NAVINCHANDRA C. NATHANI,,NAVI MUMBAI vs. DEPUTY OMMISSIONER OF INCOME-TAX,,

The brief facts of the case as emanating from records are : For the sake of convenience facts are extracted from the appeal of assessee in ITA No. 690/PUN/2016 for assessment year 2010-11. The assessee is trading in food grains and spices. A search and survey action was carried out on Thakkar Group on 22-02-2012. The assessee is an associate of said group. During the course of search a document was seized and the assessee was asked to explain the same. The statement of assessee was recorded on 22-02-2012. In reply to Q. No. 26, the assessee offered Rs.68,50,000/- over and above the regular income. The assessee in response to notice u/s. 153A filed return of income for assessment year 2010-11 declaring business income of Rs.6,17,721/-. The Assessing Officer inter alia made addition of Rs.61,69,167/- on account of undisclosed income as per document seized during search. The assessee assailed the addition of aforesaid amount in assessment year 2010-11 on the ground that the assessee has offered the said income in the return of income for assessment year 2012-13. If the same amount is added in the assessment year 2010-11 it would result in double taxation of the same amount. The Commissioner of Income Tax (Appeals) rejected the contentions of the assessee and confirmed the findings of Assessing Officer in making addition of Rs.61,69,167/- in assessment year 2010-11. The Commissioner of Income Tax (Appeals) further directed the Assessing Officer to reduce the amount to the extent of double addition in

Shri Vipul Shah and Shri Rahul Shah appearing on behalf of the assessee submitted that the authorities below have erred in making addition of Rs.61,69,167/- in assessment year 2010-11. The assessee had offered the said amount in the return of income for assessment year 2012-13. The ld. AR referring to the answer to Q. No. 26 in the statement recorded on 22-02-2012 submitted that the assessee had voluntarily offered Rs.68,50,000/- over and above the regular income in the current Financial Year i.e. 2011-12 relevant to the assessment year 2012-13. The ld. AR submitted that the amount mentioned in seized document refers to transaction which had not materialized. Therefore, no addition can be made qua said transaction. The ld. AR further to buttress his submissions placed reliance on the following decisions : i. Commissioner of Income Tax Vs. Navinbhai N. Patel, 41 taxmann.com 424 (Gujarat); ii. M/s. Abhishek Enterprises Vs. Dy. Commissioner of Income Tax in ITA Nos. 1008 to 1010/MUM/2016 for assessment years 2005-06 to 2007-08 decided on 04-06-2018;

On the other hand Shri A.K. Modi representing the Department vehemently defended the impugned order and prayed for dismissing the appeals of the assessee. The ld. DR submitted that the document seized during search (page 5 of the paper book) bears the date 01-04-2010 after recording of the figure Rs.61,69,167/-. This clearly indicates that the amount pertains to the period prior to 01-04-2010 and not the assessment year 2012-13 as is claimed by the assessee. It is a well settled law that the income has to be assessed in the correct assessment year. The Commissioner of Income Tax (Appeals) has rightly confirmed the addition in assessment year 2010-11 and has directed the Assessing Officer to delete the double addition in assessment year 2012-13. It is not a case of double addition as has been alleged by the assessee.

We have heard the submissions made by representatives of rival sides and have perused the orders of authorities below. The ground No. 1

During search action a document was seized by the Department from the premises of assessee which is at page 5 of the paper book. On the basis of seized document the assessee made declaration in the statement recorded u/s. 132(4) of the Act on 22-02-2012. In response to Q. No. 26, the assessee voluntarily offered Rs.68.5 lakhs over and above regular income for the current financial year i.e. period relevant to assessment year 2012-13. However, a perusal of the seized document reflects that the amount offered by the assessee pertains to the period prior to 01-04-2010. Therefore, the amount Rs.61,69,167/- which is part of disclosure is relatable to Financial Year 2009-10 relevant to assessment year 2010-11. The authorities below have thus rightly assessed the amount Rs.61,69,167/- as undisclosed income of the assessee for the period relevant to the assessment year 2010-11.

The Commissioner of Income Tax (Appeals) while considering the appeal of assessee for the assessment year 2012-13 has directed the Assessing Officer to give consequent effect to the income disclosed by the assessee in assessment year 2012-13 to avoid double taxation. The relevant extract of the findings of Commissioner of Income Tax (Appeals) in this regard are as under : “8. In asst year 2012-13 the effective relief sought by the appellant is exclusion of the undisclosed income already taxed in asst year 2010-11 from this year's assessed income. The facts in this regard have already been discussed above and it has been held that the additional income of Rs.61,69,167/- taxed by the AO in asst year 2010-11 is out of the income disclosed by the appellant in his statement during the search. The appellant had disclosed total income of Rs.68,50,000/- in his statement recorded during the search. The appellant has not given full break up of this

The ground Nos. 3 and 4 in the revised grounds of appeal are consequential to ground No. 2. Accordingly, both the grounds are dismissed.

In ground No. 5 of the revised grounds of appeal, the assessee has assailed addition of Rs.4,94,167/- u/s. 14A r.w. Rule 8D. The contention of the assessee is that no incriminating material whatsoever was found during the search to make disallowance u/s. 14A. The return filed by the assessee u/s. 139 was processed summarily u/s. 143(1) of the Act. The time limit for issuing notice u/s. 143(2) had already expired. These facts are undisputed. It is a well settled law that in the case of completed assessment, any addition made in proceedings u/s. 153A without incriminating material is not legally sustainable. We find merit in the

In the result, appeal of the assessee is partly allowed.

In assessment year 2012-13 the only ground raised by the assessee is: “On the Facts and circumstances of the case and in law the action of learned Commissioner of Income Tax (A) in deleting a sum of Rs.50,18,492/-, wrongly treating it as Double Taxation of the same income, has resulted in reduction of income below returned income, which is not permitted under the provisions of Income Tax Act, 1961.”

The ld. AR contended that by adding Rs.61,69,167/- in assessment year 2010-11 and reducing the corresponding amount in assessment year 2012-13 would result in assessed income falling below returned income, which is not permissible.

It is a well settled law that the income has to be assessed in right assessment year. The assessee in his statement recorded u/s. 132(4) has offered Rs.68.5 lakhs in the period relevant to the assessment year 2012- 13. A perusal of seized document reveal that out of the aforesaid amount Rs.61,69,167/- pertain to Financial Year 2009-10 i.e. relevant to the assessment year 2010-11. Accordingly, the Assessing Officer assessed the said amount in 2010-11. In First Appellate proceedings the Commissioner of Income Tax (Appeals) has upheld the action of Assessing Officer and has further directed the Assessing Officer to give consequential effect in

In so far as anxiety of assessee that addition of Rs.61,69,167/- in assessment year 2010-11 would result in double taxation of the same amount in assessment year 2012-13 as the assessee has disclosed the same amount in return of income for assessment year 2012-13 is concerned, the Commissioner of Income Tax (Appeals) has given appropriate directions to Assessing Officer to give corresponding effect of the addition in assessment year 2010-11, in assessment year 2012-13.

In the result, the appeal of assessee in ITA No. 690/PUN/2016 is partly allowed and the appeal of assessee in ITA No. 691/PUN/2016 is dismissed.