2018 (2) TMI 1815 - HC - Income Tax

Unexplained investment u/s 68 - ITAT deleted the amounts brought to tax u/s 68 holding that the relevant enquiry based upon the materials furnished by the assessee had not been made - Held that - We notice that the search in the premises of the Bhushan Steel Group, had led to survey in the premises of various other assessee including M/s Adamine Construction Pvt. Ltd., and in the end the additions made in that case too were deleted. The deletion again concurrently by the lower appellate authorities was upheld by this Court recently in respect of the same assessee for an earlier assessment. Here too, the Court has considered the materials. What is evident is that the AO went by only the report received and did not make the necessary further enquiries such as into the bank accounts or other particulars available with him but rather received the entire findings on the report, which cannot be considered as primary material. The assessee had discharged the onus initially cast upon it by providing the basic details which were not suitably enquired into by the AO. No substantial question of law.

Issues:
1. Re-assessment based on search conducted in the premises of a third party.
2. Addition of unexplained investment under Section 68 of the Income Tax Act, 1961.
3. Deletion of amounts brought to tax under Section 68 by CIT(A) and ITAT.
4. Lack of relevant enquiry by Assessing Officer.
5. Upholding of deletion of additions by lower appellate authorities.
6. Consideration of materials by the Court.
7. Failure of AO to make necessary further enquiries.
8. Discharge of onus by the assessee.
9. Dismissal of the appeal.

The High Court dealt with a case where the Assessing Officer issued re-assessment and added a substantial amount as unexplained investment under Section 68 of the Income Tax Act, 1961, based on a search conducted in the premises of a third party. The amounts in question were received from seven entities, prompting the AO to seek reports from the Commissioner in Mumbai and Kolkata. However, both the CIT(A) and the ITAT deleted the amounts brought to tax under Section 68, emphasizing the lack of relevant enquiry based on the materials provided by the assessee.

The Court noted that the search at the Bhushan Steel Group's premises led to surveys at various other assessees, including M/s Adamine Construction Pvt. Ltd., where similar additions were made and subsequently deleted by the lower appellate authorities. The Court upheld the deletion of additions for the same assessee in an earlier assessment, emphasizing the importance of considering materials provided. It was observed that the AO relied solely on received reports without conducting necessary further enquiries, such as examining bank accounts or other relevant particulars, which were crucial for a comprehensive assessment.

Highlighting the failure of the AO to delve deeper into the provided details, the Court emphasized that the findings based solely on the initial report could not be considered as primary material for taxation purposes. The assessee had fulfilled the initial onus by providing basic details, which, unfortunately, were not adequately investigated by the AO. Consequently, the Court found no question of law arising from the case and dismissed the appeal, affirming the decisions of the lower appellate authorities in deleting the additions made under Section 68 of the Income Tax Act, 1961.

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