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2018 (6) TMI 1550 - AT - Income TaxUndisclosed investment - assessment u/s 153A - Held that - It is pertinent to note that in present case on 17.08.2011 a search and seizure action has undertaken in the case of AEZ group during this search it is alleged that the assessee invested an amount of 25, 20, 884/-via cash in M/s Indrapurarn Habitat Center Pvt Ltd. Thereafter a search action was also undertaken in the case of assessee on 10.02.2012. No evidence supporting the case of revenue vis-a-vis investment in cash in Indrapurarn Habitate Center was found. AO issued notice to the assessee asking the source of alleged investment. During the course of assessment proceedings the assessee explained that assessee had not invested anything in the alleged property. AO relied upon the confession of some I.E. Soomar and made the addition in the hands of the assessee. The said confession and the said Group search is already taken into account in co-investor s case by this Tribunal. See PR. COMMISSIONER OF INCOME TAX CENTRAL-2 NEW DELHI VERSUS SUBHASH KHATTAR 2017 (7) TMI 1091 - DELHI HIGH COURT wherein held AO was not justified in assuming jurisdiction u/s 153A and authorities below ere also not justified in making and sustaining the addition in question merely on the basis of a hard disc found during the course of search at the premises of Aerens Group without any corroborative evidence in support. We thus hold that the assessee/appellant succeeds on both the above issues i.e. on validity of assumption of jurisdiction u/s 153A and the addition in question. The grounds involving the above issues are accordingly allowed - Decided in favour of assessee.
Issues Involved:
1. Addition of ?25,20,884/- as income from undisclosed sources. 2. Lack of positive and cogent evidence for the addition. 3. Non-consideration of evidence produced by the appellant. 4. Legality and arbitrariness of the appellate order. Issue-wise Detailed Analysis: 1. Addition of ?25,20,884/- as income from undisclosed sources: The assessee appealed against the addition of ?25,20,884/- as income from undisclosed sources by the Assessing Officer (AO) and confirmed by the Commissioner of Income Tax (Appeals) [CIT(A)]. The AO based this addition on an excel sheet found during a search at the AEZ group, which indicated that the assessee had made a cash payment of ?25,20,884/- for the purchase of property. The assessee denied making any such payment and argued that no incriminating document was found during the search at their premises. 2. Lack of positive and cogent evidence for the addition: The assessee contended that the addition was made without any positive and cogent evidence. The AO relied on the excel sheet found at the AEZ group’s premises and the confession of another individual, Sh. I.E. Soomar, who admitted to making cash investments. However, the assessee argued that this evidence was not sufficient to justify the addition, as no direct evidence of cash payment by the assessee was found. 3. Non-consideration of evidence produced by the appellant: The assessee argued that the AO did not consider the evidence they produced, which clearly established that no cash payment was made. The AO dismissed the assessee’s denial of the cash payment without providing a satisfactory explanation or considering the evidence provided by the assessee. 4. Legality and arbitrariness of the appellate order: The assessee claimed that the appellate order was arbitrary, illegal, and in violation of contemporary jurisprudence principles. The CIT(A) upheld the addition without properly evaluating the facts and evidence presented by the assessee. Tribunal’s Decision: The Tribunal noted that a similar issue was adjudicated in the case of Subhash Khattar, where the addition was made based on the same excel sheet and confession of Sh. I.E. Soomar. In that case, the Tribunal held that no addition under section 153A could be made in the absence of incriminating documents found during the search. The Tribunal emphasized that merely because a third party admitted to cash payments, it did not bind other independent assessees. Conclusion: The Tribunal found that the AO was not justified in making the addition based on the excel sheet and confession without corroborative evidence. The Tribunal referred to the Delhi High Court’s decision in Subhash Khattar, which confirmed that additions could not be made without incriminating evidence found during the search. Consequently, the Tribunal allowed the assessee’s appeal, holding that the addition of ?25,20,884/- as income from undisclosed sources was unwarranted and should be deleted. Order Pronounced: The appeal of the assessee was allowed, and the order was pronounced in the Open Court on 1st June, 2018.
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