2013 (11) TMI 1719 - AT - Income Tax

Summary

Issues Involved:
1. Enhancement of income by CIT(A) u/s 251 of the IT Act.
2. Rejection of cash-flow statement by AO.
3. Additions made by AO under s. 69 of the IT Act.
4. Validity of assessment proceedings initiated by AO.
5. Unexplained investments and income from moneylending business.

Summary:

1. Enhancement of Income by CIT(A) u/s 251:
The CIT(A) enhanced the income by Rs. 2,68,74,825 based on an alleged moneylending business. The assessee argued that the CIT(A) exceeded his jurisdiction under s. 251(1)(a) of the Act by discovering a new source of income not considered by the AO. The Tribunal held that the CIT(A) had indeed traveled outside the record, discovering a new source of income, which is beyond the scope of s. 251(1)(a). Therefore, the enhancement was set aside.

2. Rejection of Cash-Flow Statement by AO:
The AO rejected the cash-flow statement submitted by the assessee, which was used to explain the source of investments. The Tribunal directed the AO to consider and apply the directions contained in the Tribunal's order dated 29th Aug., 2013, which allowed credit to the extent of 40% of the claim made by the assessee in the cash-flow statements for each year.

3. Additions Made by AO under s. 69:
The AO made several additions under s. 69 for unexplained investments in shops, plots, and other assets. The Tribunal upheld some of these additions but directed the AO to recompute the income based on the revised cash-flow statements. Specific additions included:
- Rs. 16,75,000 for investment in the scheme of Viraj Corner.
- Rs. 11,05,000 for investment in Image Plaza.
- Rs. 3,00,000 for investment in Plot No. 18 Ghuje.

4. Validity of Assessment Proceedings Initiated by AO:
The assessee challenged the validity of the assessment proceedings, arguing that they should have been initiated under s. 153A r/w s. 143(3) instead of s. 143(3) alone. The Tribunal dismissed this challenge, following the precedent set in the case of Shri Jagdishsingh Amritsingh Bindra for asst. yr. 2007-08, where it was held that the assessment was valid as it complied with the mandatory conditions under s. 153B(1)(b).

5. Unexplained Investments and Income from Moneylending Business:
The CIT(A) made an addition of Rs. 2,68,74,825 for unexplained investments and income from moneylending activities. The Tribunal found that the CIT(A) had no jurisdiction to enhance the income by discovering a new source of income not considered by the AO. Consequently, the addition was deleted.

Conclusion:
The Tribunal partly allowed the appeals of the assessees, directing the AO to recompute the income based on revised cash-flow statements and set aside the enhancement made by the CIT(A) for discovering a new source of income. The appeals of the Revenue were dismissed.