2019 (2) TMI 1071 - AT - Income Tax

Assessment u/s 153A - unaccounted credits in the bank account and unaccounted cash deposits - assessee has challenged the additions being not based on any incriminating material found during the course of search - Held that - A.O was not justified in making the additions for Assessment Year 2007-08 to 2011-12 in absence of any incriminating material found during the course of search and the impugned additions are based on the details of documents called from the assessee during the course of assessment proceedings which were regularly disclosed in the return of income. Unaccounted investment u/s 69 - addition made by the A.O on the strength of documents seized during the course of search in the shape of sale deeds which were purchased by different persons - Held that - it is undisputed that the purchase consideration in the alleged immovable properties have been paid by the respective persons in whose name the property has been registered and their source of income is not doubted as Mr. G.P. Sinha is a retired person who paid the amount out of the accumulated savings and Mr. Shailendra Kumar Sinha has paid amount out of the disclosed source of income earned from outside India. Therefore the allegation of the revenue authorities that the investment of ₹ 46 lakh in the properties in the name of Shri G.P. Sinha and Shri Shailendra Kumar Sinha is unaccounted investment of the assessee seems baseless as all the evidences are on record which clearly prove that the owners of the properties have paid consideration for acquiring deed and there is no evidence to show that the alleged investment in the properties has been made by the assessee. Therefore addition for unaccounted investment u/s 69 of the Act stands deleted. As far as the property of Smt. Vinita Parashar is concerned it is true that the original sale deed was seized from the residence of the appellant but in response to the summon issued to Smt. Vinita Parashar, her father namely Shri Shriram Choudhary appeared and stated that he is an employee of State Government and has sold one plot admeasuring 2400 sq.ft at Kolar road and receipt from sale of the plot was invested in the property in the name of daughter. The document related to this purchase was duly executed but was pending for registration and the document seized was a normal business document found at the Directors residence. No other connection was established between the assessee and Smt. Vinita Parashar. Shri Shriram Choudhary has categorically accepted that the investment has been made by him in the name of his daughter from his own fund received from sale of plot at Kolar Road. Therefore when all the details of the purchaser were with the A.O and these persons appeared before A.O there was no estoppels on his part to make necessary verification as well as investigation if any required from Shri Shriram Choudhary. There is no iota of evidence which could prove that investment of ₹ 17,50,000/- in the property in the name of Smt. Vinita Parashar is an unaccounted investment by the assessee and thus deserves to be deleted. Addition for the alleged unaccounted transactions in the hands of the assessee as the seized document was found at the residence of third party i.e. Mr. Rajeev Sharma and no particular of the transaction with date was mentioned nor there was any direct connection with the assessee, therefore such addition seems to be made merely on suspicion and devoid of any corroborative evidence which could prove the alleged additions of the A.O. Undisclosed perquisite as undisclosed receipts u/s 17(2)(iii) - Held that - The transaction have been carried out at fair market value as lower rates for the properties were charged to the other customers in comparison to those charged to the Director or the relatives and thus the purchase consideration paid by the plot owners was accepted and the addition was deleted. We also held that the provisions of Section 50C of the Act are not applicable on the sale of stock in trade for the transactions entered during the year under appeal. In view of our above decision, we are inclined to hold that no addition was called for in the hands of the assessee as undisclosed perquisite. Deemed dividend u/s 2(22)(e) - Held that - The assessee and also after going through the records placed before us and statements of Ld. Departmental Representative we find that entitlement of total salary as on 31.3.2012 is ₹ 1,90,720/- and the alleged amount of ₹ 1,73,352/- is received against the outstanding receivable amount. Further total salary due on 31.3.2013 is ₹ 23,368/- (Rs.1,90,720 (-) ₹ 1,73,352/-). Therefore there remains no basis for the addition of ₹ 1,73,352/- on account of deemed dividend u/s 2(22)(e). Unaccounted credits in the bank - Held that - The bank statement of Shri R.P. Sinha is filed. Ld. CIT(A) did not delete the addition for the alleged amount and confirmed it. It is also noticed that Shri R.P. Sinha was available during the course of search as well as during the course of assessment. In these given facts the claim of the assessee that ₹ 3,00,000/- has been received from Shri R.P. Sinha could be verified by the Ld.A.O in order to satisfy about the source of the credit entry in the bank account which is claimed to have been received from the bank account of Shri R.P. Sinha for necessary verification with the assistance of the assessee, after providing him necessary opportunity of being heard. Ground No. 5 of the assessee is allowed for statistical purpose.

