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2015 (8) TMI 606 - AT - Income TaxValidity of assessment - assessee has pleaded that the assessment orders have been passed by the AO after 12o clock in the mid-night of 31-12-2009. Therefore, the assessment orders are time barred, and consequently be quashed - Held that - On due consideration of the facts and circumstances, we do not find force in the submissions of the ld. counsel for the assessee. Firstly, the ld. AO has mentioned a time at 12 15 am, meaning thereby, it is morning of 31-12-2009. Rather, the CIT(A) has rightly pointed out that instead of expression night , the ld.AO should have recorded morning . It is only incorrect use of word at the end of the AO. Otherwise, he has passed the assessment order on 31.12.2009 after 12oclock next day would begin. Had it been 12 15am after 31st January, then the AO would not have mentioned 31.12.2009, rather it would have been 1st January, 2010. - Decided against assessee. Undisclosed investment/expenditure in the property situated at 6, Kaushal Co-op. Hsg. Society - Held that - The assessee has not submitted any fund flow statement for the purpose of explaining the source before the AO. It is impossible to reconcile this statement with the availability of funds at a given point of time. There is no head and tail of the exact amount available on a particular date, out of which, it can be alleged that the investment was made in the advancement of loans.No doubt, on 21.2.2002, cheque bearing no.0303541 for ₹ 7 lakhs has been cleared. But this cheque number has not been mentioned in the promissory note. It cannot be said that the loan of ₹ 7 lakhs in the Asstt.Year 2002-03 was given through account payee cheques, and that the cheque was bearing no.0303541. In the promissory note, there is a cutting of cash with the cheque, but neither the assessee has alleged the cheque number during the assessment proceedings nor mentioned in the promissory note. This fact can easily be demonstrated before the AO by producing the bank account of the borrower indicating the fact that cheque no.0303541 was credited to his account, but no such effort was made by the assessee during the assessment proceedings. Before us, it is not possible to cross-verify this aspect at this stage. Therefore, we do not find any merit in this contention of the ld.counsel for the assessee - Decided against assessee. Unexplained source of payment - explanation of the assessee is that these documents were issued in lieu of security of the loan earlier advanced by the assessee to Hasubhai Thakkar. According to the assessee, Shri Hasubhai Thakkar has given a declaration that Bhagyodaya Plaza was never constructed and no possession was given to the assessee - Held that - as far this letter from Shri Hasubhai Thakkar is concerned, it was not taken on record by the ld.CIT(A). The assessee sought to produce this letter by way of additional evidence. But prayer of the assessee was rejected. The copies of the receipts indicate that the payment of ₹ 12.25 lakhs in the accounting year relevant to the Asstt.Year 2004-05. Had the amount was not given, then it was for the assessee to demonstrate, as to why the necessity to execute such type of receipts, in this methodical way, was felt. As far as security of the first loan amount is concerned, the assessee has taken undated cheques from Shri Hasubhai Thakkar. She had also got executed promissory notes. These two sureties were also there in existence. Therefore, in our opinion, the First Appellate Authority has rightly concluded that payment of ₹ 40 lakhs was made by the assessee to Shri Hasubhai Thakkar or his concern. This payment was made during the accounting year relevant to the Asstt.Year 2004-05 and 2005-06. It is a separate amount than the one given in financial year 2001-02 or 2002-03. We do not find any merit in this contention of the assessee.- Decided against assessee. Unexplained investment in shares - Held that - AO has annexed a list of shares which have been considered by him as unexplained investment of the assessee. The major item of investment worked out by him is with regard to Smt.Pareshaben Shah. The client ID is 10735254. The balance has been shown at ₹ 13,90,888/-. Against this ID, 56 scrips have been noticed by the AO, in the annexure appended with the assessment order. All these shares have been shown pertained to F.Y.2003-04. The ld. Counsel for the assessee failed to pin point, out of these 56 scrips, which were purchased by this person in earlier years. He merely stated that some of the shares which have been included were purchased in earlier years, but after this list, at least