even though the case is previously assessed u/s 143(3). He accordingly made the addition for the assessment years 2008-09, 2010-11 and 2014-15 on account of cash deposits in the bank and properties purchased during these years. 4.The matter was taken up before the Ld. CIT(A) who dismissed the assessee's ground in respect of the additions made without finding any incriminating material. The Ld. CIT( A) observed at Pg. 8 that the jurisdiction is conferred on the A. 0. to pass order to assess or re-assess the income. In para 4.1 the Ld. CIT(A) observed once the assessee has been put to notice and has filed the returns in response to the notices and has attended the assessment proceedings it cannot be said that issue of notice u/s 153A is not in order. The seized documents and papers are the incriminating material on the basis of which the additions have been made. With these observations the ground was decided against the assessee. 5.It is humbly submitted that the Ld. A.O. has not made any addition on the basis of any paper or document found during the course of the search. The Ld. A.O. has purely made the additions on the basis of inquiries made during the course of the assessment proceedings. The Ld. A.O. in para 8.41 Pg.10 observed that during the course of the assessment proceedings vide questionnaire u/s 142(1) the assessee was asked to furnish the detail of source of investment in the properties and cash deposits in the bank. The assessee filed the cash flow statement. However, the same is not acceptable, since the assessee failed to satisfactorily explain the investment. It is thus submitted that no incriminating material has been pointed out by the Ld. A.O. on the basis of which the additions have been made. The Id. A.O. simply during the course of the assessment proceedings has asked the assessee to file the details and the assessee furnished 6 Smt. Alamail Raju Income-tax Act, 1961.(SS) No.319 & 320/Ind/17 & ITANo.831/17 the details. The additions have not been made on the basis of any incriminating material found during the course of the search. As indicated above, the assessee has filed the regular returns every year with complete details. No incriminating material has been found to show that the assessee had earned any income other than disclosed in the return. In this connection, attention is drawn to the following decisions: a.CIT vs. Kabul Chawla 281 CTR 85 (Delhi) b.PC IT vs. Meeta Gutgutia 395 ITR 296 (Delhi) c.PCIT vs. Soumya Construction 387 ITR 529 (Guj.) d.CIT vs. Deepak Agrawal 251 Taxmann Pg.22 (Bom.) e.PCIT vs. Lata Jain 384 ITR 543 (Del.) Very recently the Hon'ble lndore Tribunal in the case of Shri Omprakash Gupta vs. ACIT in IT(SS) 277 to 2811lND/2017 for A.Y. 2008-09 to 2012-13 has allowed the assessee's appeal and deleted the addition and held that in absence of any incriminating documents found and seized during the course of search the A.O. is not justified in making the additions in non abated assessments passed u/s 153A. The facts of this case were absolutely identical as that of the assessee's case. The Hon 'ble Tribunal observed at Pg.11 that the additions made by the A.o. for all the years are not based on any incriminating material found during the course of search. It is only based on subsequent to search by issue of notice u/s 153A of the Act. The time limit to issue notice u/s 143(2) is already over before the date of search. Therefore, in our opinion all assessments are concluded assessments and not abated assessments and any addition has to be made in respect of those assessment years, there must be any incriminating material. In the present case there is no incriminating material and therefore, the additions made by the A.o. cannot survive. (The copy of the order is attached) Similar view was taken in the case of Anant Steel reported in 28 ITJ 47 The Hon'ble Indore Tribunal in the case of ACIT(1) vs. 7 Smt. Alamail Raju Income-tax Act, 1961.(SS) No.319 & 320/Ind/17 & ITANo.831/17 Sudeep Maheshwari in vide order dated 13.02.2019 held in para 6 that during the course of the search and seizure no incriminating material or undisclosed income or investments were found. Under the mental pressure the assessee declared 3 crores but retracted from the admission. It is a settled position of law that the addition cannot be sustained merely on the basis of the statement. There has to be some material corroborating contents of the statements. The A. 0. failed to correlate the disclosure made in the statement with the incriminating material gathered during the search. Therefore, no addition can be made on this account. (The copy of the order is attached herewith). ON MERITS The Ld. A.O. has made additions on account of purchase of the properties and investments in the bank. It is submitted that the assessee has been filing the returns regularly showing the income u/s 44AD from transport business. The income so earned was available with the assessee. The assessee has filed the cash flow statement which shows the monthly income and the accumulation of cash for purchase of the property. For the A.Y. 2010-11 she has shown the additional income of Rs. 3,00,000/- which has been accepted by the Ld. A.O. This was available for the purchase of the flat during the A.Y. 2010-11. Thus, for this year double addition has been made. Once as the income and secondly as the investment. The deposits in the bank and the cash balance are out of the income shown by the assessee. In view of this the additions made may please be deleted.
