THE ACIT, CENTRAL CIRCLE-1(2), AHMEDABAD vs. SHRIPAL VRAJLAL VORA, BHAVNAGAR

ITSSA 474/AHD/2019Status: DisposedITAT Ahmedabad06 December 2024AY 2013-1450 pages
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What were the facts?

The assessee, a practicing Chartered Accountant, was subjected to a survey under Section 133A on December 14, 2016, during which cash of Rs. 29,05,280 was found. This survey was converted into a search under Section 132 on December 16, 2016, and the cash was seized. Proceedings under Section 153A were initiated. Documents found suggested the assessee provided accommodation entries in the form of unsecured loans. The Assessing Officer (AO) estimated commission income at 2.75% for various assessment years (AYs) from 2011-12 to 2017-18 and made additions. Evidence for accommodation entries was found for AY 2015-16 and AY 2016-17, but the AO estimated income for all years. Additions were also made for cash deposits. The CIT(A) upheld additions only for years with evidence of accommodation entries, reducing the commission rate to 1%. Both the Revenue and the Assessee filed appeals.

What did the Tribunal hold?

The Tribunal held that for unabated assessment years (AYs 2011-12 to 2014-15), additions under Section 153A must be based on incriminating material found during the search, as per the decision in Abhishar Buildwell (supra). Therefore, the CIT(A)'s deletion of additions for these years was upheld, and the Revenue's appeals for these years were dismissed. For AY 2017-18, which was an abated assessment, the Tribunal ruled that the AO is entitled to assess or re-assess total income using all available materials, and the CIT(A)'s restriction to incriminating material was incorrect. The Revenue's ground for AY 2017-18 was allowed in part. Regarding the commission income for AY 2017-18, the Tribunal directed the AO to estimate commission income at 0.75% on an estimated transaction of Rs. 100 Crores, considering the evidence from earlier years and the assessee's admission regarding the source of cash. The assessee was to be allowed set-off for cash deposits and PMGKY disclosures. The Assessee's appeals were partly allowed, and the Revenue's appeal for AY 2017-18 was partly allowed.

What were the issues?

1. Whether, in assessment proceedings under Section 153A, additions can be made for assessment years where no incriminating material was found during the search, particularly for unabated assessments (Revenue's contention)? The Revenue argued that Section 153A does not stipulate that additions must be confined to incriminating material found during search and that restricting additions to such material would render the assessment scheme ineffective. They cited the intention of the legislature to assess or re-assess total income for six preceding years. The Assessee's position is implied by the CIT(A)'s finding that additions should be confined to incriminating material. 2. Whether the CIT(A) erred in restricting the addition for commission income on accommodation entries to 1% instead of 2.75% and in not considering all debit entries in the bank accounts of 36 concerns (Revenue's contention for AY 2015-16)? The Revenue argued that the CIT(A) erred in reducing the commission rate and in not taking into account all debit entries amounting to Rs. 345,95,16,540. The Assessee's position is implied by the CIT(A)'s reduction of the rate and restriction of additions. 3. Whether, for AY 2017-18 (an abated assessment), the CIT(A) erred in holding that additions must be confined to incriminating material found during the search (Revenue's contention)? The Revenue contended that for abated assessments under Section 153A, the AO is entitled to consider all available materials, and the CIT(A)'s view was incorrect. The Assessee's position is implied by the CIT(A)'s finding.

Which sections of the Income-tax Act were involved?

Section 133A,Section 132,Section 153A,Section 153BI,Section 158BB,Section 132(4)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD

For Appellant: Shri Parimalsinh B. Parmar, A.R
For Respondent: Shri A.P. Singh, CIT DR
Hearing: 23.10.2024

PER BENCH:

These 10 cross appeals are filed by the Revenue and the Assessee against the orders of Ld. Commissioner of Income Tax (Appeals)-11, Ahmedabad, (in short “CIT(A)”), dated 02.07.2019 passed for the assessment years (A.Ys.) 2011-12 to 2017-18. Since common facts and IT(SS)A

The order continues below.

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