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Facts
During a survey, the tax authorities found advance payments of Rs. 5,50,000/- by the assessee for AY 2004-05, for which no return was filed nor explanation provided. For subsequent assessment years (AYs 2005-06, 2006-07, and 2010-11), additions were made based solely on the assessee's alleged admissions during the survey regarding estimated commissions.
Held
For AY 2004-05, the tribunal dismissed the assessee's quantum and penalty appeals, upholding the addition of Rs. 5,50,000/- under Section 292C due to the lack of explanation. For AYs 2005-06, 2006-07, and 2010-11, the tribunal allowed the quantum and penalty appeals, citing a CBDT circular dated 10.03.2023 which renders admissions during a survey insignificant without independent corroborative material.
Key Issues
1. Whether additions based on unexplained investments for AY 2004-05 were justified under Section 292C of the Income Tax Act. 2. Whether additions based solely on alleged admissions during a survey for subsequent assessment years were valid without independent corroborative material, in light of a recent CBDT circular.
Sections Cited
147, 144, 271(1)(c), 143(3), 292C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’ NEW DELHI
Before: SHRI SATBEER SINGH GODARA
O R D E R
PER SATBEER SINGH GODARA, JM:
The instant batch of eight cases pertains to a single assessee herein, namely, Shri Rishi Prakash. All other relevant details stand tabulated as under:
2 ITA 811-818/Del/2024 appealed against Proceedings U/s 1 2004-05 CIT(A)-14, New Delhi – dt. 144/147 of the I.T. 23.07.2018 – case no. 12/17- Act, 1961. 18/IT/DEL/2018-19 2 2004-05 CIT(A)-14, New Delhi – dt. 271(1)(c) of the I.T. ITA No. 812/Del/2024 23.07.2018 – case no. 13/17- Act, 1961. 18/ IT/DEL/2018-19 3 2005-06 ITA No. 813/Del/2024 CIT(A)-14, New Delhi – dt. 143(3) of the I.T. Act, 23.07.2018 – case no. 14/17- 1961. 18/ IT/DEL/2018-19 4 2005- CIT(A)-14, New Delhi – dt. 271(1)(c) of the I.T. 23.07.2018 – case no. 15/17- Act, 1961. 18/ IT/DEL/2018-19 5 2006-07 CIT(A)-14, New Delhi – dt. 143(3) of the I.T. Act, 23.07.2018 – case no. 16/17- 1961. 18/2018-19 6 2006-07 ITA No. 816/Del/2024 CIT(A)-14, New Delhi – dt. 271(1)(c) of the I.T. 23.07.2018 – case no. 17/17- Act, 1961. 18/ IT/DEL/2018-19 7 2010-11 ITA No. 817/Del/2024 CIT(A)-14, New Delhi – dt. 143(3) of the I.T. Act, 23.07.2018 – case no. 18/17- 1961. 18/ IT/DEL/2018-19 8 2010-11 ITA No. 818/Del/2024 CIT(A)-14, New Delhi – dt. 271(1)(c) of the I.T. 23.07.2018 – case no. 19/17- Act, 1961. 18/ IT/DEL/2018-19
Heard both the parties at length. Case files perused. For the sake of convenience all these appeals are heard together and being disposed of by a common order.
It emerges during the course of hearing that both the learned lower authorities have added Rs. 5,50,000/- on account of alleged unexplained investments followed by estimated commission(s) of Rs. 45,000/-, Rs. 3,93,350/- and 38,52,375/-; assessment year wise, respectively in assessee’s heads.
It is in this factual background that I take up assessee’s first and foremost assessment year 2004-05, wherein the learned departmental authorities had carried out a survey in his case wherein it came across twin agreements dated 10.05.2003 and 12.11.2003 indicating advance payments on his behalf amounting to Rs. 5,00,000/- and Rs. 50,000/- respectively. Such impugned documents during the course of survey indeed carried presumption of correctness u/s 292C of the Act.
3 ITA 811-818/Del/2024 The assessee, undisputedly, had not filed any return nor explained source of the said investments before lower authorities. He has now filed an additional ground application that the department be directed to produce the relevant records. I am of the considered view that such a course of action is not available to an applicant seeking admission of additional ground in the tribunal as per NTPC Co. Ltd. v. CIT (1998) 229 ITR 383 (St.) as it is a precondition that all the relevant facts must form part of return. There is no other explanation disputing the impugned investment appears to have been made in the lower proceedings. It is in these peculiar facts that I invoke section 292C presumption to uphold the impugned addition of Rs. 5,50,000/- in the first and foremost assessment year 2004-05 in assessee’s hands. His quantum appeal and consequential 271(1)(c) penalty appeal are dismissed in very terms. Ordered accordingly.
Coming to the assessee’s latter three quantum appeals i.e. 815 & 817/Del/2024 (supra), it is noticed that both the learned lower authorities went only by his alleged admission during the course of survey indicating estimated commissions for making the impugned additions. The CBDT’s landmark circular dated 10.03.2023 holds that such admission or confession, as the case may be, in search or survey, do not carry any significance. There is no independent corroborative material relied by the learned lower authorities for the purpose of making the impugned identical additions in these three assessment years. I, therefore, accept the assessee’s instant sole substantive ground for A.Y. 2005-06, 2006-07 and 2010-11 involving his quantum appeals 815 & 817/Del/2024. The same shall stand allowed. So is the outcome of his corresponding penalty appeals ITA nos. 814, 816 & 818/Del/2024.
No other ground was argued or pressed during the course of hearing.
4 ITA 811-818/Del/2024
These assessee’s twin appeals & 812/Del/2024 are dismissed and remaining six appeals i.e. to 818/Del/2024 for A.Y. 2005-06, 2007-08 & 2010-11 are allowed in above terms. A copy of this common order will be placed in respective case files.
Order pronounced in open court on 19.12.2024.