2019 (10) TMI 1279 - AT - Income Tax

Assessment u/s 153A - Addition on the basis of loose paper - Year of assessment - HELD THAT - From perusal of these loose papers - HELD THAT - No dispute to this fact that the dates mentioned against the amount shown do not pertain to Assessment Year 2006-07. It is an established rule that if addition is made on the basis of seized document and there is a reference of a date against the amount then the revenue authorities can make the addition for the assessment year in which these date fall. In the instant case the alleged entries totaling to Rs. 13, 00, 000/- fall in the financial year 2004-05 and preceding period. A.O erred in making the addition for Assessment Year 2006-07. Alleged entries are payment by cheque given by the assessee to Ayushman Medical Diagnostic Private Limited. This fact is proved with the bank statement placed on record. We can therefore safely conclude that Ld. A.O grossly erred in making the addition for Assessment Year 2006-07 and the same deserves to be deleted. Unexplained foreign expenditure u/s 69C - HELD THAT - There is no dispute to the fact that the assessee has very much accepted to offer unaccounted foreign expenditure. He has also accepted that the amount as incurred on his foreign tour which is not recorded in the books of accounts nor offered as income in the returns filed. Relief has only been claimed for the package rates wrongly applied by the Ld. A.O for the preceding years. We find merits in the contention of assessee that the Ld. A.O ought to have applied lower package rates for the preceding years and should not have uniformly applied the package rate as on 21.02.2014. Therefore the assessee deserves the relief requested by him before the first appellate authority. We accordingly delete the addition for Assessment Years 2007-08 2008-09 2009-10 and 2010-11.- Decided in favour of assessee. Undisclosed investment u/s 69B - HELD THAT - Since the alleged seized document has been duly explained since the source of payment and the owner of the property is not disputed then no addition was called for in the hands of the assessee. Revenue authorities were well within their powers to invoke provisions of 153C of the Act in order to assess Smt. Sudha Jain. However since before us the alleged document has been duly explained the same cannot be an incriminating material and thus no addition was called for u/s 69B of the Act and the same is directed to be deleted. We accordingly set aside the finding of Ld. CIT(A) and allow assessee s Ground. Unexplained cash received - HELD THAT - Name of the assessee is not indicated on this paper nor it is stated that the amount is paid to the assessee. It is not clear how the Ld. A.O came to the conclusion that the amount has been received by the assessee from Dr. Gopal Batni. Such addition seems to have been made on surmises and conjectures and in the given facts and circumstances of the case the addition in the hands of the assessee for unexplained cash was uncalled for since the alleged transaction related to the receipts of the Ayushman Hospital and cannot be considered as unexplained cash receipt of the assessee. Thus the addition deserves to be deleted. We accordingly set aside the finding of Ld. CIT(A) and allow the ground raised by the assessee.

Summary

Issues Involved:

1. Validity of assessment made under Section 153A read with Section 143(3) of the Income Tax Act.
2. Addition on account of unexplained cash received.
3. Addition on account of unexplained foreign expenditure under Section 69C.
4. Addition on account of undisclosed investment under Section 69B.

Detailed Analysis:

1. Validity of Assessment Made Under Section 153A read with Section 143(3):

The assessee challenged the assessments made for the years 2006-07 to 2010-11 under Section 153A read with Section 143(3) of the Income Tax Act as bad in law and on facts. The Tribunal noted that the assessments were initiated following a search on the Bansal Group and Ayushman Group, including the residential premises of the assessee. The Tribunal did not find merit in the assessee's argument against the validity of the assessments and proceeded to address the specific additions made by the Assessing Officer (A.O.).

2. Addition on Account of Unexplained Cash Received:

For Assessment Year 2006-07, the A.O. made an addition of Rs. 13,00,000 based on a loose paper (LPS-3 page-122) seized during the search, which listed amounts against dates. The Tribunal observed that these transactions pertained to the Financial Year 2004-05 and earlier periods, not the Assessment Year 2006-07. Additionally, the amounts were payments made by cheque to Ayushman Medical Diagnostic Private Limited and were recorded in the regular books of accounts. Thus, the Tribunal concluded that the A.O. erred in making the addition for Assessment Year 2006-07 and deleted the addition.

For Assessment Year 2010-11, the A.O. made an addition of Rs. 3,11,000 based on a daily report of the Accounts Department of Ayushman Hospital, which did not mention the assessee's name. The Tribunal found that the A.O. made the addition on surmises and conjectures, as the transactions related to the hospital's receipts and not to the assessee. The Tribunal deleted the addition.

3. Addition on Account of Unexplained Foreign Expenditure Under Section 69C:

The A.O. made additions for unexplained foreign expenditure for Assessment Years 2007-08 (Rs. 68,763), 2008-09 (Rs. 1,12,500), 2009-10 (Rs. 1,50,000), and 2010-11 (Rs. 72,737) based on the discovery of foreign currency during the search. The assessee argued that these tours were sponsored by pharmaceutical companies, but failed to provide any certificates of sponsorship. The A.O. estimated the expenses using package rates as of 21.02.2014.

The Tribunal noted that the assessee admitted to the unaccounted foreign expenditure but requested relief for the incorrect application of package rates. The Tribunal agreed that the A.O. should have applied lower package rates for the preceding years and granted relief for the excess amounts added. Consequently, the Tribunal deleted the excess additions and partly allowed the appeals for these years.

4. Addition on Account of Undisclosed Investment Under Section 69B:

For Assessment Year 2010-11, the A.O. made an addition of Rs. 10,27,060 based on a seized document related to the purchase of immovable property registered in the name of the assessee's mother-in-law. The Tribunal observed that the document was a photocopy of a registered purchase deed, and the payment was made from the sale proceeds of agricultural land owned by the mother-in-law. Since the source of payment and the owner of the property were not disputed, the Tribunal concluded that the addition was unwarranted and deleted it.

Conclusion:

The Tribunal allowed the appeal for Assessment Year 2006-07 and partly allowed the appeals for Assessment Years 2007-08, 2008-09, 2009-10, and 2010-11, providing relief for the incorrect application of package rates for foreign expenditure and deleting unwarranted additions for unexplained cash and undisclosed investment. The order was pronounced in open court on 24.10.2019.