2011 (6) TMI 921 - AT - Income Tax

Summary

Issues Involved:

1. Cancellation of assessment orders by CIT under section 263 of the Act.
2. Introduction of funds in the books of the assessee from M/s. Jupiter Commercial Corporation (JCC).
3. Cash brought in by the assessee from Adoni to Pune.
4. Gifts received by the assessee from various HUFs.
5. Transactions on pages 5, 6, and 8 of seized material.

Issue-wise Detailed Analysis:

1. Cancellation of Assessment Orders by CIT under Section 263 of the Act:
The learned CIT erred in cancelling the assessment orders, alleging they were erroneous and prejudicial to the revenue due to various issues not being examined by the Assessing Officer (A.O.) during the assessment. The CIT's decision to cancel the entire assessment orders was contested, as the issues were already considered by the A.O. during the block assessment proceedings.

2. Introduction of Funds in the Books of the Assessee from M/s. Jupiter Commercial Corporation (JCC):
The assessee received amounts from JCC, which were claimed to be recorded in the books prior to the search. The A.O. accepted the explanations provided by the assessee and did not make any additions. The CIT, however, believed the A.O. did not apply his mind and ignored certain factual aspects, directing a re-examination of the issue. It was argued that the A.O. had verified the issue in detail, and the CIT was not justified in invoking section 263, as no incriminating material was found during the search.

3. Cash Brought in by the Assessee from Adoni to Pune:
The assessee claimed to send cash from Adoni to Pune for depositing in a bank account. The A.O. concluded that the cash deposits belonged to parties to whom loans were advanced, not the assessee, and made no additions. The CIT held that the A.O. should have added the cash deposits to the assessee's income, as he did not accept the cash transfer theory. The assessee argued that no incriminating material was found during the search, and the issue had been thoroughly investigated earlier, making the CIT's revision unjustified.

4. Gifts Received by the Assessee from Various HUFs:
The assessee received Rs. 39,00,000/- in gifts from various HUFs, recorded in the books before the search. The CIT doubted the genuineness of the HUFs and the source of funds, directing the A.O. to verify the gifts. The assessee contended that the HUFs were genuine, assessed to tax, and their balance sheets and returns were filed before the search. The A.O. had accepted the genuineness of the HUFs in earlier assessments, and no incriminating material was found during the search, making the CIT's revision unjustified.

5. Transactions on Pages 5, 6, and 8 of Seized Material:
Certain pages relating to M/s. Alimchand Topandas Oil Industries Ltd. were found with the assessee. The A.O. accepted the assessee's explanation that the papers pertained to the company, not the assessee. The CIT, however, held that the A.O. did not verify the issue properly and considered the assessment order erroneous and prejudicial to the revenue. The assessee argued that the company's chairman confirmed the papers belonged to the company, and the A.O. had verified and accepted the explanation, making the CIT's revision unjustified.

Conclusion:
The Appellate Tribunal ITAT Pune found that the A.O. had verified the issues in detail during the original assessment proceedings, and the CIT was not justified in invoking section 263 of the Act. The appeals were allowed, and the orders of the CIT were set aside.