SHRI RAM PRAKASH PANDEY ,KOLKATA vs. DCIT, CENTRAL CIRCLE - 3(3), KOLKATA , KOLKATA

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ITSSA 82/KOL/2018Status: DisposedITAT Kolkata07 October 2024AY 2013-145 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the additions made by the Assessing Officer were not sustainable. Regarding the addition on account of sale of shares (Rs. 4,67,963/-), the Tribunal noted that the AO relied solely on information from the departmental online system without providing any supporting documents to the assessee. The AO did not demonstrate that the assessee had purchased these shares in earlier years and sold them in the assessment year. Therefore, this addition was deemed unsustainable. Concerning the disallowance of agricultural income (Rs. 96,000/-), the Tribunal observed that the Revenue officers failed to demonstrate how the assessee had claimed this income, noting the assessee's stand that it was added back and not claimed. This aspect was not verified by either authority. Crucially, the Tribunal held that all three additions were not made on the basis of any seized material, but were routine disallowances. It relied on the Supreme Court's judgment in Pr. CIT, Central -3 vs. Abhisar Buildwell (P) Ltd. [2023] 149 taxmann.com 399 (SC), which mandates that additions in search assessments should be based on seized material. As no seized material was referred to by the AO for any of the additions, the Tribunal allowed the appeal and deleted all the additions. No issue was expressly left undecided.

What were the facts?

A search and seizure operation was conducted on Prakash Group on November 21/22, 2013. Subsequently, a notice under section 153A of the Income Tax Act, 1961, was issued to the assessee, Shri Ram Prakash Pandey, for Assessment Year 2013-2014. The assessee filed a return declaring a total income of Rs. 2,29,060/-. The Assessing Officer (AO) framed an assessment order under section 153A/143(3) on March 29, 2016, making additions of Rs. 11,74,115/- under section 14A, disallowing Rs. 96,000/- of claimed agricultural income, and adding Rs. 4,67,963/- on account of undisclosed sale proceeds of shares. The Commissioner of Income Tax (Appeals) [CIT(A)] deleted the section 14A addition, restricting it to Rs. 762/-. The assessee appealed to the Income Tax Appellate Tribunal (ITAT) against the remaining additions.

What were the issues?

1. Whether additions made by the Assessing Officer in an assessment order passed under section 153A are sustainable when no seized material was found during the course of the search? (Question of law and fact, turning on Section 153A). 2. Whether the addition of Rs. 96,000/- on account of disallowance of agricultural income is sustainable? (Question of law and fact). 3. Whether the addition of Rs. 4,67,963/- on account of undisclosed receipts from the sale of shares is sustainable? (Question of law and fact). Assessee's Contentions: The assessee argued that the additions made by the AO under section 153A are not sustainable as no seized material was found during the search. The additions were routine disallowances. The assessee also contended that the agricultural income of Rs. 52,450/- was added back and not claimed, and this aspect was not properly verified by the authorities. Regarding the sale of shares, the assessee argued that the AO failed to provide any supporting documents to show the purchase of shares in earlier years and their sale in the current year, relying solely on departmental portal information. Revenue's Contentions: The judgment does not record specific contentions made by the Revenue on these issues.

Which sections of the Income-tax Act were involved?

Section 153A,Section 143(3),Section 14A,Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH, KOLKATA

Before: Shri Rajpal Yadav, Vice-(KZ) & Shri Rajesh Kumar

Per Rajpal Yadav, Vice-President (KZ):- The present appeal is directed at the instance of assessee against the order of ld. Commissioner of Income Tax (Appeals)-21, Kolkata dated 14th June, 2018 passed for Assessment Year 2013- 14.

IT(SS)A No. 82/KOL/2018 (A.Y. 2013-2014) Shri Ram Prakash Pandey 2. The assessee has taken six grounds of appeal. However, his grievances revolve around two issues, namely- (a) whether additions made by the ld. Assessing Officer in an assessment order passed under section 153A is sustainable or not? because no seized material was found during the course of search;

(b) whether addition of Rs.96,000/- made on account of disallowance of agricultural income and Rs.4,67,963/- added on account of undisclosed receipts of sale of shares are sustainable?

3.

