2017 (6) TMI 592 - AT - Income Tax

Initiating action u/s 153A - Held that - As the documents on the basis of which proceedings u/s 153C of the Act had been initiated in the case of the assessee did not belong to the assessee. Accordingly, we set aside the order of the Ld. CIT (A) and direct the Assessing Officer to delete the impugned additions. - Decided in favour of assessee.

Summary

Issues:
1. Validity of assessment u/s 144/148
2. Legality of action u/s 148 for reassessment proceedings
3. Justification of additions made by Assessing Officer
4. Rejection of affidavit filed by the assessee
5. Validity of action taken u/s 147/148
6. Confirmation of addition of ?20 Lakh by the AO

Analysis:

Issue 1: Validity of assessment u/s 144/148
The appellant challenged the validity of the assessment conducted under sections 144/148 of the Income Tax Act. The Assessing Officer added ?20 lakh u/s 69A and interest earned on alleged advances. The first appellate authority upheld the assessment. However, the ITAT found that the seized documents did not belong to the assessee, similar to a previous case involving Shri Rajiv Gupta. The ITAT held that the Assessing Officer failed to establish that the name mentioned in the seized papers belonged to the assessee. Consequently, the ITAT directed the Assessing Officer to delete the impugned additions, ruling in favor of the appellant.

Issue 2: Legality of action u/s 148 for reassessment proceedings
The appellant contested the initiation of reassessment proceedings u/s 148. Despite receiving a notice u/s 148, no compliance was made, leading the Assessing Officer to complete the assessment under section 144 r.w.s. 148 by adding back ?20 lakh u/s 69A. The appellant challenged this action before the Ld. CIT (A), who dismissed the appeal. However, the ITAT, considering the lack of evidence linking the seized documents to the appellant, directed the Assessing Officer to delete the additions, thereby ruling in favor of the appellant.

Issue 3: Justification of additions made by Assessing Officer
The Assessing Officer made additions based on seized documents indicating cash advances by the appellant. The AO initiated action u/s 153C, adding ?20 lakh on a peak basis and interest earned. The first appellate authority annulled the assessment, stating that the documents did not belong to the appellant. The ITAT, following a similar case precedent, found that the Assessing Officer failed to establish the connection between the seized documents and the appellant, directing the deletion of the additions.

Issue 4: Rejection of affidavit filed by the assessee
The appellant submitted an affidavit denying any involvement in the alleged cash advances. Despite this, the Assessing Officer proceeded with the additions. The ITAT, considering the lack of evidence linking the seized documents to the appellant, directed the Assessing Officer to delete the impugned additions, ruling in favor of the appellant.

Issue 5: Validity of action taken u/s 147/148
The appellant challenged the validity of the action taken u/s 147/148. The Ld. CIT (A) upheld the action, leading the appellant to approach the ITAT. The ITAT, finding no conclusive evidence linking the seized documents to the appellant, directed the Assessing Officer to delete the additions, ruling in favor of the appellant.

Issue 6: Confirmation of addition of ?20 Lakh by the AO
The Assessing Officer added ?20 lakh as income of the appellant under section 69 of the Act. The appellant contended that this addition was unjustified, presenting an affidavit denying any involvement in the alleged transactions. The ITAT, following a similar case precedent, directed the Assessing Officer to delete the impugned additions, ruling in favor of the appellant.