2018 (11) TMI 1736 - AT - Income Tax

Reopening of assessment u/s 147 - Addition u/s 69C on account of alleged unexplained expenditure - HELD THAT - Search operation was carried on in the premises of Santosh Group of Institutions. This means that any document found during the course of the search makes the assessee other person therefore the correct section for initiation of any proceeding against the assessee is section 153C of the Act. On identical set of facts the coordinate bench in the case of Sushil Gaur 2017 (8) TMI 482 - ITAT DELHI had the occasion to consider identical set of facts. In that case also the search in the premises of Santosh Medical College was under consideration. Respectfully following the findings of the coordinate bench. I am inclined to hold that the notice issued u/s 148 of the Act and assessment framed u/s 147 of the Act is void ab initio.

Summary

Issues Involved:
- Addition of ?3,05,610 confirmed by CIT(A)
- Grievance against assessment order under section 143(3)/147
- Addition of ?25 lakhs under section 69C for unexplained expenditure

Addition of ?3,05,610 confirmed by CIT(A):
The assessee appealed against the CIT(A)'s decision to confirm the addition of ?3,05,610. The case pertained to the assessment year 2011-12. The assessee contended that the CIT(A) erred in upholding this addition. The facts revealed that the Assessing Officer had information suggesting that the assessee had paid a donation/capitation fee of ?40 lakhs for his son's admission to a course. The assessee explained that only ?15 lakhs was paid in cash from family savings, and the remaining ?25 lakhs was paid through demand drafts from an education loan. However, the Assessing Officer did not accept this explanation and made an addition of ?25 lakhs under section 69C of the Income Tax Act.

Grievance against assessment order under section 143(3)/147:
The assessee raised a twofold grievance regarding the assessment order. Firstly, the assessee challenged the framing of the assessment under section 143(3)/147 of the Act. Secondly, the assessee contested the addition of ?25 lakhs under section 69C for alleged unexplained expenditure. The assessee argued that the assessment was based on information from a search operation conducted under section 132 of the Act. The assessee claimed that the appropriate section for such proceedings should have been section 153C instead of section 147. Citing a previous decision, the assessee contended that making additions based on incorrect documents was not sustainable. The DR, however, supported the Assessing Officer's findings.

Addition of ?25 lakhs under section 69C for unexplained expenditure:
The crux of the matter revolved around the addition of ?25 lakhs under section 69C of the Act. The assessee maintained that the amount in question was not paid as capitation fees/donation to an institution as alleged by the department. The Assessing Officer's decision to add this amount was challenged by the assessee before the CIT(A) without success. During the proceedings, the assessee's counsel argued that the assessment under section 147 was flawed and should have been initiated under section 153C due to information obtained during a search operation at Santosh Group of Institutions. The counsel relied on precedents to support this argument, emphasizing that the initiation of proceedings under section 147 was incorrect. Ultimately, the Tribunal quashed the reassessment, ruling that the notice issued under section 148 and the assessment under section 147 were void ab initio, thereby allowing the appeal filed by the assessee.

This detailed analysis of the legal judgment highlights the issues involved, the arguments presented, and the Tribunal's decision regarding the addition of amounts and the validity of the assessment order under different sections of the Income Tax Act.