2016 (6) TMI 585 - AT - Income Tax

Assessment u/s 153A r/w s. 143(3) - The assessments presently under appeal before us (as well as the corresponding penalty appeals) are consequent to a search action u/s. 132(1) of the Act at the assessee s different, as it appears, Short Street and Camac Street premises, at Kolkata on 05.1.2007. The same formed part of a concerted action by the Revenue on Hassan Ali Khan and other related parties at different place across India. Various issues of additions towards unexplained investments / deposits, unexplained expenditure, dis-allowances and set off of losses including Admission of additional evidences by the tribunal, presumption that the document found during search as true and correct - All the quantum appeals are partly allowed.

Summary

Issues Involved:
1. Jurisdiction of assessment under section 153A r/w s. 143(3) and 144 of the Income Tax Act, 1961.
2. Non-grant of reasonable opportunity of being heard.
3. Non-admission of additional evidence.
4. Various additions/disallowances on merits, including unexplained deposits, interest, brokerage, credit card expenses, foreign travel expenses, and unexplained cash/jewelry found during the search.
5. Penalty under section 271(1)(c).

Detailed Analysis:

1. Jurisdiction of Assessment:
The assessments under appeal were consequent to a search action under section 132(1) of the Act at the assessee’s premises. The assessee challenged the jurisdiction of the assessment under section 153A, relying on the decision in CIT vs. Continental Warehousing Corporation, which restricts the scope of assessment to books of account, documents, and materials found during the search. The Tribunal noted that except for A.Y. 2002-03, there had been no assessment either under section 143(1) or 143(3) prior to the date of search. Therefore, the limitation on the scope of the assessment would only apply to A.Y. 2002-03. The Tribunal dismissed the ground for other years but acknowledged the limitation for A.Y. 2002-03.

2. Non-Grant of Reasonable Opportunity:
The assessee contended that the CIT(A) did not grant a reasonable opportunity of being heard. The Tribunal found that the CIT(A) had sought a remand report from the Assessing Officer (A.O.) and that the assessee had been given sufficient opportunity. The Tribunal dismissed this ground, noting that the assessee had failed to substantiate claims of not being heard properly.

3. Non-Admission of Additional Evidence:
The Tribunal discussed the scope of Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963, which allows the production of additional evidence under specific circumstances. The Tribunal found that the assessee's request for additional evidence was not substantiated with specific pleadings or relevance to the issues at hand. The Tribunal dismissed the general request for additional evidence but allowed for specific evidence to be considered in the set-aside proceedings.

4. Additions/Disallowances on Merits:
- Unexplained Deposits: The Tribunal discussed various additions based on transfer instructions (TIs) and other documents found during the search. It noted that the assessee had failed to provide satisfactory explanations or evidence to rebut the presumption of section 292C. The Tribunal set aside several additions for fresh adjudication, allowing the assessee to produce relevant bank statements and other evidence.
- Interest and Brokerage: Additions related to interest and brokerage were confirmed in part, with the Tribunal noting the statutory presumption of section 292C and the assessee's failure to provide contrary evidence.
- Credit Card Expenses: The Tribunal found that the assessee had not substantiated claims of credit card expenses being accounted for in regular books. It restored the matter to the A.O. for fresh adjudication, allowing the assessee an opportunity to explain the source of payments.
- Foreign Travel Expenses: The Tribunal restored the matter of foreign travel expenses to the A.O., noting the need for the assessee to substantiate claims with specific evidence.
- Unexplained Cash/Jewelry: The Tribunal noted the assessee's failure to reconcile the cash and jewelry found during the search with disclosed assets. It restored these matters for fresh adjudication, allowing the assessee to provide explanations and evidence.

5. Penalty under Section 271(1)(c):
The Tribunal noted that the quantum proceedings had been largely restored to the A.O. for fresh adjudication. It set aside the penalty orders for all years, directing the A.O. to reconsider the issue of penalty afresh in light of the findings in the set-aside proceedings.

Conclusion:
The Tribunal's order comprehensively addressed the jurisdictional issues, procedural fairness, and substantive additions/disallowances. It provided the assessee with opportunities to substantiate claims and produce additional evidence, while also upholding the statutory presumptions and principles of law. The penalty proceedings were set aside for reconsideration post fresh adjudication of the quantum appeals.