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2017 (9) TMI 557 - AT - Income TaxValidity of proceeding u/s. 153C - Unexplained cash credit u/s 68 - claimed deduction u/s 54 as making investment in Marvel Group - purchase of flat - whether the proceeding is bad-in-law without jurisdiction - Held that - DCIT CC(1)(1) has rightly followed the procedure for informing the A.O. for initiating the proceedings u/s. 153C of the Act. We agree with the finding of the Ld. CIT(A) and dismiss the cross objection filed by the assessee. Regarding additions - Held that - A.O. failed to make any enquiry to know the identity of the people mentioned in the ledger account. No details were called by him from the Marvel Group. There is no statement indicating that the assessee had given any cash amount. There is no finding in the case of Marvel Group about the destination of these amounts. The A.O. failed to consider that the assessee purchased the property in Marvel Enigma whereas the ledger account mentions the project at Mystique at Honavar and Abnave at Hadapsar . - CIT(A) has rightly deleted the additions - Decided against the revenue.
Issues:
1. Addition of unexplained cash credit u/s 68 of the Income Tax Act. 2. Validity of proceeding u/s 153C. 3. Jurisdiction of the assessing officer in initiating proceedings u/s 153C. 4. Deletion of addition made by the assessing officer u/s 68 of the Act. Issue 1: Addition of Unexplained Cash Credit u/s 68 of the Income Tax Act: The assessing officer made an addition of ?1,25,00,000 u/s 68 of the Act based on information received regarding cash payments made by the assessee to Marvel Group. The CIT(A) deleted ?51,00,000 from the addition as pertaining to a different assessment year. Regarding the remaining ?74,00,000, the CIT(A) noted discrepancies in the evidence provided by the assessing officer. The CIT(A) found that the assessing officer failed to establish that the cash amount was considered as income of Marvel Group or that the appellant had purchased properties from Marvel Group. The CIT(A) concluded that without evidence, the addition of ?74,00,000 was unjustified and deleted it. Issue 2: Validity of Proceeding u/s 153C: The assessee contended that the notice u/s 153C was issued without jurisdiction as no satisfaction note was recorded by the assessing officer of the searched party u/s 153C. The CIT(A) found that the procedure for informing the assessing officer to initiate proceedings u/s 153C was duly followed by the DCIT. The tribunal agreed with the CIT(A) and dismissed the cross objection filed by the assessee, upholding the validity of the proceedings u/s 153C. Issue 3: Jurisdiction of the Assessing Officer in Initiating Proceedings u/s 153C: The assessing officer had issued a notice u/s 153C to the assessee based on information received post a search and seizure action in the Marvel Group. The assessee challenged the jurisdiction of the assessing officer in initiating proceedings u/s 153C. The tribunal found that the DCIT had followed the correct procedure in informing the assessing officer to initiate proceedings u/s 153C, thereby upholding the jurisdiction of the assessing officer in initiating the proceedings. Issue 4: Deletion of Addition Made by the Assessing Officer u/s 68 of the Act: The tribunal examined the ledger account used by the assessing officer to make the addition of ?1,25,00,000 u/s 68 of the Act. It was observed that the assessing officer failed to verify the identity of individuals mentioned in the ledger account or call for details from the Marvel Group. The tribunal found that the assessing officer did not conduct proper inquiry or verification to establish the authenticity of the ledger account. Citing a Supreme Court judgment, the tribunal upheld the CIT(A)'s decision to delete the addition of ?74,00,000 made by the assessing officer u/s 68 of the Act. In conclusion, the tribunal dismissed the appeal filed by the revenue and the cross objection filed by the assessee, upholding the CIT(A)'s decision to delete the addition made by the assessing officer u/s 68 of the Act. The tribunal also affirmed the validity of the proceedings u/s 153C and the jurisdiction of the assessing officer in initiating the proceedings.
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