2016 (12) TMI 1876 - AT - Income Tax

Addition on account of unexplained investment u/s 69 - parties were alleged to be paper-company of M/s. M.D. Patel Group - HELD THAT - Similar issues reached ITAT in various cases including Smt. Alkaben Amrutram Guru and Smt Kanchanlal Natwarlal Rana 2016 (8) TMI 1563 - ITAT AHMEDABAD as observed that these assessees are connected to M/s. M.D. Patel Group thus facts about Settlement Commission owning up of the income by the kingpin M/s. M.D. Patel Group etc. are not on the record. In view thereof these appeals are set aside and restored back to the file of the Assessing Officer to call the assessees to demonstrate that the subject matter raised in these appeals is covered by the alleged settlement petition of M/s. M.D. Patel Group and the result thereof. It is made clear that the Assessing Officer will verify necessary records and the assessees will fully co-operate in this matter. In case of non-cooperation by the assessees, the ld. Assessing Officer will be at liberty to take appropriate view in accordance with law. Accordingly, both the appeals are allowed for statistical purposes. Addition of additional grounds - addition made on unexplained gifts received by the assessee and on substantive basis on account of alleged unexplained capital/interest income/donation etc - HELD THAT - All these issues involve Settlement Petition and income owned up by M/s. M.D. Patel Group in respect of all the constituents. It is not disputed that the assessee is connected to M D Patel Group and the fact that the additions in question are subject matter of reassessed income as well as impugned reframing of assessment u/s 143(3) r.w.s. 263 of the Act. The doubt of ld. DR that the additional grounds will require verification of fresh evidence and facts seems to be out of place inasmuch as the relevant record of the Settlement Petition and other relevant evidence is on the record of the AO in multiple proceedings. In any case, host of assessments are being set aside and restored back to the file of AO in view the Settlement Petition and owning up of income by M/s. M.D. Patel Group. Consequently the application for admission of additional grounds deserves merit. In consideration of entirety of facts and circumstances, contentions and judicial precedents relying on the judgments of National Thermal Power Corporation Jute Corporation of India Ltd (supra), the additional grounds as raised by the assessee are admitted. Following the ITAT judgment in the case of Smt. Alkaben Amrutram Guru and Kanchanlal Natwarlal Rana (supra) to which the undersigned is a party, the assessments are set aside which will include the admitted additional grounds as above

Summary

Issues:
1. Addition of unexplained investment u/s 69 of the Income Tax Act, 1961.
2. Treatment of agricultural income as income from undisclosed sources.
3. Deletion of addition of alleged unexplained gifts received by the assessee.
4. Deletion of addition of alleged unexplained capital/interest income/donation.

Analysis:

Issue 1:
The appeal was against the addition of ?4,82,953 on account of unexplained investment u/s 69 of the Income Tax Act, 1961. The assessee contended that they were connected to M/s. M.D. Patel Group, which owned up the transactions of the connected entities. The ITAT observed that similar issues were addressed in other cases connected to M/s. M.D. Patel Group and set aside the appeals to the file of the Assessing Officer for further verification.

Issue 2:
The second ground raised was the addition of ?73,182 on account of treating agricultural income as income from undisclosed sources. The assessee argued that the assessments related to M/s. M.D. Patel Group were being set aside due to a Settlement Petition filed by the group. The ITAT admitted additional grounds raised by the assessee and set aside the assessments for fresh consideration by the Assessing Officer.

Issue 3:
The assessee sought deletion of the addition of ?90,000 made by the Assessing Officer on account of alleged unexplained gifts received. The ITAT admitted the additional grounds raised by the assessee, considering the Settlement Petition and the owning up of income by M/s. M.D. Patel Group. The assessments were set aside for a fresh determination by the Assessing Officer.

Issue 4:
Regarding the addition of ?2,02,07,402 on account of alleged unexplained capital/interest income/donation, the ITAT admitted the additional grounds raised by the assessee. The assessments were set aside for a fresh decision by the Assessing Officer in accordance with law and after giving the assessee an adequate opportunity of being heard.

In conclusion, the ITAT allowed the assessee's appeal for statistical purposes, setting aside the assessments for fresh consideration in light of the Settlement Petition and the owning up of income by M/s. M.D. Patel Group.