2016 (11) TMI 1366 - AT - Income Tax

Addition under the provisions of section 292C - Unaccounted income - addition u/s 69/69B/69C - ingenuine transaction - Held that - Here a paper is found during the course of search on 6.11.2008 and assessment of search made by the AO u/s. 143(3) of the Act. In fact AO should have proceeded to act u/s. 153A of the Act. AO should also have recorded his satisfaction in this case u/s. 153A of the Act. Even otherwise, the document shown before us does not have the date of transaction where amount of ₹ 96 lakhs is alleged to have been transferred by appellant to other person. Further the AO has also stated that the transaction is also corroborated by the date of cheque transaction. We do not found any cheque transaction where assessee is involved in the present transaction which is allegedly taxed in the hands of the assessee. Much to say that there was no date of cash transaction as alleged then it is surprised how AO has correlated the date with other transaction. Even otherwise when the assessee had denied the transactions, AO should have examined the recipient of search stated in that document and then confronted the assessee with the same. All these exercise have not at all been carried out by the AO. Furthermore, the presumption stated u/s. 292C of the I.T. Act is a rebuttal presumption. Therefore, when the assessee herself denied any such transaction, it cannot be stated that the actual transaction has taken place between the assessee and the person concerned whose name mentioned therein. Further the Circular No. 24 of 2015 dated 31.12.2015 also supports the case of the assessee that satisfaction should have been recorded in the case of the appellant u/s. 153A of the I.T. Act. Therefore, the Appellant succeeds on the issue of satisfaction in view of the CBDT s Circular stated above and also on the merit as the sole addition has been based on the document in which one transaction is allegedly sold without mentioning the date and further no corroborative evidence of any investment made by the assessee was found. Further the document is also unsigned and undated, the addition made in the hands of the assessee of ₹ 96 lacs cannot be sustained. Thus we reverse the finding of the Ld. CIT(A) by confirming the addition in the hands of the assessee under the provisions of section 292C - Decided in favour of assessee Addition of unexplained jewellery u/s. 69B - Held that - Both the authorities below have made the additions and confirmed part addition without any basis and the same is totally based on assumption only which is not sustainable in the eyes of law. It is a settled law that addition on assumption is not permissible under the law. Even otherwise, the Appellant succeeds on the legal issue of satisfaction in view of the CBDT s Circular as stated above and therefore, the addition is not sustainable in the eyes of law. Hence, we delete the addition confirmed by the Ld. CIT(A) of ₹ 5.67 lacs towards the unexplained jewellery u/s. 69B - Decided in favour of assessee

Issues Involved:

1. Addition of ?96 lacs as unaccounted income under Sections 69/69B/69C of the Income Tax Act.
2. Addition of ?5.67 lacs as unexplained jewellery under Section 69B of the Income Tax Act.
3. Penalty of ?10,16,700 under Section 271AAA of the Income Tax Act.

Detailed Analysis:

1. Addition of ?96 lacs as Unaccounted Income:

The Assessee contested the addition of ?96 lacs as unaccounted income based on a loose paper found during a search operation. The paper allegedly indicated a cash transaction that was not recorded in the books. The Assessee argued that the document was unsigned, undated, and lacked corroborating evidence. The Tribunal found merit in the Assessee's argument, noting that the document was merely a computer printout without any signature or date, and there was no evidence of any actual transaction. The Tribunal cited several judicial precedents, including the Delhi High Court's judgment in Vatika Landbase Pvt. Ltd. and the ITAT's decision in P. Koteshwara Rao, which established that loose sheets and unsigned documents without corroborative evidence could not be used to substantiate income additions. Consequently, the Tribunal deleted the addition of ?96 lacs, finding it unsustainable.

2. Addition of ?5.67 lacs as Unexplained Jewellery:

The Assessing Officer (AO) had added ?5.67 lacs as unexplained jewellery, considering the social status of the Assessee and the value of jewellery found during the search. The AO allowed a portion of the jewellery as received during the marriage but treated the rest as unexplained. The Assessee argued that the entire jewellery was received as gifts during the marriage, and its value had appreciated over ten years. The Tribunal found that the addition was made on arbitrary assumptions without any concrete evidence. It noted that both the AO and the CIT(A) had based their conclusions on assumptions rather than solid evidence. The Tribunal, therefore, deleted the addition of ?5.67 lacs, emphasizing that additions based on assumptions are not permissible under the law.

3. Penalty of ?10,16,700 under Section 271AAA:

The penalty was imposed on the basis of the quantum additions which were already deleted by the Tribunal. Since the primary additions of ?96 lacs and ?5.67 lacs were found unsustainable, the penalty under Section 271AAA could not survive. The Tribunal set aside the penalty orders, deleting the penalty of ?10,16,700.

Conclusion:

The Tribunal allowed both the appeals filed by the Assessee, deleting the additions of ?96 lacs and ?5.67 lacs, and setting aside the penalty of ?10,16,700. The judgment emphasized the need for concrete evidence rather than assumptions and loose documents to substantiate income additions and penalties under the Income Tax Act.

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