With the assistance of ld. Representatives, we have gone through the record carefully. A search and seizure operation was carried out at the premises of Prakash Group on 21/22-11-2013. A notice under section 153A was issued upon the assessee and in response to that assessee has filed his return of income on 07.08.2015 declaring total income of Rs.2,29,060/-. The ld. Assessing Officer has framed the assessment order under section 153A/143(3) of the Income Tax Act, 1961 on 29.03.2016. He made the following additions:-

(a) Addition of Rs.11,74,115/- under section 14A (b) Rs.96,000/- disallowance out of the claim of agricultural income (c) Addition of Rs.4,67,963/- on account of undisclosed sale proceeds of the shares 2

IT(SS)A No. 82/KOL/2018 (A.Y. 2013-2014) Shri Ram Prakash Pandey

4.

Dissatisfied with this disallowance, the assessee carried the matter in appeal before the ld. CIT(Appeals). The ld. CIT(Appeals) deleted the first disallowance made with the aid of section 14A read with Rule 8D on the ground that exempt income claimed by the assessee is only of Rs.762/-. The ld. CIT(Appeals) has restricted the disallowance to this extent. The assessee has not challenged this issue in appeal because substantial part has already been deleted by ld. CIT(Appeals). This aspect has been referred to appreciate the angle with which ld. Assessing Officer has passed the search assessment.

5.

The ld. CIT(Appeals) with regard to disallowance of agricultural income observed that claim of the assessee is that he has already added back an income of Rs.52,450/-, which is required to be re-verified.

6.

The finding of the ld. Assessing Officer on the third addition is required to be noted, which reads as under:- “Sale of undisclosed shares- On perusal of the ITS details downloaded from the departmental online system, it is observed that the assessee sold shares of LUPIN for Rs.2,60,085/- & CIPLA for Rs.2,07,878/- during the year. These shares were not shown in the balance sheet of earlier years the assessee was asked through a show- cause letter dated 04.03.2016 to submit the details, but he failed to explain the same with supporting evidence. Hence, the total amount shown as receipt from shares sold for Rs.4,67,963/- (260085 + 207878) is treated as undisclosed transaction in the hands of the assessee and added to the total income.

IT(SS)A No. 82/KOL/2018 (A.Y. 2013-2014) Shri Ram Prakash Pandey Penalty proceedings u/s 271(1)(c) is initiated separately”.

7.

On due consideration of the above finding, we are of the view that ld. Assessing Officer has not supplied any document to the assessee. On whose basis, he has arrived at the conclusion that assessee sold shares. His only case is that in the Portal of the Income Tax Department, sale of certain shares is reflected. It is for the ld. Assessing Officer to show that the assessee has purchased those shares in earlier years and those were sold by the assessee in this year. There is nothing possessed by the ld. Assessing Officer. Hence, this addition is not sustainable.

8.

As far as disallowance of agricultural income is concerned, the Revenue Officers have failed to demonstrate as to how the assessee has claimed this agricultural income. The stand of the assessee is that he has shown agricultural income at Rs.52,450/- , which was added back and in fact, not claimed. This aspect has not been verified by either of the authorities but ld. Assessing Officer has made the addition without proper understanding of the facts and circumstances.

9.

Apart from the above, all these three additions are not made on the basis of any seized material. These are the routine disallowances. Therefore, these are otherwise not sustainable in view of the latest judgment of the Hon’ble Supreme Court in the case of Pr. CIT, Central -3 -vs.- Abhisar Buildwell (P) Ltd. [2023] 149 taxmann.com 399 (SC). The Hon’ble Supreme Court has propounded that additions are to be made on the basis of seized 4

IT(SS)A No. 82/KOL/2018 (A.Y. 2013-2014) Shri Ram Prakash Pandey material found during the course of search. The ld. Assessing Officer has nowhere referred to any seized material regarding any of the additions. Therefore, we allow this appeal and delete all these additions.

10.

In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 07/10/2024.

Sd/- Sd/- (Rajesh Kumar) (Rajpal Yadav) Accountant Member Vice-President (KZ) Kolkata, the 7th day of October, 2024 Copies to :(1) Shri Ram Prakash Pandey, P-214, Block-A, Lake Town, Kolkata-700089, West Bengal (2) Deputy Commissioner of Income Tax, Central Circle-3(3), Aayakar Bhawan Poorva, 110, Shanti Pally, Kolkata-700107 (3) Commissioner of Income Tax (Appeals)-21, Kolkata; (4) CIT - , Kolkata; (5) The Departmental Representative; (6) Guard File TRUE COPY By order

Assistant Registrar, Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha/Sr. P.S.

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