RAJU J SOOMANEY,MUMBAI vs. CIT CEN CIR IV, MUMBAI

Briefly stated facts are that a search and seizure action under section 132 of the Act was carried out by the department on Saf Yeast Group on 30.11.2006. The present assessee has been member of Saf Yeast group, was covered under search and seizure action under section 132 of the Act. Original return of income for AY 2001-02 was filed by the assessee under section 139(1) of the Act on 23.05.2001 declaring the income at ₹ 1,45,210/-. This return has become final and no proceedings whatsoever was pending as on the date of the search and seizure action carried out by the department under section 132 of the Act on very assessee’s cases on 30.11.2006. The AO issued notices under section 153A of the Act and finally, completed the assessment under section 153A read with section 143(3) of the Act, vide order dated 27.11.2008 and made addition on account of deposits made with State Bank of Bikaner and Jaipur Saving Account No. 5222. According to AO, in the present Saving Bank Account there is peak of credit entries of deposits of cash of ₹ 7,24,098/- as on 03.05.2011 and giving benefit of opening capital balances of ₹ 2 lakhs and gross total income declare during the year under the original return of income at ₹ 1,53,667/-, he estimated the undisclosed income of ₹ 3,68,431/-. The AO further estimated the addition of ₹ 1 lakh on account of low household withdrawal. Accordingly, the AO computed the undisclosed income of the assessee at ₹ 4,68,431/- . Aggrieved, assessee preferred the appeal before CIT(A).

The CIT(A) considered this issue, but finally added the unexplained gift of ₹ 11.23 lakhs and after allowing the benefit of already added discrepancy in the capital account and the drawings and deletion made as per Para 7.1 of CIT(A) ‘s order of ₹ 2 lakhs retained further addition of -43, 4211/Mum/2011 347/Mum/2014 ₹ 4,54,569/-. For this CIT(A) confirmed the addition by observing in Para 8.1 as under: -

In view of the above facts and circumstances, we are of the view that the assessee has filed regular return of income for AY 2001-02 on 02.03.2009, wherein the gift received from the above said parties of ₹ 11.23 lakhs has been disclosed in the capital account which is enclosed with the return of income. Further, we also find that the bank balances of the saving bank account No. 5222 mentioned with the State Bank of Bikaner and Jaipur is also disclosed in the balance sheet as on 31.03.2001 and there is no incriminating material available with the assessing officer for framing this assessment under section 153A read with section 143(3) of the Act. The assessment originally made is unabated and once, there is no incriminating material found during the course of search in relation to the income added as undisclosed income, the proposition argued by the learned Counsel for the assessee relying on the decision of Hon’ble Bombay High Court in the case of Continental Warehouse Corporation (supra) is clearly applicable in respect of -43, 4211/Mum/2011 347/Mum/2014 undisclosed income added by the AO despite the fact that there is no incriminating material found during the course of search. Following the Hon’ble Bombay High Court and going by the facts of the case, we delete the addition. The appeal of the assessee is allowed.

The facts and circumstances are exactly identical from AY 2001- 02. The AO added the gift of Rs. 6,62,000/- as unexplained in the hands of the assessee received from Shri Gulab M. Adnani. The CIT(A) confirmed this addition and further enhanced the following additions:-

The facts and circumstances are exactly identical relating to search conducted on 30.11.2006. We find from the facts of the case that the assessee has filed regular return of income for AY 2003-04 on 27.08.2003 under section 139 of the Act and along with the return of income the assessee has disclosed the gifts received in the capital account filed with the return of income from Shri Gulab M. Adnani. The assessee has enclose the copy of capital account along with the return, wherein the gift received from the above said party of ₹ 6,62,000/- has been disclosed. Further, the assessee also drew our attention to the capital account wherein he has declared the receipt of fixed deposit maturity amount of ₹ 2 lacs and amount receive don redemption of ULIP of ₹ 86,855/-. Further, we also find that there is no proceedings pending before the AO on account of regular assessment and there is no incriminating material available with the assessing officer for framing this assessment under section 153A read with section 143(3) of the Act. The -43, 4211/Mum/2011 347/Mum/2014 assessment originally made is unabated and once, there is no incriminating material found during the course of search in relation to the income added as undisclosed income, the proposition argued by the learned Counsel for the assessee relying on the decision of Hon’ble Bombay High Court in the case of Continental Warehouse Corporation (supra) is clearly applicable in respect of undisclosed income added by the AO despite the fact that there is no incriminating material found during the course of search. Following the Hon’ble Bombay High Court and going by the facts of the case, we delete the addition. The appeal of the assessee is allowed.

