2013 (7) TMI 730 - AT - Income Tax

Whether the assessment framed is bad, illegal, void and without jurisdiction, as the necessary conditions for assuming jurisdiction and/or for initiating the assessment and/or for completion of the assessment were not fulfilled - Held that - The assessment completed cannot be held as bad in law on the issue that there was no material found during the course of search as the assessment has been completed u/S 153A, which is a new provision in the law by which it has been provided that the assessment for six years has to be completed independently - If there was any material then on the basis of material or any material gathered after search was to be considered while computing the assessment u/s153C - rejected the legal ground for all the three assessment years raised by the assessee after admitting the same as the ground raised was purely a legal ground. The next issue is against confirming the addition on the basis of valuation in respect of jewellery - on the basis of difference in valuation report - the addition should not have been made - the quantity of jewelley has already been shown in the earlier years - there is no difference in quantity of items as the difference is only on account of the valuation report. - Additions deleted. Whether confirming the addition on account of shoppers stop card is valid - most of the additions have been made in the routine manner as the issue has not been discussed in right perspective in taking into consideration the submission and other evidences filed -It is also a matter of fact that no incriminating material was found during the course of search as only during the assessment proceeding these expenses were found made through credit cards Additions deleted. Whether confirming the addition of loan taken from an NRI businessmen in Russia -Held that - There is no material to hold that the assessee has shown bogus loan - Similar addition was made for assessment year 2000-01 and after discussing the issue in detail, court deleted the loan shown by the assesse - For the same reasoning - Additions deleted. Whether confirming the addition on account of credit card payment made by the mother of the assesse - It is stated that the payment was made through credit card of her mother - This aspect has not been examined, therefore, to meet the end of justice court remand the matter back to AO to examine this issue afresh appeal decided in favour of assessee.

Summary

Issues Involved:

1. Validity and jurisdiction of the assessment framed.
2. Barred by limitation.
3. Incriminating material found during the search.
4. Additions based on gifts, loans, and property valuation.
5. Additions based on unexplained cash, jewelry, and betting income.

Issue-wise Detailed Analysis:

1. Validity and Jurisdiction of the Assessment Framed:

The assessee argued that the assessments were "bad, illegal, void and without jurisdiction" as the necessary conditions for assuming jurisdiction were not fulfilled. However, the Tribunal rejected this contention, affirming that the assessments were completed within the stipulated 21 months from the end of the financial year in which the search was conducted. The Tribunal held that the assessments were valid and within jurisdiction.

2. Barred by Limitation:

The assessee claimed that the assessments were barred by limitation as they were not completed within 21 months from the end of the financial year in which the search was conducted. However, the Tribunal found that the assessments were indeed completed within the allowed time frame, thus rejecting the assessee's contention.

3. Incriminating Material Found During the Search:

The assessee argued that no incriminating material was found during the search, making the assessments invalid. The Tribunal, however, referenced the case of Scope (P) Limited and held that the Assessing Officer (AO) is bound to issue notice under Section 153A after a search, and the assessment must be completed irrespective of whether incriminating material was found. The Tribunal upheld the assessments as valid under Section 153A.

4. Additions Based on Gifts, Loans, and Property Valuation:

The Tribunal addressed multiple additions made by the AO:

- Gifts and Loans: The Tribunal deleted the additions of Rs. 7 lakhs, Rs. 5 lakhs, and Rs. 4 lakhs made by the AO on account of gifts and loans, as the assessee provided sufficient details and confirmations. The Tribunal found no material evidence suggesting that these were not genuine transactions.

- Property Valuation: Additions based on the difference between the assessee's disclosed property values and the DVO's valuation were deleted. The Tribunal held that minor differences in valuation do not justify additions, especially when no material evidence suggests undisclosed income.

- Assessment Year 2001-02: The Tribunal deleted the additions of Rs. 4 lakhs and Rs. 2.5 lakhs, finding the assessee's explanations regarding loans and rental deposits credible. Similarly, the addition of Rs. 6,07,200 based on the DVO's report was deleted due to lack of material evidence.

- Assessment Year 2006-07: The Tribunal deleted the addition of Rs. 77,100 on account of unexplained cash, Rs. 2,71,915 for jewelry valuation differences, Rs. 9,057 for Shoppers Stop card expenses, and Rs. 4,36,506 for a loan from Mr. Sujit Kumar Singh. The Tribunal found the assessee's explanations satisfactory and noted the lack of incriminating material.

5. Additions Based on Unexplained Cash, Jewelry, and Betting Income:

- Unexplained Cash: The Tribunal deleted the addition of Rs. 77,100, noting that the assessee had already disclosed Rs. 22 lakhs in cash and that the remaining amount was minor and likely available from regular income.

- Jewelry: The addition of Rs. 2,71,915 based on the valuer's report was deleted as the quantity of jewelry was consistent with earlier disclosures, and the difference was only in valuation.

- Betting Income: The Tribunal upheld the addition of Rs. 75,000, finding sufficient evidence of betting activities from the search and subsequent surveys.

Conclusion:

The Tribunal allowed the appeals for the assessment years 2000-01 and 2001-02, and partly allowed and partly remanded the appeal for the assessment year 2006-07 for statistical purposes. The order was pronounced on July 12, 2013.