2017 (10) TMI 1237 - AT - Income Tax

Validity of order u/s. 143(3) r.w.s. 153A - period of limitation - Held that - The six assessments year as referred in clause (b) of sub section (1) of 153A clearly speaks about six assessment year immediately preceding assessment year relevant to the previous year in which year search is conducted. Further, in our considered view, the assessment year under consideration is out of the preview of scope of section 153A. Since the assessment for the year under consideration was out of the scope of section 153A, thus, the period of limitation prescribed under section 153A(1)(b) has no application for passing the assessment order with a stipulated period as prescribed therein. Hence the order passed by the AO under section 143(3) is within prescribed period of limitation as provided under section 153. Unexplained cash and unexplained jewellery seized at Mumbai Airport - Held that - AO while passing assessment order has not given sufficient opportunity to explain and substantiate the claim of assessee and these grounds of appeal may also be restored to the file of AO with the direction to allow the assessee to explain about the seizure of cash and jewellery. On the other hand, the ld. DR for the Revenue supported the order of authorities below and would argue that the assessee has not appeared before the AO on a number of appointed dates and asked for adjournment. The assessee started to appear at the fag end of the year when the time period for passing the assessment order was knocking. However, on our specific query, the ld. DR for the Revenue agreed that he has no objection, if the grounds of appeal are restored to the file of AO. However, it was prayed that assessee be directed to fully co-operate and to provide the full detail and not to drag the proceeding unnecessary. Considering the contention of both the parties, the ground no.1 &2 are restored to the file of AO to decide both the ground afresh in accordance with law. The assessee is directed to provide full detail and information which may be required by AO and not to take the adjournment without legitimate ground.

Issues Involved:
1. Treatment of cash seized as concealed income.
2. Treatment of seized gold jewellery as unexplained investment.
3. Treatment of genuine creditors as bogus.
4. Disallowance of interest on loan.
5. Addition of rent expenses.
6. Disallowance of conveyance and travelling expenses.
7. Allegation of assessment order being time-barred.
8. Charging of interest under sections 234A, 234B, and 234C.
9. Initiating penalty under section 271(1)(c).
10. Additional ground regarding the period of limitation under section 153A(1)(b).

Detailed Analysis:

1. Treatment of Cash Seized as Concealed Income:
The assessee contended that the cash of ?61 Lacs seized from his employee was recorded in the books of account and should not be treated as concealed income. The Tribunal, considering the arguments and the order for earlier assessment years, restored the matter to the Assessing Officer (AO) for fresh adjudication, directing the assessee to provide necessary details and cooperate fully.

2. Treatment of Seized Gold Jewellery as Unexplained Investment:
The assessee argued that the seized gold jewellery worth ?18,15,390/- was part of the stock-in-trade and recorded in the books of account. The Tribunal, aligning with its decision on the cash seizure issue, restored this matter to the AO for fresh examination, emphasizing the need for the assessee to submit detailed information and cooperate during the proceedings.

3. Treatment of Genuine Creditors as Bogus:
The assessee challenged the addition of ?30,21,580/- as unexplained loans, providing extensive documentation to prove the identity, creditworthiness, and genuineness of the creditors. The Tribunal restored the matter to the AO, directing a fresh examination of the evidence and adherence to legal procedures, including the possibility of issuing notices under section 131 for securing the presence of creditors.

4. Disallowance of Interest on Loan:
The Tribunal, considering the linkage with the unexplained loan issue, restored the matter of disallowance of ?4,89,423/- interest on loan to the AO for fresh adjudication, consistent with the directions for examining the genuineness of the loan transactions.

5. Addition of Rent Expenses:
The assessee argued against the addition of ?36,000/- as rent expenses, stating that it was paid by his brother and not claimed as an expenditure. The Tribunal, referring to its earlier decision for AY 2007-08, dismissed this ground, upholding the addition.

6. Disallowance of Conveyance and Travelling Expenses:
The Tribunal restored the issue of disallowance of 10% of conveyance and travelling expenses (?8,374/-) to the AO for fresh examination, aligning with its decision for AY 2007-08, and directed a proper review of the relevant documents and accounts.

7. Allegation of Assessment Order Being Time-Barred:
The assessee claimed that the assessment order served on 05.01.2011 was time-barred. The Tribunal dismissed this ground, clarifying that the order was passed within the prescribed period under section 153 and that the service of the order within a reasonable time was sufficient.

8. Charging of Interest Under Sections 234A, 234B, and 234C:
This ground was deemed consequential and required no separate adjudication.

9. Initiating Penalty Under Section 271(1)(c):
The Tribunal found this ground premature and did not adjudicate on it.

10. Additional Ground Regarding the Period of Limitation Under Section 153A(1)(b):
The Tribunal dismissed the additional ground, stating that the assessment year 2008-09 was outside the purview of section 153A and that the order passed under section 143(3) was valid and within the prescribed period.

Conclusion:
The appeal was partly allowed, with several issues restored to the AO for fresh adjudication, while others were dismissed based on prior decisions and legal interpretations. The Tribunal emphasized the need for the assessee's cooperation and detailed submission of evidence during the reassessment process.

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