2017 (7) TMI 908 - AT - Income Tax

Addition u/s 69 - Held that - In the present case, it is noticed that the main addition has been made by the AO u/s 69 of the Act on the basis of alleged bank account in the name of the assessee firm in First Curacao International Bank, Netherland. The assessee now furnished the new documents first time before the Tribunal. These documents/evidences are relevant to resolve the present controversy and could not be furnished earlier before the authorities below because the assessee could not lay its hands. These additional evidences/documents now furnished by the assessee are relevant to resolve the present controversy and go to the root of the matter but these documents/evidences were not available to the authorities below, so they did not have any occasion to comment upon the same. We, therefore, set aside the cases to the file of the AO to be adjudicated afresh. Appeals of the assessee are allowed for statistical purposes.

Issues Involved:
1. Confirmation of the order of the Assessing Officer (AO).
2. Non-confrontation of documents collected behind the back of the assessee.
3. Assessment based on unauthenticated photocopies.
4. Alleged forged signatures on documents.
5. Inability to locate the alleged bank account.
6. Assessment based on "dumb documents."
7. Ignoring the involvement of First Curacao International Bank in cybercrime and VAT frauds.
8. Denial of opening the alleged bank account and e-trading activities.
9. Alleged forged account opening documents.
10. Ignoring the absence of records of operations by internet banking.
11. Ignoring the lack of address on alleged communications from the bank.
12. Ignoring criminal complaints filed by the assessee.
13. Ignoring ongoing investigations by Exchange Control Authorities.
14. Alleged arithmetical errors and double additions in the assessment.
15. Disallowance of expenses as un-vouched.
16. Wrong interest charges under sections 234A and 234B.

Detailed Analysis:

1. Confirmation of the Order of the Assessing Officer (AO):
The CIT(A) confirmed the addition made by the AO, observing that the appellant had income from e-trading activities based on evidence found during the search at Transworld ICT Solutions Pvt. Ltd. and the appellant’s premises. The AO had framed the assessment at an income of ?15,41,86,913/-.

2. Non-Confrontation of Documents:
The appellant contended that the Department did not confront the documents collected from Transworld ICT Solutions Pvt. Ltd., nor was there an opportunity to cross-examine the person from whom the documents were recovered. The CIT(A) did not find this argument sufficient to rebut the substantive evidence gathered.

3. Assessment Based on Unauthenticated Photocopies:
The assessment was based on photocopies of documents found from Transworld ICT Solutions Pvt. Ltd., which the appellant claimed were unauthenticated. The CIT(A) rejected this claim, stating the documents had independent evidentiary value.

4. Alleged Forged Signatures:
The appellant argued that the documents bore forged signatures. The CIT(A) dismissed this, stating that the appellant had not provided tangible evidence to establish the documents were forged.

5. Inability to Locate the Alleged Bank Account:
The Department could not locate the alleged bank account, but extracted information from Transworld ICT Solutions Pvt. Ltd. The CIT(A) upheld the AO’s findings based on the documents found.

6. Assessment Based on "Dumb Documents":
The appellant claimed the assessment was based on "dumb documents" unrelated to the assessee. The CIT(A) found the documents to have independent evidentiary value.

7. Ignoring Cybercrime and VAT Frauds:
The appellant argued that the First Curacao International Bank was involved in cybercrime and VAT frauds. The CIT(A) did not find this argument sufficient to rebut the evidence of the bank account and e-trading activities.

8. Denial of Opening the Alleged Bank Account:
The appellant denied opening the alleged bank account or engaging in e-trading. The CIT(A) found substantial evidence, including a letter with the internet banking password, linking the appellant to the account.

9. Alleged Forged Account Opening Documents:
The appellant claimed the account opening documents bore forged signatures. The CIT(A) rejected this, citing the lack of tangible evidence to support the claim.

10. Ignoring Absence of Internet Banking Records:
The appellant argued that no records of internet banking operations were found. The CIT(A) upheld the AO’s findings based on the documents recovered.

11. Ignoring Lack of Address on Alleged Communications:
The appellant pointed out that the alleged communications from the bank lacked an address. The CIT(A) dismissed this, stating the documents were sufficient evidence.

12. Ignoring Criminal Complaints:
The appellant had filed criminal complaints, which were still under process. The CIT(A) found this irrelevant to the assessment.

13. Ignoring Ongoing Investigations:
The appellant mentioned ongoing investigations by Exchange Control Authorities. The CIT(A) did not find this sufficient to rebut the evidence of the bank account and e-trading activities.

14. Alleged Arithmetical Errors and Double Additions:
The appellant claimed arithmetical errors and double additions in the assessment. The CIT(A) rejected this claim, as no submissions were made in this regard.

15. Disallowance of Expenses as Un-Vouched:
The AO disallowed ?36,300/- as 1/5th of the total expenses shown in the Profit & Loss Account as un-vouched. The CIT(A) upheld this disallowance.

16. Wrong Interest Charges Under Sections 234A and 234B:
The appellant contested the interest charges under sections 234A and 234B. The CIT(A) did not specifically address this issue in the judgment.

Conclusion:
The Tribunal admitted additional evidence/documents furnished by the appellant, which were relevant to the case but not available earlier. The cases for both assessment years were set aside to the AO for fresh adjudication, providing due and reasonable opportunity to the assessee. The appeals were allowed for statistical purposes.

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