The facts and circumstances are exactly identical from AYs 2001- 02 and 2003-04. The AO added an amount of ₹ 55,000/- on account of unexplained cash credit in the hands of the assessee being liability shown in the balance sheet in the name of ‘Plas Chem’.

The facts and circumstances are exactly identical relating to search conducted on 30.11.2006. We find from the facts of the case that the assessee has filed regular return of income for AY 2004-05 on 01.12.2004 under section 139 of the Act and along with the return of income the assessee has disclosed this amount of ₹ 55,000/- in the balance sheet being liability in the name of ‘Plas Chem’. Further, we also find that there is no proceedings pending before the AO on account of regular assessment and there is no incriminating material available with the assessing officer for framing this assessment under section 153A read with section 143(3) of the Act. The assessment originally made is unabated and once, there is no incriminating material found during the course of search in relation to the income added as undisclosed income, the proposition argued by the learned Counsel for the assessee relying -43, 4211/Mum/2011 347/Mum/2014 on the decision of Hon’ble Bombay High Court in the case of Continental Warehouse Corporation (supra) is clearly applicable in respect of undisclosed income added by the AO despite the fact that there is no incriminating material found during the course of search. Following the Hon’ble Bombay High Court and going by the facts of the case, we delete the addition.

One more issue in this appeal is raised by assessee by way of additional ground that the CIT(A) has enhanced the assessment in respect to gift received from Mr. Gulab Adnani as unexplained income under section 68 of the Act. For this assessee has raised the following additional ground.

The facts and circumstances are exactly identical relating to search conducted on 30.11.2006. We find from the facts of the case that the assessee has filed regular return of income for AY 2004-05 on 27.08.2003 under section 139 of the Act and along with the return of income the assessee has disclosed the gifts received in the capital account filed with the return of income from Shri Gulab M. Adnani. The assessee has enclose the copy of capital account along with the return, wherein the gift received from the above said party of ₹ 6,31,000/- has been disclosed. Further, we also find that there is no proceeding pending before the AO on account of regular assessment and there is no incriminating material available with the assessing officer for framing this assessment under section 153A read with section 143(3) of the Act. The -43, 4211/Mum/2011 347/Mum/2014 assessment originally made is unabated and once, there is no incriminating material found during the course of search in relation to the income added as undisclosed income, the proposition argued by the learned Counsel for the assessee relying on the decision of Hon’ble Bombay High Court in the case of Continental Warehouse Corporation (supra) is clearly applicable in respect of undisclosed income added by the AO despite the fact that there is no incriminating material found during the course of search. Following the Hon’ble Bombay High Court and going by the facts of the case, we delete the addition. The appeal of the assessee is allowed.

The only issue in this appeal of assessee is as regards to the order of CIT(A) confirming the addition made by the AO of ₹ 25,000/- on account of unexplained cash credit.

The facts and circumstances are exactly identical relating to search conducted on 30.11.2006. We find from the facts of the case that the assessee has filed regular return of income for AY 2005-06 on 01.09.2005 under section 139 of the Act and along with the return of income the assessee has disclosed this amount of ₹ 25,000/- in the balance sheet being liability in the name of Shri Gulab Adnani. Further, we also find that there is no proceeding pending before the AO on account of regular assessment and there is no incriminating material available with the assessing officer for framing this assessment under section 153A read with section 143(3) of the Act. The assessment originally made is unabated and once, there is no incriminating material found during the course of search in relation to the income added as undisclosed income, the proposition argued by the learned Counsel for the assessee relying on the decision of Hon’ble Bombay High Court in -43, 4211/Mum/2011 347/Mum/2014 the case of Continental Warehouse Corporation (supra) is clearly applicable in respect of undisclosed income added by the AO despite the fact that there is no incriminating material found during the course of search. Following the Hon’ble Bombay High Court and going by the facts of the case, we delete the addition.

The first issue in this appeal of assessee is as regards to the order of CIT(A) confirming the addition made by AO of unexplained cash credit of Rs. 4,97,000/-. The AO noted that there is credit in the accounts of the assessee amounting to Rs. 4.97 lakhs in the name of ‘journal’ as the assessee could not file any details. The AO added the same to the return of income of the assessee. Aggrieved, assessee preferred the appeal before CIT(A).

