2014 (2) TMI 1299 - AT - Income Tax

Addition of interest as well as brokerage - documents seized from the premises of Mr. Shriram H. Soni - Reopening of assessment - Held that - Since identity of the assessee was not proved by Mr. Shriram H. Soni at any point of time nor any corroborative evidence was found from the residence of Mr.Shriram H. Soni so as to prove that the assessee is the same person as per the name appearing in the seized document, therefore, in absence of any contrary material brought to our notice, we set-aside the order of the CIT(A) and direct the Assessing Officer to delete the addition. Since we have deleted the addition made by the Assessing Officer and upheld by the CIT(A), therefore, the ground relating to the validity of the re-assessment proceedings u/s.147 and applicability of section 153C become academic in nature and therefore is not being adjudicated. - Decided in favour of assessee.

Issues Involved:
1. Validity of reassessment under Section 147.
2. Applicability of Section 153C.
3. Addition of Rs. 15 lakhs as unexplained investment under Section 69.
4. Addition of Rs. 71,250 as unaccounted interest income.
5. Addition of Rs. 3,750 as unexplained expenditure on brokerage under Section 69C.
6. Opportunity for cross-examination of Mr. Soni.
7. Presumption under Section 132(4A).

Issue-wise Detailed Analysis:

1. Validity of reassessment under Section 147:
The assessee challenged the reassessment under Section 147, arguing that the notice issued was without jurisdiction, bad in law, and void ab-initio. The CIT(A) upheld the reassessment, finding it valid. The Tribunal did not specifically adjudicate this issue as it became academic after deciding on the merits of the additions.

2. Applicability of Section 153C:
The assessee contended that the provisions of Section 153C were applicable rather than Section 147. The CIT(A) did not find merit in this argument and upheld the reassessment under Section 147. The Tribunal did not specifically address this issue due to its decision on the substantive additions.

3. Addition of Rs. 15 lakhs as unexplained investment under Section 69:
The Assessing Officer (AO) added Rs. 15 lakhs as unexplained investment based on documents seized from Mr. Shriram H. Soni, which allegedly indicated that the assessee had invested this amount in money lending. The assessee argued that the seized documents did not pertain to him and that the name appearing in the documents was not his. The CIT(A) upheld the AO's addition, citing the presence of the assessee's name in the seized documents in abbreviated form. However, the Tribunal found that the identity of the assessee was not conclusively established by the seized documents or corroborative evidence. The Tribunal noted that no promissory note or security in the name of the assessee was found, and Mr. Soni had refused to identify the investors. The Tribunal, following a similar decision in the case of Ashok Keshvlal Oswal, directed the deletion of the Rs. 15 lakhs addition.

4. Addition of Rs. 71,250 as unaccounted interest income:
The AO added Rs. 71,250 as unaccounted interest income based on the alleged investment of Rs. 15 lakhs. The CIT(A) upheld this addition. The Tribunal, having deleted the principal addition of Rs. 15 lakhs, also directed the deletion of the interest income addition.

5. Addition of Rs. 3,750 as unexplained expenditure on brokerage under Section 69C:
The AO added Rs. 3,750 as unexplained expenditure on brokerage. The CIT(A) upheld this addition. The Tribunal, consistent with its decision to delete the principal addition of Rs. 15 lakhs, also directed the deletion of the brokerage expenditure addition.

6. Opportunity for cross-examination of Mr. Soni:
The assessee argued that he was not given an opportunity to cross-examine Mr. Soni, whose statements and documents formed the basis of the additions. The CIT(A) did not find this argument persuasive. The Tribunal did not specifically address this procedural issue but focused on the lack of substantive evidence linking the assessee to the seized documents.

7. Presumption under Section 132(4A):
The assessee contended that the presumption under Section 132(4A) did not apply to him as the documents were seized from Mr. Soni and not from the assessee. The CIT(A) upheld the application of this presumption. The Tribunal, however, found that the identity of the assessee was not established by the seized documents or corroborative evidence, thus negating the presumption's applicability.

Conclusion:
The Tribunal allowed the appeal filed by the assessee, directing the deletion of all additions made by the AO and upheld by the CIT(A). The Tribunal's decision was based on the lack of conclusive evidence linking the assessee to the seized documents and the failure to establish the identity of the assessee as the person referred to in those documents. Consequently, the issues regarding the validity of reassessment and applicability of Section 153C were rendered academic and not adjudicated.

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