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2014 (9) TMI 80 - AT - Income TaxAdmission of additional ground Return of undisclosed income u/s 158BC Held that - Following the decision in Aravali Engineers (P.) Ltd. Versus Commissioner of Income-tax 2010 (12) TMI 750 - PUNJAB AND HARYANA HIGH COURT - the assessee has sought to raise the additional ground for the first time before the ITAT with regard to non-service of notice u/s 143(2) - an appellate authority can allow a question to be raised for the first time even if a question was not raised at a lower forum but the discretion to do so has to be exercised in the interest of justice in the facts and circumstances and not mechanically - the assessee sought to raise the additional ground for the first time in 2009 thus, the additional ground cannot be admitted Decided against assessee. Relief out of undisclosed income not provided Income returned for various years Held that - Following the decision in Commissioner of Income Tax Versus Ashim Krishna Mondal 2004 (7) TMI 80 - CALCUTTA High Court - after considering the amendment in Section 158BB, it has been held that the income below the taxable limit of the previous year could not be included as undisclosed income for the block period also in Chain Sukh Rathi Versus Commissioner Of Income Tax 2003 (9) TMI 12 - RAJASTHAN High Court it has been held that income has been concealed and it should be computed in cases of search in accordance with the provisions of section 158BB and after computing the total concealed income, it should be taxed as per the rates specified for the concealed income, in each year - the AO is directed to allow appropriate relief to the assessee Decided in favour of Assessee. Income earned during the year Undisclosed income or not Held that - No disclosure in any other manner was made by the assessee - The assessee has not paid any advance tax or self- assessment tax - merely because some TDS was deducted by the payee, it cannot be presumed that the income is disclosed by the assessee so as to exclude the same from the undisclosed income under Chapter XIV-B - For AY 1997-98, the assessee had income of more than ₹ 10 lakhs, he did not file any return at all - The assessee has not paid any advance tax - there was no overt act on the part of the assessee which would indicate that the assessee had the intention to disclose the income - merely because TDS is deducted by a third party, which he was obliged to deduct under the statute, cannot be indicative of the intention of the assessee to disclose the income Decided against Assessee. Share of profit brought to tax or not - Held that - Out of the total advances given for purchase of land, the advance given by the assessee is only ₹ 31,43,580 - in the case of the assessee, only his income can be assessed and not the income of the family members - If the Revenue is of the opinion that the family members are the benami of the assessee, then the onus was upon the Revenue to establish so - no evidence is brought on record by the AO to establish that the other family members were benami of Ram Kumar - the AO himself accepted that income of only Ram Kumar is to be assessed in his hands and not the income of family members there was no infirmity in the direction of CIT(A) for excluding the profit earned by other family members from the income of the appellant Decided against Revenue. Profit from deal of estate and housing Commission paid disallowed Deduction on miscellaneous expenses not allowed Held that - Before the assessee and family members got the land transferred in their names, they could find a buyer for a higher value and instead of getting the land transferred in his or family member s name, they got the land transferred directly in the name of such buyer viz., M/s Gopal Das Estate & Housing (P) Ltd. and received commission from M/s Gopal Das Estate & Housing (P) Ltd. - incurring of some expenditure by the assessee and family members on brokerage/commission at the time of purchase of land i.e. agreement to purchase, and transfer of land to M/s Gopal Das Estate & Housing (P) Ltd. cannot be ruled out - incurring of the expenditure on conveyance, documentation, obtaining revenue records of the sellers etc. cannot be ruled out - The assessee has not maintained complete details of these expenditure incurred by him and his family members - the deduction is restricted at ₹ 10 lakhs to be allowed to the assessee as against ₹ 19,83,350/- claimed by the assessee, for brokerage, commission and other expenses Decided partly in favour of assessee. Bank accounts in name of family to be added or not Held that - The cash/cheque deposited in the bank account of various family members is to be considered in their hands and if any part remains unexplained, then the addition, if any, can be made in their hands - The bank accounts of various family members cannot be added in the hands of the assessee unless the Revenue proves that these bank accounts were benami accounts of the assessee - the onus of establishing that the bank accounts in the name of family members are benami accounts of the assessee is upon the Revenue - Revenue has not brought on record an iota of evidence to establish that the bank accounts in the name of various family members were the bank accounts belonging to the assessee - the direction of the CIT(A) to the AO to exclude the cash and cheque deposited in the accounts of different members of the family cannot be said to be unjustified or incorrect Decided against Revenue.