Per contra Ld. Departmental Representative (DR) vehemently argued supporting the order of both the lower authorities. 8 Smt. Alamail Raju Income-tax Act, 1961.(SS) No.319 & 320/Ind/17 & ITANo.831/17 8. We have heard the rival contentions and perused the record placed before us and also gone through the judicial matrix. 9. We will first take the assessee’s appeal for A.Y. 2008- 09 wherein the assessee has challenged the addition of Rs.3,11,465/- made towards unexplained investment for purchase of plot and also challenged the addition taking legal ground, relying on various judgments contending that no addition should have been made as there was no incriminating material found during the course of search pertaining to A.Y. 2008-09. The assessee has heavily relied on the decision of Coordinate Bench, Indore in the case of Shri Omprakash Gupta vs. ACIT in IT(SS)No. 277 to 281/Ind/2017. 10. We find that the assessee filed its regular return of income u/s 139 of the Act for A.Y. 2008-09 on 30.03.2009. This case was not picked up for scrutiny as the assessee was not served any notices u/s 143(2) of the Act latest by 30.09.2010. Search took place on 29.01.2014. At the time of search time limit for issuing notices u/s 143(2) of the Act stood expired. There is no dispute at the end of both the parties that no incriminating material during the course of search was 9 Smt. Alamail Raju Income-tax Act, 1961.(SS) No.319 & 320/Ind/17 & ITANo.831/17 found for the alleged transactions of unexplained investment pertaining to A.Y. 2008-09. It was only during the course of assessment proceedings that the information was called by the assessing officer. In these given facts, we find that the decision of Coordinate Bench, Indore in the case of Shri Omprakash Gupta (supra) squarely applicable. The Tribunal has followed the judgment of Hon'ble High Court of Delhi in the case of CIT vs. Kabul Chawka 281 CTR 85 (Delhi) and held that the additions made by the A.O. for all the years are not based on any incriminating material found during the course of search. The time limit to issue notice u/s 143(2) is already over before the date of search. Therefore, in our opinion all assessments are concluded assessments and not abated assessments and if any addition has to be made in respect of those assessment years, there must be any incriminating material. In the present case there is no incriminating material and therefore, the additions made by the A.O. cannot survive.
We, therefore, respectfully following the decision of the Tribunal hold that A.Y. 2008-09 comes under the category of completed and non abated assessment and 10 Smt. Alamail Raju Income-tax Act, 1961.(SS) No.319 & 320/Ind/17 & ITANo.831/17 both the lower authorities erred in confirming the addition of Rs. 3,11,465/- for unexplained investment in absence of any incriminating material and the same deserves to be deleted. We accordingly order so and allow all assessee’s grounds for A.Y. 2008-09.
Now we take up assessee’s appeal in IT(SS) No.320/Ind/2017 for A.Y. 2010-11 wherein two additions namely; addition for unexplained investment of Rs. 1,60,120/- towards investment made in purchase of flat and secondly; for unexplained cash of Rs. 72,000/- deposited in the bank during the year.
