2017 (9) TMI 1713 - HC - Income Tax

Additions on account of unexplained investment in properties - seized document could be treated as corroborative evidence or not - addition u/s 2(22)(e) towards deemed dividend - Held that - the case of the Revenue is that certain loose documents were found during search representing the assessee s cash transactions recorded in terms of rupees in crores. The assessee, however, denied this suggesting that these figures represented the calculations for the purpose of vastu shastra. CIT (Appeals) as well as the Tribunal concurrently held that there was no material suggesting that the figures indicated in loose papers represented assessee s cash transactions. This was thus purely a question of fact. No question of law therefore arises. Second question pertains to deemed dividend under section 2(22)(e) of the Act. The Tribunal found that there was no material found during the survey relatable to this issue and therefore confirmed the view of the CIT(Appeals). - Revenue appeal dismissed.

Summary

Issues:
1. Addition of unexplained investment in properties based on recovered diaries.
2. Deletion of addition under section 2(22)(e) for assessment u/s. 153A.

Analysis:
1. The first issue revolves around the Revenue's appeal concerning the deletion of an addition made on account of unexplained investment in properties based on recovered diaries. The Revenue contended that the diaries indicated cash transactions of the assessee, while the assessee claimed they were related to vastu shastra calculations. Both the CIT (Appeals) and the Tribunal found no evidence linking the figures in the diaries to the assessee's cash transactions. Consequently, it was determined as a question of fact with no legal implications, leading to the dismissal of the appeal.

2. The second issue pertains to the deletion of an addition under section 2(22)(e) for assessment u/s. 153A. The Tribunal concluded that no material was discovered during the survey that could be linked to the deemed dividend under section 2(22)(e). As a result, the Tribunal upheld the decision of the CIT (Appeals) in this regard. Ultimately, the tax appeal was dismissed based on the findings related to both issues presented before the court.