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2011 (5) TMI 529 - AT - Income TaxUnexplained expenditure - Held that - There was a search on 28-6-2006 resulting in assessments made under section 153A read with section 143(3) in the course of which Shri Mukesh Choksi made a statement on 26-11-2008 and also submitted an affidavit on 4-12-2008/5-12-2008 reiterating what he stated in the earlier search proceedings on him which statement had been relied upon by the Assessing Officer in the course of the earlier reassessment proceedings - Already noted that the earlier reassessment proceedings were taken in appeal by the assessee to the CIT(A) who by order dated 26-6-2007 deleted the additions and the department did not file any further appeal to the Tribunal. Having accepted the order of the CIT(A) dated 26-6-2007 the Assessing Officer was not justified in repeating the same addition in the present proceedings by merely seeking to rely on the statement of Shri Mukesh Choksi and his affidavit which are nothing but reiteration of the stand which he took in the earlier proceedings also - Decided in favour of assessee.
Issues Involved:
1. Validity of assessments under section 153A. 2. Addition of unexplained expenditure under section 69C. 3. Treatment of short-term capital gains and losses. Issue-wise Detailed Analysis: 1. Validity of Assessments under Section 153A: The assessee challenged the validity of the assessments completed under section 143(3) read with section 153A of the Income-tax Act, 1961, on two grounds: (a) No new evidence was found during the search to justify the assessments. (b) The additions/disallowances made had already been adjudicated upon by the CIT(A) and were deleted, and since the revenue did not appeal against those deletions, the same issues cannot be re-agitated. The CIT(A) rejected these contentions, stating that discovery of new evidence during a search is not a mandatory requirement for initiating action under section 153A. The Tribunal agreed with the assessee's contention that finality of issues cannot be ignored. Additions deleted in earlier proceedings, which were not appealed by the revenue, cannot be revived under section 153A. The Tribunal emphasized the principle that final assessments or judicial orders passed in appeal are sacrosanct and cannot be disturbed except by a process known to law. 2. Addition of Unexplained Expenditure under Section 69C: For the assessment years 2001-02 and 2002-03, the Assessing Officer (AO) added Rs. 6,63,093 and Rs. 12,51,937 respectively as unexplained expenditure under section 69C, based on the statement and affidavit of Shri Mukesh Choksi, who claimed that the transactions were accommodating entries with no actual delivery of shares. The CIT(A) deleted these additions, noting that the parties mentioned by Shri Mukesh Choksi were not the ones with whom the assessee had dealings. The Tribunal upheld this deletion, highlighting the unreliability of Shri Mukesh Choksi's testimony, as he had given conflicting statements at different stages. The Tribunal referenced the Calcutta High Court's judgment in CIT v. Eastern Commercial Enterprises, which held that a person indulging in double speaking cannot be considered truthful. 3. Treatment of Short-term Capital Gains and Losses: The CIT(A) allowed the short-term capital loss of Rs. 5,58,230 to be set off against the short-term capital gains of Rs. 6,63,093 for the assessment year 2001-02. For the assessment year 2002-03, the CIT(A) accepted the amount of Rs. 12,51,937 as short-term capital gains and not unexplained expenditure. The Tribunal agreed with the CIT(A) that the amounts represented short-term capital gains and should be treated as such. The Tribunal noted that the CIT(A) had correctly followed the ratio of the Tribunal's decision in Mukesh R. Marolia v. Additional CIT, which supported the genuineness of the transactions. Conclusion: The Tribunal allowed the assessee's cross objections, condoning the delay in filing them, and dismissed the revenue's appeals. The Tribunal confirmed that the AO had no jurisdiction to include additions deleted by the CIT(A) in earlier proceedings, and upheld the CIT(A)'s treatment of the amounts as short-term capital gains. The Tribunal emphasized the importance of finality in assessments and judicial orders, aligning with established legal principles.
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