Issues Involved:
1. Admission of Additional Ground 2. Relief for Assessed Undisclosed Income Below Basic Exemption Limit 3. Relief for Income Earned During the Year of Search 4. Addition on Account of Profit from Land Deals 5. Deduction for Commission and Miscellaneous Expenses 6. Addition in Respect of Bank Accounts Found in the Name of Family Members 7. Credit for Income Disclosed Under VDIS by Family Members 8. Disallowance of Commission Paid to Mr. Tara Chand 9. Charging of Interest u/s 158BFA(1) Detailed Analysis: 1. Admission of Additional Ground: The assessee sought to raise an additional ground regarding the non-issuance and non-service of notice u/s 143(2) after filing the return of undisclosed income. The Tribunal noted that the original assessment order dated 26th February 1999 recorded that notice u/s 143(2) was served, and the assessee appeared and filed written submissions. The assessee did not raise this issue in earlier appeals. The Tribunal relied on the decision of the Hon'ble Punjab & Haryana High Court in Aravali Engineers P. Ltd. vs. CIT, holding that a question of fact could not be raised for the first time before the ITAT. Consequently, the Tribunal declined to admit the additional ground. 2. Relief for Assessed Undisclosed Income Below Basic Exemption Limit: The assessee argued that income below the basic exemption limit should not be considered undisclosed. The Tribunal found this issue covered in favor of the assessee by the decision of the Hon'ble Calcutta High Court in CIT vs. Ashim Krishna Mondal, which held that income below the taxable limit could not be included as undisclosed income for the block period. The Tribunal allowed the assessee's appeal on this ground. 3. Relief for Income Earned During the Year of Search: The assessee claimed relief of Rs. 79,355, arguing that since tax was deducted at source, this income should not be considered undisclosed. The Tribunal noted that the assessee did not file any return for AY 1997-98, had not paid advance tax, and there was no overt act indicating an intention to disclose the income. The Tribunal found no merit in this ground and rejected the assessee's appeal. 4. Addition on Account of Profit from Land Deals: The assessee contended that the profit from land deals should not be taxed in his hands as it was earned by various family members. The Tribunal noted that the family members had disclosed income under VDIS and that the Assessing Officer had allowed credit for this in the original assessment order. The Tribunal found no evidence that the family members were benami of the assessee and upheld the CIT(A)'s direction to exclude the profits earned by other family members from the assessee's income. The Revenue's appeal on this ground was rejected. 5. Deduction for Commission and Miscellaneous Expenses: The assessee claimed deductions for commission and miscellaneous expenses related to land deals. The Tribunal acknowledged the incurring of some expenditure on brokerage, conveyance, documentation, etc., but noted the lack of detailed records. Considering the age of the matter, the Tribunal directed a deduction of Rs. 10 lakhs against the claimed Rs. 19,83,350/- for brokerage, commission, and other expenses. 6. Addition in Respect of Bank Accounts Found in the Name of Family Members: The CIT(A) directed the exclusion of cash and cheque deposits in the bank accounts of family members from the assessee's income. The Tribunal upheld this direction, stating that the onus was on the Revenue to prove that these accounts were benami accounts of the assessee. The Revenue's appeal on this ground was rejected. 7. Credit for Income Disclosed Under VDIS by Family Members: The assessee sought credit for income disclosed by family members under VDIS. The Tribunal found this ground infructuous as the CIT(A) had already directed to consider only the assessee's income from the land dealing business. The assessee's appeal on this ground was rejected. 8. Disallowance of Commission Paid to Mr. Tara Chand: The assessee contested the disallowance of Rs. 1,00,000/- paid as commission to Mr. Tara Chand. The Tribunal noted that it had already allowed a deduction for commission and other expenses under ground Nos. 6 to 8 and found no merit in granting separate relief. The assessee's appeal on this ground was rejected. 9. Charging of Interest u/s 158BFA(1): The assessee argued against the charging of interest u/s 158BFA(1). The Tribunal noted that this ground was consequential and directed the Assessing Officer to recompute the interest in accordance with the law after the final determination of income. Conclusion: The Revenue's appeal was dismissed, and the assessee's appeal was partly allowed. The Tribunal provided relief on certain grounds while rejecting others based on the facts and legal precedents.
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