Before CIT(A), the assessee file reconciliation statement based on the credits of Rs. 4.97 lakhs as on 31.03.2006. It was explained that this entry was on account of reconciliation statement based on the credits of Rs. 4.97 lakhs. The AO has made addition. The assessee before the CIT(A) explained that there is credit in his capital account under the narration of ‘journal’ of an amount of Rs. 4.97 lakhs as on 31.03.06. It was explained that this entry difference in the value recorded in the books of account, which was on explained by filing of reconciliation of Flat account in the books of accounts. It was explained that there was an accounting error occurred in AYs 1995-96, 1998-99, 2000-01 and 2004- 05 while recording the value of Flat owned by the assessee resulting in short credit in the capital account and the assessee filed reconciliation statement. The CIT(A) confirmed the addition by stating that the assessee has failed to satisfactorily explain the credit entry of Rs. 4.97 lakhs by observing in Para 12.3 as under: - -43, 4211/Mum/2011 347/Mum/2014

Before us, the learned Counsel for the assessee drew our attention to balance sheet as on 31.03.2005, which carried forward the value of flat. Finally, the learned Counsel for the assessee took us through the balance sheet for 31.03.2006, wherein the value disclosed is Rs. 29,67,200/- and this is the actual value. The learned Counsel for the assessee filed paper book at pages 1, wherein the details of credit balances as per the balance sheet for AYs 1995-96, 2000-01, 1998-99 and 2004-05 are disclosed and finally reconciliation as on 31.03.2006 is enclosed. We have gone through the reconciliation and when confronted the same to the learned CIT DR, he fairly stated that this reconciliation can be sent back to the file of the AO for verification and in case this verification is correct the AO can delete the addition otherwise, the AO will sustain the addition.

After hearing both the sides and going through the facts of the case, we are of the view that let this issue of reconciliation referred back -43, 4211/Mum/2011 347/Mum/2014 to the file of the AO and we order accordingly. The AO will go into the reconciliation and after verifying reconciliation, will decide whether addition is to be sustained or addition is to be deleted. We order accordingly. The matter is remanded back to the file of the AO.

The next issue in this appeal of is as regards to the order of CIT(A) confirming the addition of gift received from Shri Gulab M. Adnani of Rs. 25,000/-. At the outset, the learned Counsel for the assessee has not argued this issue due to smallness of tax effect and hence, he stated that this can be decided by the Tribunal accordingly. As the learned Counsel for the assessee seems not interested in prosecuting this issue due to smallness of amount, the same is dismissed.

The only issue in this appeal of assessee is against the revision order passed by the CIT(A) revising the assessment framed by AO under section 153A read with section 143(3) of the Act. For this assessee has raised the following 3 effective grounds:-

At the outset, the learned Counsel for the assessee stated that the minor children of the assessee i.e. Master Ashish Soomaney and Master A Soomaney received gift from one Shri Gulab M. Adnani, a -43, 4211/Mum/2011 347/Mum/2014 Spanish citizen of Indian origin. During FY 2001-02 relevant to AY 2002- 03 the following gifts were received:-

According to CIT(A), the assessment completed under section 143(3) read with section 143A of the Act is erroneous as the genuineness of this Gift received from Shri Gulab M. Adnani has not been verified and the above gifts were neither disclosed by the assessee in his return of income nor any particulars or details are submitted during the course of assessment proceedings. The learned Counsel for the assessee before us stated that that there is no incriminating material found during the search in relation to these gifts, which were disclosed in the return filed by the assessee for AY 2002-03. We find from the assessment order and the order of PCIT revising the assessment, that there is no incriminating material found during the course of search which reveals that this gift amount is undisclosed. For this proposition, the learned Counsel for the assessee stated that this issue has been deliberated Hon’ble Delhi High Court in the case of Pr. CIT vs. Shri Mahesh Kumar Gupta in /2-16 & CM Nos. 43256-43257/2016 vide order dated 22.11.2016 observing as under: -

In view of the above decision of Hon’ble High court, we are of the view that the assessment framed by AO is neither erroneous nor prejudicial to the interest of the Revenue and hence, the PCIT cannot assume jurisdiction under section 263 of the Act for revising the assessment. Accordingly, we quash the revision order passed by PCIT under section 263 of the Act and allow the appeal of the assessee. -43, 4211/Mum/2011 347/Mum/2014 In for AY 2002-03

At the outset, it is noticed that the assessment framed by AO in consequence to revision order passed by the PCIT under section 263 of the Act. Since, we have quashed the revision order passed by the PCIT, the consequential assessment framed will not survive and hence, the orders passed by the lower authorities are set aside and the appeal of the assessee is allowed.

In the result, the appeals of assessee in 3740, 3741, 3742/Mum/2011 are allowed. Appeal of assessee in ITA No. 3743/Mum/2011 is set aside to the file of the AO and allowed partly. Appeals of assessee in 347/Mum/2014 are allowed.