Ld. Counsel for the assessee has pleaded that the assessee had sufficient cash in hand to explain the alleged unexplained cash. Ld. Counsel for the assessee took us through pages No.44 to 46 of the paper book showing the cash flow statement. As regards the addition for Rs.1,60,120/- is concerned it has its nexus towards purchase of flat at K.K. Nagar, Bhopal on 28.05.2009. This flat was purchased for Rs. 4,61,120/- payment of Rs.3,01,000/- was explained. Balance amount of Rs.1,61,120/- was claimed to have been in cash towards stamp purchase and other payments. The 11 Smt. Alamail Raju Income-tax Act, 1961.(SS) No.319 & 320/Ind/17 & ITANo.831/17 assessee was unable to explain the source of cash at the time of assessment proceedings. Now the cash flow statement has been placed on record. On going through the same we find that the assessee has shown opening cash balance of Rs. 50,000/- as on 01.04.2007 for A.Y. 2007-08, cash income of Rs.3,06,000/- has been shown. There is no out flow for household drawings. We, however, note that in the income Tax return filed for A.Y. 2008-09, the assessee has disclosed income of Rs.1,28,010/- whereas in the cash flow statement income of Rs.3,06,000/- has been shown. So there is a difference of Rs.1,77,990/-. Similarly no household drawings have been shown. Even, if he consider Rs.5000/- per month as normal household withdrawal. The assessee should have spent of Rs.60,000/- for the year. On one hand the assessee has claimed higher cash in flow of Rs.1,77,990/- and on the other hands he has not shown cash withdrawal of Rs.60,000/- so the total sum of Rs.2,37,990/- needs to be reduced from the cash in hand shown by the assessee at Rs.5,17,035/- which is claimed as cash in hand as on the date of purchase of property. Therefore, when we reduce the amount of Rs. 2,37,990/- from the cash in hand claimed by the 12 Smt. Alamail Raju Income-tax Act, 1961.(SS) No.319 & 320/Ind/17 & ITANo.831/17 assessee at Rs.5,17,035/- on May 2009 the cash in hand available would be Rs.2,83,045/- which will not be sufficient to explain the total cash out flow of Rs.4,61,120/- used by the assessee for purchase of property. Therefore, we are of the considered view that as the assessee has been unable to explain cash investment of Rs.1,60,120/- the addition needs to be sustained. We, accordingly dismiss the assessee’s ground No.2.
As regards the addition for unexplained cash of Rs.72,000/- which also pertains to the same period from May, 2009 to June, 2009 situation remains the same as the assessee was short of cash in hand rather the cash in hand was negative and the negative balance would have widened more on account of no cash withdrawal shown by the assessee during the F.Y. 2008-09 also. In view of above discussion the cash in hand was negative at the time of alleged deposits and therefore, the impugned addition of Rs.72,000/- also needs to be confirmed. We, accordingly dismiss the assessee’s ground No.3.
Apropos Ground No.1 raised by the assessee for A.Y. 2010-11 challenging the addition in absence of any 13 Smt. Alamail Raju Income-tax Act, 1961.(SS) No.319 & 320/Ind/17 & ITANo.831/17 incriminating material, we find no merit in this ground because assessee had not filed its regular income tax return for A.Y. 2010-11. The return has been filed on 11.03.2016 which is after the date of issuance of notice u/s 153A of the Act and therefore, the contention of the assessee that no addition can be made without incriminating material cannot stand, as it is not covered by the aforesaid decision of Coordinate Bench Indore in the case of Shri Omprakash Gupta (supra). Thus, ground no.1 of assessees appeal for A.Y. 2010-11 deserves to be dismissed.
As a result, appeal of the assessee for A.Y. 2010-11 is dismissed.
Now we take assesee’s appeal for A.Y. 2014-15 wherein sole grievance relates to the addition of Rs.98,000/- towards unexplained cash.
From perusal of the cash flow statement, we find that the assessee has claimed to have cash in hand of Rs.7,94,415/-. Except for A.Y. 2007-08 the assessee has disclosed the regular income in its income tax return which almost matches to the cash in flow shown in the cash flow statement. The regular household withdrawals have also been shown from F.Y. 2010-11 onwards. The 14 Smt. Alamail Raju Income-tax Act, 1961.(SS) No.319 & 320/Ind/17 & ITANo.831/17 Addition has also been confirmed by us for A.Y. 2010-11 for short fall in cash. We, therefore, are of the considered opinion that as the assessee was having sufficient cash in hand during the F.Y. 2013-14 relevant to A.Y. 2014- 15 for deposit of cash of Rs.98,000/-, thus, the finding of lower authorities needs to be set aside and the addition for unexplained cash of Rs.98,000/- needs to be deleted. We accordingly allow the assessee ground no.1 and appeal for A.Y. 20014-15.
In the result, appeals of the assessee for A.Y. 2008- 09 & 2014-15 are allowed & appeal of the assessee for A.Y. 2010-11 is dismissed. Order was pronounced in the open court on 29.04.2019.