2015 (8) TMI 1210 - HC - Income Tax

Unaccounted cash payment - addition on the basis of seized documents - ITAT consequently held that there was no basis for sustaining the addition in respect of alleged cash transactions referred to in the document in the hands of the Assessee - Held that - Revenue having taken a conscious decision to initiate proceedings against Inmon under Section 147/143 (3) of the Act, and having in those proceedings added the entire cash amount aforementioned in the hands of Inmon, must pursue those proceedings to their logical end. There is no factual or legal basis for seeking to add the same cash amount in the hands of both Inmon and the Respondent Assessee for the same AY. Further, nothing has been placed before the Court by the Revenue to doubt the correctness of the factual findings of the ITAT in respect of the document qua the Respondent Assessee. No substantial question of law arises for examination. - Decided against revenue.

Issues:
1. Appeal by Revenue under Section 260-A of the Income Tax Act, 1961 against ITAT order for AY 2006-07.
2. Validity of addition towards unaccounted cash payment based on seized documents.
3. Dispute over ownership of seized document and transactions related to Inmon Buildcon (P) Limited.
4. Discrepancy in seized document not belonging to the Assessee.
5. ITAT's factual findings overturning CIT (A) order and dropping enhancement proceedings.
6. Assessment finalization against Inmon for the alleged cash payment.
7. Denial of cash payment addition in Assessee's hands based on Inmon's assessment.
8. Legal basis for adding cash amount in both Inmon and Assessee's hands for the same AY.

Analysis:
1. The appeal before the Delhi High Court stemmed from the Revenue challenging the ITAT's order concerning the Assessment Year 2006-07 under Section 260-A of the Income Tax Act, 1961. The ITAT had dismissed the Revenue's appeal ITA No. 2063/Del/2013, prompting the current legal proceedings.

2. The core issue revolved around the addition of approximately Rs. 4.81 crores towards unaccounted cash payment by the Assessing Officer based on seized documents during a search and seizure operation under Section 132 of the Act at the premises of an individual associated with the Assessee. The Assessee had declared Nil income in response to the notice issued.

3. The Assessee contested the addition, arguing that the seized document did not belong to them and pertained to transactions of Inmon Buildcon (P) Limited, not the Assessee. Despite objections raised before the CIT (A), the addition was upheld, leading to further legal proceedings.

4. The ITAT's findings highlighted discrepancies, such as the seized document not being found at the Assessee's premises, lacking the Assessee's name, and being related to Inmon's property transactions. Consequently, the ITAT overturned the CIT (A) order and dropped enhancement proceedings against the Assessee.

5. Notably, the ITAT emphasized that the Revenue failed to provide supporting evidence linking the seized transactions to the Assessee, despite declarations made during the search operation. This lack of concrete evidence led to the dismissal of the addition in the Assessee's hands.

6. Subsequently, the Court noted that separate proceedings were initiated against Inmon for the alleged cash payment, resulting in the finalization of assessment against Inmon for the same Assessment Year by adding the cash amount in its hands.

7. The Court rejected the Revenue's argument to add the same cash amount in both Inmon and the Assessee's hands for the same Assessment Year, emphasizing the need to pursue proceedings logically and based on factual findings. The lack of legal basis for duplicating the addition led to the dismissal of the appeal.

8. In conclusion, the Court found no substantial question of law warranting examination based on the factual and legal circumstances presented. The appeal was ultimately dismissed, affirming the ITAT's decision and resolving the dispute over the alleged unaccounted cash payment.

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