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Facts
The assessee's appeals stemmed from additions for suppressed sales and unexplained cash deposits following a search and survey operation. The Revenue's appeals challenged the CIT(A)'s deletion of a protective addition made in the assessee's hands for a significant deposit in his son's NRE account, which the CIT(A) held should be taxed in the son's hands substantively.
Held
The Tribunal dismissed the assessee's appeals, affirming that the estimation of suppressed sales was based on material found during the search. It also dismissed the Revenue's appeals, upholding the CIT(A)'s decision that the protective addition was inappropriate, as the funds belonged to the son and should be taxed in his hands on a substantive basis, not protectively in the assessee's.
Key Issues
1. Whether the estimation of suppressed sales and addition for unexplained cash deposits were justified following a search and survey. 2. Whether a protective addition for deposits in the assessee's son's NRE account was correctly deleted by the CIT(A), asserting taxability in the son's hands on a substantive basis.
Sections Cited
153A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN
Before: Shri Inturi Rama Rao & Shri Prakash Chand Yadav
: Asst.Year 2014-2015 ITA No.260/Coch/2024 : Asst.Year 2011-2012 Rasheed V.P. The Asst.Commissioner of IV/131, NH Bypass, v. Income-tax, Edapally Central Circle 1 Ernakulam – 682 025. Ernakulam. PAN : AFHPP3555P. (Appellant) (Respondent) ITA No.755/Coch/2023 : Asst.Year 2011-2012 ITA No.757/Coch/2023 : Asst.Year 2012-2013 The Asst.Commissioner of Rasheed V.P. Income-tax, v. IV/131, NH Bypass, Central Circle 1 Edapally Ernakulam. Ernakulam – 682 025. (Appellant) (Respondent) Revenue by : Sri.Sundarasan S, CIT-DR Assessee by : --- None --- Date of Pronouncement : 27.05.2025 Date of Hearing : 26.05.2025. O R D E R Per Prakash Chand Yadav, JM : These appeals filed by the assessee and revenue are arising from different orders of the learned Commissioner of Income-tax (Appeals)-3, Kochi.
Since the only common issue involved in all these assessee’s appeals, they were heard together and are being disposed of by this consolidated order, for the sake of convenience.
Today, when the matter was called up for hearing, nobody appeared from the side of the assessee, despite service of notice. These matters were listed before bench so many times earlier also and adjourned at the request of the assessee, but today, nobody appeared from the side of the assessee. Therefore, we are going to decide the appeals on the basis of the material available on record.
There is a delay of 160 days in all these appeals, for which the assessee has filed an application for condonation of delay stating that the assessee was suffering from severe heart deceases and in support of the same, medical reports of the assessee for the relevant period were also annexed.
The learned CIT-DR opposed the condonation application.
After considering the rival submissions, we are of the view that there was a reasonable cause for not filing the appeals in time, for which the assessee has also annexed medical records. Therefore, we hereby condone the delay in the present appeals and proceed to decide the appeals.
We take assessment year 2008-2009 in as the lead appeal for adjudication and
Brief facts of the case as coming out from the orders of the authorities below are that the assessee is an individual and engaged in the business of purchase and sale of wood, timber and commodities of similar nature under the banner M/s.E- Oriental, a proprietary concern and M/s.Oriental Woods, a partnership concern. A search and seizure action was carried out in the business as well as residential premises of the assessee on 8th October, 2013 and thereafter a survey was also carried at the premises of the assessee. Later on, proceedings u/s.153A of the Act were initiated against the assessee. During the course of assessment proceedings, the Assessing Officer observed that the assessee has suppressed his sales and has not recorded exact sale in the books of account. Observing this, the A.O. estimated the sales turnover of the assessee to the tune of Rs.6,11,18,965. Besides this, the A.O. has also made an addition on account of unexplained cash deposits in the bank accounts, which is not disputed before us by assessee.
Aggrieved with the order of the AO, the assessee filed an appeal before the CIT(A) and inter alia argued that the estimated suppression of 40% of accounted sales is not based upon the material found during the course of search and hence the order of the AO is not tenable. However, the CIT(A) could not find any force in the arguments of the assessee and affirmed the order of the AO.
The learned DR relied upon the orders of the authorities below.
After considering the rival submissions and perusing the material available on record, we are of the view that there is no infirmity in the order of the CIT(A) as the AO has made the estimation on the basis of material found during the course of search. Therefore, the appeal of the assessee stands dismissed.
In the result, all the appeals filed by the assessee are dismissed.
Revenue’s appeals
These two appeals of the Revenue are arising from the order of the CIT(A) dated 18th August, 2023 and relates to the assessment years 2011-2012 and 2012-2013.
The solitary issue raised by the Revenue is that the CIT(A) has erred in deleting the protective addition made by the AO in the hands of the assessee. We are taking assessment year 2011-2012 as a lead year for adjudication and decision.
Brief facts of the case as coming out and relevant for this year are that during the course of assessment proceedings, the AO observed that there is a deposit of Rs.2,72,38,241 in the NRE account of the assessee’s son. This amount has been & Ors. Rasheed V.P. added by the AO in the hands of the assessee on protective basis. The AO has made this addition on protective basis in the hands of the assessee merely on the ground that the son of the assessee, using these accounts, have remitted approximately Rs.9.94 crore from assessment year 2010-2011 to 2012-2013, to the assessee and during the course of assessment proceedings, no clarification has been submitted by the assessee vis-à-vis receipts of these amount. However, the CIT(A) observed that this account exclusively pertains to the assessee Mr. Ashar Rasheed and not proved to be related to the business of the assessee, therefore, the same has to be taxed in the hands of assessee’s son on substantive basis and not in the hands of the assessee on protective basis.
The learned CIT-DR relied upon the order of the AO.
After considering the arguments of the learned CIT-DR and perusing the material available on record, we are of the firm opinion that no interference is called for with the order of the CIT(A) because he has merely deleted the protective addition and has affirmed that this account belongs to son of the assessee, and hence if any addition is required to be made the same to be made in the hands of the son of the assessee. Therefore, we dismiss these appeals of the Revenue.
In the result, the appeals of the Revenue stand dismissed.
To sum up, appeals filed by the assessee as well as Revenue are dismissed.