the assessee should identify, which are those scrips deserve to be excluded on the ground that the investment does not pertain to this year. No such efforts have been made. The AO has, accordingly, recorded a finding that the assessee did not submit any detail. He has worked out the details on analysis of DEMAT account. No material has been brought to our notice which can suggest this erroneous approach adopted by the Revenue authorities. We, therefore, do not find any merit in this ground of appeal. It is rejected. - Decided against assessee. Addition on deemed dividend u/s 2(22)(e) - Held that - The assessee has never raised any plea that the company was incorporated on 1.9.2003. The ld.counsel drew our attention towards page no.119 where certificate issued by the Asstt.Registrar of Companies, Gujarat, exhibiting the incorporation of the company has been placed on record. He also drew our attention towards copy of the balance sheet prepared on 31.3.2004. These documents were not brought to notice of the AO during the assessment proceedings. Therefore, we deem it proper to set aside this issue to the file of the AO for re-adjudication. The ld.AO shall determine the date of incorporation of the company, and thereafter, decide whether, there was any accumulated profit or not, out of which it can be alleged that the loans have been given to the assessee. - Decided in favour of assessee for statistical purpose.
Issues Involved:
1. Time-barred assessment orders 2. Addition on account of alleged investment/expenditure in property 3. Addition on account of unexplained investment in shares 4. Addition under section 2(22)(e) of the Income Tax Act (deemed dividend) 5. Multiple additions and peak credit theory Detailed Analysis: 1. Time-barred Assessment Orders: The assessee argued that the assessment orders were time-barred as they were passed after midnight on 31-12-2009. The CIT(A) reviewed the order sheet entries and found that the assessment order was served on 31.12.2009, indicating it was passed within the time limit. The Tribunal agreed with the CIT(A) that the AO's mention of "12:15 am" referred to the morning of 31-12-2009, not the night, thus the orders were not time-barred. This ground of appeal was rejected. 2. Addition on Account of Alleged Investment/Expenditure in Property: The AO made additions for unexplained investments in property based on seized documents indicating loans given by the assessee and her family members. The assessee contended that the loans were covered by disclosed income and cash withdrawals. The CIT(A) found that the additional income disclosed was already utilized for other investments and the assessee failed to provide a satisfactory explanation for the source of funds. The Tribunal upheld the CIT(A)'s findings, rejecting the assessee's arguments and confirming the additions. 3. Addition on Account of Unexplained Investment in Shares: The AO added unexplained investments in shares based on the DEMAT account details, adopting market value as the cost due to lack of purchase details from the assessee. The CIT(A) confirmed the addition, noting that the assessee did not dispute the number of shares or provide purchase details. The Tribunal found no merit in the assessee's claim that some shares were purchased in earlier years, as no specific evidence was provided. The addition was upheld. 4. Addition Under Section 2(22)(e) of the Income Tax Act (Deemed Dividend): The AO treated payments from companies to the assessee as deemed dividend under section 2(22)(e). The assessee argued that the company had no accumulated profits before 31.3.2004, thus no deemed dividend could arise. The Tribunal noted that this argument was not raised before the AO and remanded the issue back to the AO to verify the date of incorporation and accumulated profits of the company. This ground was allowed for statistical purposes. 5. Multiple Additions and Peak Credit Theory: The assessee contended that the assessment suffered from multiple additions and that the disclosed income based on peak theory should cover the investments. The CIT(A) found that the additional income disclosed was utilized against specific assets and was not available for set-off against other additions. The Tribunal upheld this finding, rejecting the ground. Conclusion: The appeals for the assessment years 2002-03 and 2003-04 were dismissed, while the appeal for the assessment year 2004-05 was partly allowed for statistical purposes, specifically remanding the issue of deemed dividend back to the AO for verification. The Tribunal pronounced the order on 7th August, 2015 at Ahmedabad.
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