2014 (11) TMI 315 - AT - Income Tax

Validity of addition made u/s 69B purchase of land belong to the asssessee or company - Held that - The assessee s main sources of income are income Partnership firms, Salary income and Income from other sources - During the course of survey operations conducted at the business premises of the various concerns, certain documents were impounded. A paper found at page 12 of Annexure 17 of the bunch impounded during the course of survey operation revealed details of payment made for purchase of land at Jaipur - the land was purchased by M/s Builders Alliance (P) Ltd and the copy of conveyance deeds placed in the paper book filed by the assessee also show that the land was purchased by the company - There is an instance wherein the tax authorities themselves have ignored, i.e., not chosen to assess the amount declared by the assessee in the sworn statement taken from him - the tax authorities have also disregarded the admission made in the sworn statement, but proceeded to assess the income in the hands of right person only on due consideration of the facts surrounding the same, the tax authorities have acted in an objective manner to corroborate the admissions made in the sworn statement with other materials and have come to the conclusion to assess the said amount in the hands of right person the order of the CIT(A) is set aside and the AO is directed to delete the addition made Decided in favour of assessee. M/s GHP Corporation received ₹ 3.00 crores as advance in the financial year 2005-06 relevant to the AY 2006-07 - the amount of ₹ 2.00 crores received by way of cheque was credited to the capital account of the assessees herein available in the books of M/s GHP corporation there is no reason to reject the claim of the assessees that they had taken away the remaining amount of ₹ 1.00 crores received by way of cash - Once it is seen that the assessees are possessed of ₹ 50.00 lakhs each, then there would merit in their contention that amount would be available as source for making investments - both the assessees have sought set off of ₹ 50.00 lakhs against the unexplained cash and unexplained jewellery found during the course of search - both the assessees are justified in the claim that the sources to the extent of ₹ 50.00 lakhs in each of their hand stand explained, the revenue did not bring any material on record to show that the amount of ₹ 1.00 crore was otherwise spent away thus, the order of the CIT(A) is to be set aside and the AO is directed to give credit of ₹ 50.00 lakhs Decided in favour of assessee.

Summary

Issues Involved:
1. Delay in filing the appeal and condonation of the same.
2. Validity of addition of Rs. 1,02,50,000/- under Section 69B of the Income Tax Act.
3. Assessment of Rs. 50,00,000/- on protective basis.
4. Set-off of Rs. 50,00,000/- against unexplained cash and jewellery.

Issue-wise Detailed Analysis:

1. Delay in Filing the Appeal and Condonation:
The appeal filed by Shri Dixant G Sharma for the assessment year 2006-07 was barred by limitation by 491 days. The assessee filed a petition to condone the delay. The tribunal, having considered the submissions made in the affidavit, found sufficient cause for the delay and admitted the appeal for hearing.

2. Validity of Addition of Rs. 1,02,50,000/- under Section 69B:
During survey operations, documents revealed payments for land purchased by M/s Builders Alliance P Ltd, including Rs. 1,02,50,000/- in cash, which was not recorded in the books. The assessee admitted this in a sworn statement but did not include it in the return of income. The AO assessed this amount under Section 69B. The Ld CIT(A) upheld this, rejecting the assessee's claim that the admission was made under pressure and that the land was purchased by a company, not the assessee personally. The tribunal found that the AO did not thoroughly examine the documents or corroborate the statement with other evidence. The tribunal noted contradictions and the lack of clarity in the AO's assessment and concluded that the amount should not be assessed in the hands of the assessee, directing the AO to delete the addition.

3. Assessment of Rs. 50,00,000/- on Protective Basis:
The assessee and his brother received Rs. 3.00 crores as an advance from M/s Alokik Township Corporation, including Rs. 1.00 crore in cash, which was not accounted for. They agreed to offer Rs. 50.00 lakhs each as income, which was assessed on a protective basis in their hands and on a substantive basis in the hands of M/s GHP Corporation. The Ld CIT(A) confirmed the substantive assessment in the hands of the partnership firm and deleted the protective assessment in the hands of the individuals. The tribunal upheld this approach, noting that the tax authorities acted objectively to assess the income in the right hands.

4. Set-off of Rs. 50,00,000/- Against Unexplained Cash and Jewellery:
For the assessment year 2007-08, both assessees claimed a set-off of Rs. 50.00 lakhs against unexplained cash and jewellery found during the search. They argued that the cash received from M/s GHP Corporation explained the sources. The AO and Ld CIT(A) rejected this claim, considering it an afterthought and pointing to a time gap. The tribunal found that the revenue did not disprove the claim that the assessees took away Rs. 50.00 lakhs each from the cash received by M/s GHP Corporation. The tribunal directed the AO to give credit of Rs. 50.00 lakhs each in the hands of the assessees, finding merit in their claim.

Conclusion:
The tribunal allowed all the appeals filed by the assessees, setting aside the orders of Ld CIT(A) and directing the AO to delete the addition of Rs. 1,02,50,000/- and give credit of Rs. 50.00 lakhs each against unexplained cash and jewellery. The judgment emphasizes the importance of thorough examination of evidence and objective assessment in tax proceedings.