2017 (1) TMI 1784 - AT - Income Tax

Assessment u/s 153C - Addition of cash jewellery and family contribution offered to tax in the case of assessee s brother-in-law Shri Anand Kumar Agrawal - D.R. submitted that in the course of search a red suit-case was seized from the premises of assessee s brother-in-law Shri Anand Agrawal from the bed room of his mother-in-law Smt. Sitadevi Agrawal containing cash jewellery and papers which were in the hand-writing of the assessee - HELD THAT - For a presumption in law that in case of the search the documents money jewellery etc. found belonged to the person searched. In the present case Shri Anand Agrawal has not at all disputed this presumption rather he has supported the presumption by accepting the entire amounts reflected in the said search as his own income and offering the same in his return of income which has been duly accepted by the Revenue in appellate proceedings. Shri Anand Agrawal has also filed an affidavit owning the entire contents of the said suitcase as belonging to himself. Thus in this view also on the anvil of section 292C of the I.T. Act there is no basis for considering this sum as addition in the hands of the assessee. This assessment is framed pursuant to notice u/s 153C of the I.T. Act. Before the assessment was framed under this section in this case there was a search conducted on 04-02-2010 at the assessee s premises. In this search also no incriminating material or evidence relating to the addition made in this case was found. Thus from the above it is clear that the plea of the Revenue authority that Shri Anand Agrawal is a benamidar of assessee is devoid of any cogency. When the Revenue is alleging that the apparent is not real then onus lies upon the Revenue to prove the same. In the present case Revenue has totally failed to prove the same. The documents cash jewellery involved have been found at the time of search at the premises of Shri Anand Agrawal Shri Anand Agrawal has owned up the same he has filed an affidavit in this regard he has filed the return of income in this regard the same has been added in his hands on substantive basis as per the appellate order of the CIT(Appeals) the Revenue has decided not to appeal against the said order thus the addition of this amount in the hands of Shri Anand Agrawal has reached finality. There is no evidence whatsoever found in the course of the search that that Shri Anand Agrawal is a benamidar of the assessee rather the Department has made search on Shri Anand Agrawal as independent group this itself dispels the doubt of the AO that Shri Anand Agrawal is a benamidar of the assessee We hold as under 1. Once the same amount has been added on substantive basis by the appellate order in the case of Shri Anand Agrawal and Revenue has chosen not to appeal against the same this appeal by the Revenue is not at all sustainable which seeks to add the same amount again in the hands of the assessee. 2. Revenue has totally failed to prove that Shri Anand Agrawal was a benamidar of the assessee. In such circumstances in our considered opinion there is no infirmity in the order of the learned CIT(Appeals). Accordingly we uphold the same. - Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of assessments under sections 153C and 153A of the Income Tax Act.
2. Whether the CIT(A) erred in concluding that the addition of ?1,21,08,113/- made by the AO did not make out a case for including the income on a substantive basis in the hands of the assessee.
3. Whether the CIT(A) erred in quashing the assessment on the ground that proceedings under section 153C were not correct and no incriminating material was found.
4. Whether the income offered by Shri Anand Kumar Agrawal should be assessed in the hands of the assessee.

Detailed Analysis:

1. Validity of Assessments under Sections 153C and 153A:
The Department argued that the assessments for AYs 2003-04 to 2009-10 were defective as they were conducted under sections 153C and 153A simultaneously. The assessments under section 153C were pending, which should have abated under the second proviso to section 153A. The Tribunal found that the Department accepted that the assessments were defective and invalid. The plea to annul the assessments and remit the matter back to the AO for fresh assessments was unsustainable. The Tribunal cited section 263, emphasizing that annulling assessments and sending the matter back is the prerogative of the Commissioner of Income-tax, not the CIT(A). The Tribunal concluded that the assessments deserved to be quashed ab initio but refrained from adjudicating this due to the absence of such grounds raised by either party.

2. Addition of ?1,21,08,113/- in the Hands of the Assessee:
The AO added ?1,21,08,113/- in the hands of the assessee based on the income disclosed by Shri Anand Kumar Agrawal in his return. The CIT(A) deleted the addition, holding that the AO did not refer to anything relating to these items in the satisfaction note and failed to make a case for including these items in the appellant's income. The CIT(A) noted that the red suitcase containing cash and jewelry was owned by Shri Anand Kumar Agrawal, and there was no incriminating material linking these assets to the appellant. The Tribunal upheld the CIT(A)'s decision, stating that the income disclosed by Shri Anand Kumar Agrawal had already been added on a substantive basis in his hands and had achieved finality. It is settled law that the same income cannot be assessed twice in the hands of different persons.

3. Proceedings under Section 153C:
The Tribunal noted that the assessment was framed pursuant to notice under section 153C. The search conducted on 04-02-2010 at the assessee's premises did not yield any incriminating material or evidence relating to the addition made. The Tribunal emphasized that no evidence was found to show that Shri Anand Agrawal was a benamidar of the assessee. The Tribunal referred to section 292C, which presumes that documents, money, and jewelry found during a search belong to the person searched. Shri Anand Agrawal accepted ownership of the assets and offered them in his return of income, which was accepted by the Revenue.

4. Ownership of Income by Shri Anand Kumar Agrawal:
The Tribunal highlighted that the red suitcase was found in the bedroom of Smt. Sitadevi Agrawal during the search at Shri Anand Agrawal's house. Shri Anand Agrawal owned up the entire amounts, reflected them in his return of income, and the same was added in his hands. The Tribunal found no basis for making any addition in the hands of the assessee. The Tribunal cited case laws supporting the principle that the onus to prove that the apparent is not real lies on the party asserting it. The Revenue failed to prove that Shri Anand Agrawal was a benamidar of the assessee.

Conclusion:
The Tribunal dismissed the Revenue's appeal, holding that the same income cannot be assessed twice in the hands of different persons. The Tribunal also dismissed the cross-objection by the assessee as infructuous, having already upheld the CIT(A)'s order. The Tribunal's order was pronounced on 9th January 2017.