FAZLE RAOOF SHEIKH,BHILWARA vs. DCIT, AJMER

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ITA 381/JPR/2024Status: DisposedITAT Jaipur25 October 2024AY 2018-1929 pages
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What did the Tribunal hold?

The Tribunal held that for AY 2016-17 and 2017-18, the addition on account of Hawala commission income could not be sustained. The reasoning was that the incriminating material recovered during the search pertained only to one assessment year (AY 2018-19), and therefore, jurisdiction could not be assumed under Section 153A for the previous two years without specific incriminating material for those periods. Guesswork was not permissible. Consequently, the additions on account of Hawala commission income for AY 2016-17 and 2017-18 were set aside. Regarding the addition of Rs. 4 crores for AY 2018-19, made under Section 69A on a protective basis, the Tribunal found no reason to sustain it. This was because the same addition was made on a substantive basis in the case of Shri Banwari Lal, from whom the cash was seized. Furthermore, Shri Banwari Lal had subsequently withdrawn his appeal and sought dismissal of his case, implying he was not claiming ownership of the cash. Therefore, the addition in the assessee's case on a protective basis was deleted. The ratio is that Section 153A assessments require incriminating material pertaining to the assessment year in question, and protective additions are unsustainable when the substantive addition has been resolved in another assessee's case. The appeals for AY 2016-17 and 2017-18 were allowed, and the appeal for AY 2018-19 was partly allowed.

What were the facts?

The assessee, Fazle Raoof Sheikh, is in appeal before the Income Tax Appellate Tribunal (ITAT), Jaipur Bench, against three orders of the CIT(A) dated January 11, 2024. These orders upheld the assessment orders for assessment years (AY) 2016-17, 2017-18, and 2018-19. The assessment orders were passed by the Assessing Officer (AO) on December 30, 2019, under Section 144 read with Section 153A of the Income Tax Act, 1961. The AO assessed income at Rs. 31,65,380/- for AY 2016-17, Rs. 31,10,380/- for AY 2017-18, and Rs. 4,32,45,510/- for AY 2018-19. The assessments were based on a search and seizure action on March 29, 2018, which led to the seizure of incriminating documents. The appeals were filed with a delay, which the Tribunal condoned.

What were the issues?

The Tribunal had to decide the following: 1. Whether the addition on account of Hawala commission income for AY 2016-17 and AY 2017-18 is sustainable in the absence of incriminating material pertaining to these specific assessment years, as per Section 153A of the Act. 2. Whether the addition of Rs. 4,00,00,000/- made under Section 69A of the Act on a protective basis for AY 2018-19 is sustainable, given that a substantive addition was made in the case of Shri Banwari Lal, from whom the cash was seized. Assessee's contentions: The assessee argued that for AY 2016-17 and 2017-18, the assessments under Section 153A were not justified as the incriminating material recovered during the search did not pertain to these specific years. The assessee also contended that the addition of Rs. 4 crores on a protective basis for AY 2018-19 was not sustainable as the same amount was added substantively in the case of Shri Banwari Lal. Revenue's contentions: The revenue's contentions are not explicitly detailed in the provided text, but it is implied that they supported the additions made by the AO and upheld by the CIT(A).

Which sections of the Income-tax Act were involved?

Section 144,Section 153A,Section 69A,Section 132(4),Section 143(2),Section 102,Section 44AD

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JAIPUR BENCHES,” B-BENCH” JAIPUR

Before: SHRI RATHOD KAMLESH JAYANTBHAI, AM& SHRI NARINDER KUMAR, JM

Hearing: 21/10/2024Pronounced: 25/10/2024

Result

44.

As a result, appeals-ITA No. 379/JPR/2024 and are allowed and the impugned orders passed by Learned CIT(A) upholding the assessment orders for the assessment years 2016-17 and 2017-18 are hereby set aside.

1.

to 381/JPR/2024 Fazle Raoof Sheikh vs. DCIT Copy of the common order be placed in the connected two appeal files. Files of appeal be consigned to the record room after the needful is done by the office.

Order pronounced in the open court on 25/10/2024.

1.

Sd/- Sd/- ¼jkBkSM+ deys'k t;UrHkkbZ ½ ¼ujsUnz dqekj½ (RATHOD KAMLESH JAYANTBHAI) (NARINDER KUMAR) ys[kk lnL; @Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 25/10/2024 *Santosh आदेश की प्रतिलिपिअग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू The Appellant- Fazle Raoof Sheikh, Bhilwara. 1. 2. izR;FkhZ@ The Respondent- DCIT, Ajmer. 3. vk;djvk;qDr@ The ld CIT 4. विभागीय प्रतिनिधि] आयकरअपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. xkMZQkbZy@ Guard File to 381/JPR/2024) vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेजज. त्महपेजतंत

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