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2017 (5) TMI 11 - AT - Income TaxUnaccounted investment - Disallowance on account of peak credit - set off the impugned peak credit while adding the peak credit in the subsequent year - Held that - Admittedly the assessee was engaged in the business activity which was not disclosed to the income tax Department. Therefore the profit from such business activity and the fund invested in such business activity should be brought to tax. However on the examining the order of lower authorities we find that the addition on account of profit on undisclosed business was made in the assessment years 2007- 08 to 2009-10 only. But the addition on account of undisclosed investment was only made in the assessment year 2007-08. Therefore, there is no question of the set off of the peak credit added to the taxable income in the earlier years as no such addition was made in earlier years i.e. AYs 2004-05, 2005-06 and 2006-07. Therefore, we find no infirmity in the order of ld CIT(A). Hence, this ground of appeal of assessee is dismissed. Undisclosed investment in the land - Held that - CIT(A) has given relief to the assessee in part by observing that double addition cannot be made on the basis of same impounded documents.Thus, it is also pertinent to note that once the addition has been made on the basis of impounded documents towards the profit and undisclosed investment as discussed above, then in our considered view the new addition on the basis of same impounded documents cannot be made. However, it is important to note that the impugned undisclosed investment for ₹ 27,55,198/- was made in the year under consideration whereas the amount in the impounded documents is of ₹ 20,97,870/- only. Thus from the above it is clear that the investment was made over and above the amount shown in the impounded documents in the year under consideration. Therefore, the balance amount of ₹ 6,57,328/- does not arise out of the impounded documents. Hence, we find no infirmity in the order of ld CIT(A) and therefore this ground of appeal of the assessee is dismissed.
Issues Involved:
1. Disallowance of peak credit. 2. Disallowance of undisclosed investment in land. 3. Legality of proceedings initiated and completed under section 153A/143(3) of the Income Tax Act. 4. Appeals by Revenue dismissed due to low tax effect. 5. Cross Objections filed by the assessee. Detailed Analysis: 1. Disallowance of Peak Credit: The assessee contested the disallowance of ?11,16,323/- on account of peak credit, arguing it resulted in double addition since the profit on undisclosed sales had already been assessed. The CIT(A) confirmed the AO’s addition, reasoning that there must be some investment in the unaccounted business. However, CIT(A) allowed a set-off for the peak credit in subsequent years. The Tribunal upheld the CIT(A)'s decision, noting no peak credit addition was made in earlier years (AYs 2004-05 to 2006-07), thus no set-off was warranted. 2. Disallowance of Undisclosed Investment in Land: The AO added ?27,55,198/- as undisclosed investment in land based on seized documents. The CIT(A) provided partial relief, reducing the addition to ?6,57,328/-, acknowledging that part of the investment was explained by receipts already considered by the AO. The Tribunal upheld the CIT(A)'s decision, agreeing that the remaining amount did not arise from the impounded documents and thus was correctly added as undisclosed investment. 3. Legality of Proceedings Under Section 153A/143(3): The assessee challenged the legality of the proceedings under section 153A/143(3), arguing no valid search warrant existed against them and the documents were impounded from a third party. Despite initial arguments, the assessee conceded to the CIT(A)'s order during the hearing. The Tribunal dismissed the appeal, finding no merit in the arguments against the legality of the proceedings. 4. Appeals by Revenue Dismissed Due to Low Tax Effect: The Revenue's appeals for AYs 2007-08 and 2008-09 were dismissed in limine due to the tax effect being below ?10 lakh, as per CBDT Circular No. 21 of 2015. The Tribunal noted no exceptions to this circular applied to the cases at hand. 5. Cross Objections Filed by the Assessee: The assessee's cross objections mirrored the issues in their appeals. The Tribunal, having already addressed these issues in the main appeals, dismissed the cross objections accordingly. Additionally, one cross objection was dismissed as not pressed by the assessee during the hearing. Conclusion: The Tribunal dismissed all appeals and cross objections filed by the assessee, upholding the CIT(A)'s decisions on disallowance of peak credit and undisclosed investment in land, and confirming the legality of the proceedings under section 153A/143(3). The Revenue's appeals were dismissed due to low tax effect.
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