2016 (7) TMI 373 - AT - Income Tax

Levy of surcharge - block assessments - Held that - Levy of surcharge is squarely covered by the judgment of the Hon ble Apex Court in the case of Vatika Township (P) Ltd.(2014 (9) TMI 576 - SUPREME COURT ), wherein the Hon ble Apex Court has held that though the provision for surcharge under the Finance Acts has been in existence since 1995, the charge of surcharge with respect to block assessments, having been created for the first time by the insertion of the proviso to section 113 of the Income Tax Act, 1961, by the Finance Act, 2002, is clearly a substantive provision and is to be construed as prospective in operation. The amendment neither purports to be merely clarificatory nor is there any material to suggest that it was intended so by Parliament. Thus the preposition that the levy of surcharge was not to apply to block assessments pertaining to period prior to 1.6.2002 and that the intention of the legislature was not to give it a retrospective effect confirmed. - Decided in favour of assessee Addition on account of undisclosed investment in purchase of farm land - addition made on substantive basis - Held that - The investment made in Farm land has already been declared by M/s JPM Farms P. Ltd. and duly accepted by the AO in its block assessment. As find no reason to add the same again in the hands of the appellant. Therefore, the AO was not justified in making the impugned addition .- Decided in favour of assessee Addition made on account of benami investment in Share Capital of different companies - Held that - The addition has already been made in the case of respective companies on substantive basis, the AO was not justified in making the impugned addition - Decided in favour of assessee Addition on account of bogus job works through MEW Tools Pvt. Ltd - Held that - Admittedly, the addition including 1/3rd of the amount, as alleged to be received by the appellant has already been added while framing block assessment in the case of MEW Tools P. Ltd. and also in the case of M/s Jay Yushin Ltd. on substantive basis. This fact has also been admitted by the AO in his assessment order. Therefore, no further addition of the same amount can be made in the hands of the appellant, which has already been taxed, on substantive basis, in the hands of the M/s MEW Tools P. Ltd. and M/s Jay Yushin Ltd. Thus there is no justification for making addition in the hands of the appellant. - Decided in favour of assessee

Issues Involved:
1. Addition of ?3,00,000 on account of unexplained cash.
2. Levy of surcharge on tax determined under section 163 of the Income Tax Act.
3. Addition of ?30,28,697 on account of undisclosed investment in purchase of farmland.
4. Addition of ?1,21,15,114 on account of benami share capital.
5. Addition of ?1,35,97,741 on account of bogus job work through M/s MEW Tools Pvt. Ltd.

Detailed Analysis:

1. Addition of ?3,00,000 on account of unexplained cash:
The assessee's appeal on this issue was not pressed and hence dismissed as not pressed.

2. Levy of surcharge on tax determined under section 163 of the Income Tax Act:
The assessee argued that the levy of surcharge should not apply to block assessments for periods before 1.6.2002, citing the Supreme Court judgment in CIT vs. Vatika Township (P) Ltd., which held that the surcharge provision is prospective and not retrospective. The Tribunal found this argument persuasive and allowed the assessee's appeal, deleting the surcharge.

3. Addition of ?30,28,697 on account of undisclosed investment in purchase of farmland:
The Department contended that the addition was made substantively in the case of the assessee and protectively in the case of M/s JPM Farms Pvt. Ltd. However, the Tribunal upheld the CIT (A)'s finding that the farmland was purchased by M/s JPM Farms Pvt. Ltd., which had already declared the undisclosed investment in its block return. The Tribunal emphasized that double taxation of the same income is not permissible and dismissed the Department's appeal on this ground.

4. Addition of ?1,21,15,114 on account of benami share capital:
The Department argued that the addition was made substantively in the hands of the assessee and protectively in the hands of the companies. The Tribunal upheld the CIT (A)'s decision, which found no material evidence to justify the addition in the assessee's hands, especially since the same amount had already been assessed substantively in the hands of the respective companies. The Department's appeal on this issue was dismissed.

5. Addition of ?1,35,97,741 on account of bogus job work through M/s MEW Tools Pvt. Ltd.:
The Department argued that the job work payments made by M/s Jay Yushin Ltd. to M/s MEW Tools Pvt. Ltd. were bogus and that the funds were siphoned off by the Minda family. The Tribunal upheld the CIT (A)'s finding that the addition had already been made substantively in the hands of M/s MEW Tools Pvt. Ltd. and M/s Jay Yushin Ltd. and could not be made again in the hands of the assessee. The Department's appeal on this issue was dismissed.

Conclusion:
The assessee's appeal was partly allowed, specifically on the issue of surcharge, while the Department's appeal was entirely dismissed. The Tribunal found no justification for the additions made by the AO in the hands of the assessee when the same amounts had already been taxed substantively in the hands of other entities.

← Previous Next →