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2019 (6) TMI 1447 - AT - Income TaxUnexplained income - declaration made by another party before the Settlement Commission - HELD THAT - ssessee need not to be asked to explain the entries or notings in the books of a third party. In the absence of any other independent material to corroborate the statement of Shri Bhikhubhai Padsala made before the Settlement Commission, it would not be prudent to take the view that there was a transaction between the assessee and Shri Bhikhubhai Padsala in cash with regard to the purchase of certain parcels of land. Declaration made by another party before the Settlement Commission is not binding upon the assessee, therefore, no additions can be made in absence of any independent material. - Decided in favour of assessee Reopening of assessment u/s 147 - HELD THAT - Reopening of the case on the basis of information received from the Investigation Wing which had searched the premises of Shri Bhikhubhai Padsala and seized certain documents. In our considered opinion, ld. A.O. was justified in issuing notice to the assessee on the basis of material was supplied by the Investigation Wing to the A.O. of the assessee. Therefore, we dismiss C.O s. of the assessee, it is pertinent to mention here that in connected appeal, we have given relief to the assessee by dismissing the appeal of the Revenue.
Issues:
1. Addition of unexplained income - Deletion by CIT(A) challenged by Revenue. 2. Justification of reopening case based on seized documents. 3. Dismissal of penalty proceedings and interest levy challenged by Assessee. Analysis: Issue 1: Addition of Unexplained Income The Revenue challenged the deletion of the addition made on account of unexplained income by the CIT(A). The case involved the reopening of the appellant's return based on seized documents indicating cash receipts. The Assessing Officer (AO) made the addition of a substantial amount as unexplained income. However, the CIT(A) partly allowed the appeal, emphasizing the lack of concrete evidence against the assessee apart from the loose papers and settlement commission's order. The CIT(A) referred to a judgment of the Delhi High Court to support the view that declarations made before the settlement commission are not binding on the assessee. The ITAT upheld the CIT(A)'s decision, citing legal precedents and finding no grounds for interference. Issue 2: Justification of Reopening Case The Assessee challenged the reopening of the case, arguing that the AO lacked a valid reason to believe or evidence of income escapement. The AO initiated the reopening based on information from the Investigation Wing, which had seized documents during a search operation at another individual's premises. The ITAT held that the AO was justified in issuing the notice to the assessee based on the material supplied by the Investigation Wing. Consequently, the ITAT dismissed the Assessee's challenge to the reopening proceedings. Issue 3: Dismissal of Penalty Proceedings and Interest Levy The Assessee contested the dismissal of grounds challenging the levy of interest under various sections and the initiation of penalty proceedings. The ITAT, after considering the facts and circumstances of the case, upheld the decisions of the CIT(A) on these matters. The ITAT noted that in a connected appeal where relief was granted to the Assessee, the grounds challenging penalty proceedings and interest levy were also dismissed. Therefore, the ITAT upheld the decisions regarding penalty proceedings and interest levy, leading to the dismissal of the Assessee's challenges in this regard. In conclusion, the ITAT dismissed the appeals filed by the Revenue and the Cross-Objections filed by the Assessee, maintaining the decisions made by the lower authorities on the issues of unexplained income addition, justification of reopening the case, penalty proceedings, and interest levy. The judgment was pronounced on 26-06-2019 by the ITAT Ahmedabad.
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