2017 (12) TMI 1879 - AT - Income Tax

Undisclosed income declared at the time of search - argument of Non considering disclosure made by the assessee in his statement recorded u/s. 132(4) - assessee vehemently stated that the disclosure made by the group was bifurcated in the hands of different Members of the group and the disclosure was honoured by including the undisclosed income declared at the time of search in the hands of the other assessees of the group. HELD THAT - We find that nobody attended during the assessment proceedings of the assessee nor anybody attended proceedings before the First Appellate Authority. Therefore, it appears that the assessments made in the cases of other assessees of the group were not verified and the entire disclosure amount has been added in the hands of the appellant assessee. In our considered opinion, a grave prejudiced has been caused to the assessee by such non verification. Therefore, in the interest of justice, we restore these appeals to the files of the A.O. A.O. is directed to verify from the assessment records of Shreem Developers and Others, The amount of undisclosed income offered during the course of the search proceedings as per the statement mentioned hereinabove. If the A.O. is satisfied that the undisclosed income has been taxed in the hands of other members of the group then there is no reason why the same income should be taxed in the hands of the assessee. The assessee is directed to furnish necessary details and substantiate its claim before the AO. Assessee appeal allowed for statistical purpose.

Summary

Issues:
Appeals against orders of CIT(A)-11 for A.Y. 2011-12, 2012-13, 2013-14 & 2014-15.

Analysis:
The appeals raised a common grievance regarding the treatment of disclosure made by the assessee during a search operation under section 132(4) of the Income Tax Act. The appellant argued that the undisclosed income declared during the search was already included in the hands of other group members, leading to double taxation if added to the appellant's income. The record showed a specific disclosure made by Shri Vijaynarayan Jaju and a subsequent letter bifurcating the disclosed income among different group members. However, it was noted that no one attended the assessment proceedings for the appellant, nor for the First Appellate Authority, indicating a lack of verification of assessments for other group members. Consequently, the entire disclosure amount was added to the appellant's income without proper verification.

The tribunal found this lack of verification prejudicial to the appellant and ordered the Assessing Officer to re-examine the undisclosed income offered during the search proceedings in the context of assessments for other group members, particularly Shreem Developers and others. If it is confirmed that the undisclosed income was already taxed in the hands of other group members, the same income should not be taxed again in the appellant's hands. The appellant was directed to provide necessary details and substantiate their claim before the Assessing Officer. As a result, all the appeals were treated as allowed for statistical purposes, emphasizing the importance of proper verification and avoiding double taxation.

In conclusion, the tribunal's decision highlighted the significance of verifying disclosures and avoiding double taxation, ensuring fairness and justice in the assessment process. The judgment underscored the need for thorough examination of disclosure statements and proper allocation of undisclosed income among group members to prevent unjust taxation.