2016 (1) TMI 308 - AT - Income Tax

Addition on receipt of on-money - Notice issued under section 158BD - CIT(A) deleted the addition - Held that - No merit in the ground of appeal raised by the Revenue in this regard, in the absence of any evidence found of cash payment made to the assessee and in view of the other evidence i.e. Affidavit of Shri Y.P. Trivedi and Shri J.M. Jhala and the narration of alleged cash having been paid after the date of execution of sale deed, no reliance could be placed on the aforesaid addition to hold that the assessee was in receipt of on-money. In view of our upholding the order of CIT(A) in deleting the addition on merit, we do not find it necessary to adjudicate jurisdictional issue of notice under section 158BD of the Act and completion of assessment under section 158BD r.w.s. 143(3) of the Act. - Decided against revenue. Interest charged under section 158BFA(1) - CIT(A) deleted the addition - Held that - The assessee has successfully demonstrated that the delay in furnishing of the block period return occurred for valid reason. Admittedly, in absence of PAN, it was impossible for the assessee to submit block period return in the capacity of legal heir. In fact the delay has occurred due to delay on the part of A.O. to allot the assessee a PAN. Thus, there was a reasonable cause and the assessee cannot be expected to do impossibility. Hence, under the facts and circumstances of the case and by relying on the ITAT decisions reported at Manoj Aggarwal and others Versus Deputy Commissioner Of Income-tax, Central Circle - 3, New Delhi 2008 (7) TMI 446 - ITAT DELHI-A and Bachubhai S. Antrolia. Versus Assistant Commissioner Of Income-tax, Circle - 1, Junagadh. 2006 (3) TMI 288 - ITAT RAJKOT it is held that the assessee is not liable to interest u/s 158BFA(1).- Decided against revenue.

Summary

Issues:
1. Admission of additional grounds by CIT(A)
2. Quashing of notice u/s 158BD and annulling the order passed u/s 158BD
3. Provisions for assessment u/s 158BD and validity of notice and block assessment order u/s 158BD
4. Deletion of addition in the hands of the assessee
5. Acceptance of fresh evidence in violation of rules 46A
6. Deletion of interest charged u/s 158BF(1)

Analysis:

Issue 1: Admission of additional grounds by CIT(A)
The Revenue challenged the admission of additional grounds by CIT(A) that were not filed earlier. The Tribunal noted the grounds raised by the Revenue against the order of CIT(A) quashing the notice u/s 158BD and annulling the order passed u/s 158BD. The Tribunal addressed the jurisdictional issue first before adjudicating on the merits of the addition.

Issue 2: Quashing of notice u/s 158BD and annulling the order passed u/s 158BD
The Revenue contested the CIT(A)'s decision to quash the notice u/s 158BD and annul the order passed under the same section. The Tribunal examined the facts related to the search and seizure action, including the seized documents showing cash payments. The Tribunal considered the arguments presented by both parties regarding the alleged cash payments and the lack of evidence supporting such claims.

Issue 3: Provisions for assessment u/s 158BD and validity of notice and block assessment order u/s 158BD
The Revenue raised concerns about the CIT(A) holding that there were no provisions for assessment u/s 158BD and questioning the validity of the notice and block assessment order u/s 158BD. The Tribunal analyzed the evidence, explanations provided by the assessee, and the lack of concrete proof of cash payments to support the Revenue's claims.

Issue 4: Deletion of addition in the hands of the assessee
The Revenue challenged the deletion of the addition in the hands of the assessee. The Tribunal reviewed the seized documents, affidavits, and statements to determine the validity of the alleged cash payments. The CIT(A) found no evidence of on-money received by the assessee, leading to the deletion of the addition.

Issue 5: Acceptance of fresh evidence in violation of rules 46A
The Revenue objected to the CIT(A) accepting fresh evidence in violation of rules 46A. The Tribunal examined the seized documents, statements, and legal heir status of the assessee to assess the validity of the addition and found no merit in the Revenue's argument.

Issue 6: Deletion of interest charged u/s 158BF(1)
The Revenue disputed the deletion of interest charged under section 158BF(1). The CIT(A) considered the delay in furnishing the block period return due to the non-issuance of a PAN number to the legal heir. The Tribunal upheld the CIT(A)'s decision based on valid reasons for the delay and dismissed the Revenue's appeal.

In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decisions on various issues, including the deletion of additions and interest charges, based on the lack of evidence and valid reasons presented by the assessee.