2016 (2) TMI 467 - AT - Income Tax

Addition u/s 69A - CIT(A) deleted the addition made by the AO - Held that - It is clear that the Assessing Officer failed to establish any case against the appellant. The impugned order does not throw any light on any inquiry/investigation carried out by the Assessing Officer that could corroborate the entries found in the seized material and justify the additions made in the case of the assessee. Further inquiry/investigation, was required to be carried out on the information passed by the DCIT, Central Circle 19, New Delhi, but apparently no worthwhile or cogent work was done towards this end. In the second round of assessment proceedings, the said persons during the cross examination has denied any sort of dealings with the assessee and in fact has even failed to identify the assessee. They have furnished their duly sworn affidavits deposing these facts(supra). No direct of corroborative evidence could be discovered by the ld.AO from the assessee s possession, which could substantiate the alleged addition. It is not at all the case where the assessee has made an unexplained investment of cash. The Assessing Officer merely summarized the salient features of the assessment proceedings relating to Shri Brij Mohan Gupta and thereafter summarily rejected the reply of the assessee as not acceptable . Therefore, the Assessing Officer was not justified in making the addition of ₹ 20,00,000/-. - Decided against revenue

Summary

Issues:
1. Addition of Rs. 20,00,000 made under section 69A of the Income Tax Act deleted by CIT(A).
2. Discrepancy in the nature of transaction - loan provider or receiver.
3. Lack of evidence connecting the seized documents to the assessee.

Analysis:

Issue 1: Addition under section 69A
The Revenue challenged the deletion of the addition of Rs. 20,00,000 made by the Assessing Officer under section 69A of the Income Tax Act. The search and seizure operation in the case of Brij Mohan Gupta group led to the reopening of the assessment of the present assessee. The AO made the addition as an unexplained transaction, which was later deleted by the CIT(A). The Tribunal had earlier set aside the issue for further examination. In the subsequent assessment proceedings, the AO failed to establish a case against the appellant. The Tribunal noted that no inquiry or investigation was conducted to corroborate the seized material with the assessee's case, leading to the dismissal of the Revenue's appeal.

Issue 2: Discrepancy in nature of transaction
The Revenue contended that the assessee received a loan from Sh. Brij Mohan Gupta Group, while the assessee claimed to be a loan provider. The AO, in the second round of assessment, provided statements from individuals related to Brij Mohan Gupta, who denied any dealings with the assessee. The Tribunal observed that no direct evidence was found to substantiate the alleged addition. The AO's summary rejection of the assessee's reply without sufficient justification was deemed unjustified, leading to the dismissal of the Revenue's appeal.

Issue 3: Lack of evidence connecting seized documents
The Revenue failed to provide concrete evidence connecting the seized documents from Brij Mohan Gupta group to the assessee. The Tribunal noted that the AO did not conduct thorough investigations or inquiries to support the addition made under section 69A. The lack of corroborative evidence and failure to establish a clear link between the seized material and the assessee's case resulted in the dismissal of the Revenue's appeal.

In conclusion, the Tribunal dismissed the Revenue's appeal due to the failure to substantiate the addition, lack of evidence connecting the seized documents to the assessee, and the discrepancy in the nature of the transaction as claimed by the Revenue and the assessee.