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Facts
A search and seizure action was conducted on Mr. P. Janakar, and documents belonging to the assessee were found. A notice under section 153C was issued, leading to assessment with additions. The assessee appealed to the CIT(A), who partly allowed the grievance.
Held
The Tribunal held that the assessment order was passed under Section 153C read with Section 143(3), not solely under Section 143(3). The assessee's challenge to jurisdiction based on the Supreme Court judgment in CIT Vs. Jasjit Singh was found not applicable. Regarding the additions sustained by CIT(A), the Tribunal found that the AO did not provide sufficient opportunity for explanation or conduct further inquiry, directing the AO to delete the addition.
Key Issues
Whether the AO's jurisdiction to pass the assessment order under Section 153C read with Section 143(3) was valid, and whether the additions made on account of certain notebook entries were justified without further inquiry.
Sections Cited
153C, 143(3), 115BBE
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Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI MANU KUMAR GIRI & SHRI JAGADISH
This appeal filed by the assessee is directed against the order of the Ld. Commissioner of Income Tax (Appeals), Chennai-18 [CIT(A)] dated 28.08.2024 for Assessment Year 2017-18.
Briefly stated, the facts of the case are that a search and seizure action was conducted in the case of Mr. P. Janakar on 10.05.2016. In the search, documents belonging to the assessee were found and seized. Accordingly, notice u/s 153C was issued on 10.09.2018 after recording of satisfaction. On the basis of the same, assessment was made making various additions u/s 115BBE, sundry credit, unaccounted income and chit transaction etc.
Aggrieved, the assessee went in appeal before the ld. CIT(A) who partly allowed the grievance.
The aggrieved assessee is in appeal before us. By Ground No.2 of this appeal, assessee challenges the jurisdiction of the AO to pass the order u/s 143(3) of the Act without complying with the provisions of section 153C of the Act.
Before us, the ld. counsel for the assessee vehemently stated in the light of the Hon’ble Supreme Court judgment in the case of CIT Vs Jasjit Singh [458 ITR 437 (SC)] that the year of search in this case would be AY 20192- and not 2017-18. It is only the AY 2019-20 that can be framed u/s 143(3) of the Act and the six years preceding the year of search have to be necessarily be conducted u/s 153C of the Act.
On the other hand, the ld. DR relied upon the orders of the AO and CIT(A).
We have heard the rival submissions and have perused the relevant material on record. We find that the assessment order has been passed u/s 153C r.w.s 143(3) of the Act and not simplicitor u/s 143(3) of the Act as alleged. The ld. CIT(A) has categorically recorded in his order that the AO issued notice u/s 153C on 10.09.2018 after recording satisfaction. Hence, in the light of above factual matrix, the case law relied by the assessee in the case of the Hon'ble Supreme Court in the case of CIT Vs. Jasjit Singh 458 ITR 437(SC) is dehors the facts of this present case therefore, not applicable. Hence, legal ground No.2 of the assessee is rejected accordingly.
With regard to the part addition sustained by the CIT(A) of Rs.14,98,720/-, the assessee submitted that the said notebook was maintained by the partner Sri P. Narasimhan to record details of expenditure incurred in certain civil construction supervision work undertaken by him in his individual capacity, for which he was getting consultancy fee. Further the said notebook was maintained by his nephew Sri D. Siva. It was categorically explained by the assessee that entries relating to such consultancy work noted in the notebook did not relate to the appellant.
Per contra, the ld. DR relied upon the order of the CIT(A).
We have gone through the orders of the lower authorities and perused the record. We find that before making addition, the AO has not given further sufficient opportunity to the assessee to explain the entries in the notebook. We also find that the AO has not conducted further enquiry to check the veracity of the assessee’s contentions with concerned parties Sri P. Narasimhan (Partner), Sri D. Siva. Hence, we are of the considered view that the explanation given by the assessee cannot be ruled out when no further enquiry has been done by the AO. Therefore, in the above factual matrix, we direct the AO to delete the part addition sustained by the CIT(A).
In the result, Appeal of assessee is partly allowed.