Summary

Issues Involved:
1. Legality of the assessment orders.
2. Additions not based on incriminating material found during the search.
3. Additions on account of unaccounted credits in bank accounts.
4. Additions on account of unaccounted cash deposits.
5. Additions on account of deemed dividend u/s 2(22)(e) of the Income Tax Act.
6. Additions on account of undisclosed perquisites.
7. Calculation of interest u/s 234B.
8. Unaccounted investment u/s 69.
9. Unexplained cash found during the search.
10. Undisclosed capital gains.

Issue-wise Detailed Analysis:

1. Legality of the Assessment Orders:
The assessee argued that the assessment orders were bad-in-law, void ab initio, barred by limitation, illegal, contrary to the facts and circumstances of the case, and liable to be annulled. However, this ground was considered general in nature and did not require specific adjudication.

2. Additions Not Based on Incriminating Material Found During the Search:
The assessee contended that the additions were illegal and bad in law as they were not based on any incriminating material found during the search. The Tribunal relied on the judgment of the Hon'ble High Court of Delhi in CIT (Central)-III vs. Kabul Chawla, which held that no additions could be made to the income already assessed if no incriminating material was unearthed during the search. The Tribunal observed that for Assessment Years 2007-08 to 2011-12, the due date for issuance of notice u/s 143(2) had expired as on the date of search, and no incriminating material was found. Therefore, the additions for these years were deleted. For Assessment Years 2012-13 and 2013-14, the ground was dismissed as the returns were filed after the search.

3. Additions on Account of Unaccounted Credits in Bank Accounts:
For Assessment Year 2012-13, the Tribunal found that the amount of ?5,00,000/- was received as advance salary from M/s. Soumya Homes Pvt. Ltd. and was disclosed in the regular return of income. Therefore, the addition was deleted. For other years, similar findings were made, and the additions were deleted.

4. Additions on Account of Unaccounted Cash Deposits:
The Tribunal set aside the issues of unaccounted cash deposits to the file of the Assessing Officer (A.O) for necessary verification of the cash flow statements provided by the assessee. If the A.O found sufficient cash balance to explain the deposits, the additions were to be deleted.

5. Additions on Account of Deemed Dividend u/s 2(22)(e) of the Income Tax Act:
For Assessment Year 2012-13, the Tribunal found that the amounts received were towards salary and share of joint venture projects and not deemed dividends. The issue was set aside to the file of the A.O for verification. For Assessment Year 2013-14, the Tribunal directed the A.O to verify the details provided by the assessee.

6. Additions on Account of Undisclosed Perquisites:
The Tribunal observed that the transactions were carried out at fair market value, and no undue benefit was given to the Directors or their relatives. Therefore, the additions for undisclosed perquisites were deleted.

7. Calculation of Interest u/s 234B:
The Tribunal did not specifically adjudicate this issue as it was considered general in nature.

8. Unaccounted Investment u/s 69:
The Tribunal found that the investments in properties were made by the respective persons in whose names the properties were registered, and their sources of income were not doubted. Therefore, the additions for unaccounted investments were deleted.

9. Unexplained Cash Found During the Search:
The Tribunal set aside the issue to the file of the A.O for verification of the cash flow statements provided by the assessee. If the A.O found sufficient cash balance to explain the cash found, the additions were to be deleted.

10. Undisclosed Capital Gains:
The Tribunal dismissed the ground as not pressed by the assessee and confirmed the additions for undisclosed capital gains.

Conclusion:
The appeals for Assessment Years 2007-08 to 2011-12 were allowed, and the additions were deleted. For Assessment Years 2012-13 and 2013-14, the appeals were partly allowed for statistical purposes, and the issues were set aside to the file of the A.O for necessary verification.