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2019 (4) TMI 1055 - AT - Income TaxBlock assessment u/s 158BC 158BD - Non filing of Income Tax returns - assessee had not filed his return of income for the assessment years falling within the block period before the date of search - Revenue Authorities had rejected the acknowledgements of the returns filed by the assessee because it did not match with the records maintained by the Ld.Revenue Authorities - HELD THAT - Revenue Authorities have not conducted any investigation on that regard. The Ld.Revenue Authorities also ought to have examined the copy of the returns filed by the assessee that was produced before them and thereafter arrived at a proper conclusion. Further the Ld.Revenue Authorities had not taken any coercive action for the alleged fraud committed by the assessee. In this situation we can neither hold the matter in favour of the Revenue nor the assessee - Addition made by the AO in the block assessment is devoid of merits because there is no conclusive finding by the Revenue that the assessee had not filed his return of income for the assessment years 1997- 98 to 2003-04. Hence we hereby direct the Ld.AO to delete the addition . Case followed SHRI RAKESH SARIN, 2011 (6) TMI 977 - ITAT CHENNAI Undisclosed investments - HELD THAT - Since the facts and the issue being same, the decision rendered in the case of the assessee s father Shri Rakesh Sarin 2011 (6) TMI 977 - ITAT CHENNAI and mother Smt. Renu Sarin . 2019 (4) TMI 1054 - ITAT CHENNAI holds good in the case of the assessee also and accordingly we hereby direct the Ld.AO to delete the addition respect to the investment made in Insurance Policies with HDFC, ₹ 88,490/- being the investment made in shares, investment in UTI, investment in shares of Aashna Invt. P. Ltd., City Union Bank Sundaram Finance, fixed deposit with Andhra Bank, investment in RBI Bonds and the investment in UTI, ICICI, IDBI HDFC relief bonds. Addition of cash deposit in SB account Current Account and addition of ₹ 8,10,656/- towards Recurring deposit - AO added the same to the undisclosed income of the assessee because the transactions were not accounted in the assessee s books of accounts - HELD THAT - AO had failed to examine the return filed by the assessee and the explanation submitted thus we hereby direct the Ld.AO to delete the addition made. Addition towards pronotes - HELD THAT - From the facts of the case, it is apparent that the pro-notes were incomplete in all aspects and therefore presumption cannot be made that the assessee had lend money though there is some air of doubt. Moreover peak credit concept may also be applicable in the case of the assessee due to rotation of advances and repayments. It appears that the Ld.AO has not examined those aspects. There is every probability that if such exercise would have been carried out the source of the amount utilized in the finance business would have been explainable as the amount utilized in the business would have been much less than the addition made by the Ld.AO. Therefore adhoc addition of the amount mentioned in the entire pro-notes is not justifiable. Further the Ld.AO has also not made any investigation in the market to find out whether any amount borrowed from the assessee was pending to be returned to the assessee Addition being the amount advanced to M/s. Shibi Travels as unexplained advances - HELD THAT - No merit in the order of the Ld.Revenue Authorities on this issue. The assessee had explained the transaction as advance extended to M/s. Shibi Travels against collateral security of a ticket to US. These facts could have been confirmed and verified by the Ld.Revenue Authorities from M/s. Shibi Travels which they have failed to do so. Hence we do not find any merit in the findings of the Ld.Revenue Authorities who had simply rejected the explanation offered by the assessee without verifying the facts. Addition being the amount advanced to M/s. Nadiadwala Grandson as unexplained advances - HELD THAT - From the above facts it appears that the assessee had explained before the Ld.Revenue Authorities that the amount advanced to M/s.Nadiadwala Grandson Entertainment for ₹ 2,50,000/- on behalf of M/s. Adlab Film Ltd., was omitted to be recorded in the books of accounts of the assessee. However on repayment of the loan of ₹ 2,50,000/- by M/s. Adlab Film Ltd., it was recorded in the name of M/s. Adlab Film Ltd.. These facts could have been verified by the Revenue from both M/s. Nadiadwala Grandson Entertainment and M/s. Adlab Film Ltd. However the Ld.Revenue Authorities had failed to do so. It is also admitted fact that the books of the assessee were incomplete. In this situation, we do not find any merit in the order of the Ld.Revenue Authorities for adding the amount Addition being the amount advanced to M/s. Status Enterprises as unexplained advances - HELD THAT - Since neither the Ld.AR nor the assessee submitted any explanation before us on this issue, we do not have any other option but to confirm the addition made by the Ld.Revenue Authorities on this issue. Accordingly we hereby confirm the addition Addition on account of property purchased at Kasthurba Nagar - CIT(A) has rejected the submission of the assessee with respect to the source of investment arising from the VDIS disclosure and borrowings by stating that it has no correlation with the investment made in the property purchased at Kasthurba Nagar - HELD THAT - CIT(A) has rejected the return of income filed by the assessee by stating it to be bogus without further investigation. When the facts being so, we do not find any merit in the observation of the Ld.CIT(A) when he has only investigated the matter partially. There is also no finding by the Revenue as to what investment was made from the voluntary disclosure. The disclosure in the VDS scheme is also not under challenge. In this situation we do not find any merit in the addition made by the Ld.AO which is further sustained by the Ld.CIT(A) on the issue. Hence, we hereby direct the Ld.AO to delete the addition made
Issues Involved:
1. Non-filing of Income Tax returns. 2. Addition of undisclosed investments/income in various financial instruments. 3. Addition towards unexplained cash deposits and recurring deposits. 4. Addition towards undisclosed investment in pronotes. 5. Addition of unexplained advances to M/s. Shibi Travels. 6. Addition of unexplained advances to M/s. Nadiadwala Grandson. 7. Addition of unexplained advances to M/s. Status Enterprises. 8. Addition on account of property purchased at Kasthurba Nagar. Issue-wise Detailed Analysis: 1. Non-filing of Income Tax returns: During the investigation, it was observed that the assessee had made substantial investments, which he claimed were disclosed in his returns. However, the acknowledgements provided by the assessee were found to belong to different persons. The Revenue authorities did not investigate further but rejected the returns as bogus. The Tribunal noted that similar issues in the cases of the assessee's parents were resolved in favor of the assessee, as the Revenue had not conclusively proved that the returns were not filed. Therefore, the Tribunal directed the deletion of the addition of ?6,29,226/- made by the AO. 2. Addition of undisclosed investments/income: The AO added various investments made by the assessee in insurance policies, shares, UTI, fixed deposits, RBI bonds, and relief bonds as undisclosed income. The Tribunal observed that in the cases of the assessee's parents, similar additions were deleted as the AO had failed to verify the returns and the sources of investments. The Tribunal directed the deletion of the additions totaling ?33,77,525/- made towards these investments. 3. Addition towards unexplained cash deposits and recurring deposits: The AO added ?1,18,000/- towards cash deposits and ?8,10,656/- towards recurring deposits as undisclosed income. The Tribunal noted that similar additions in the cases of the assessee's parents were deleted due to the AO's failure to verify the returns and explanations provided. Therefore, the Tribunal directed the deletion of these additions. 4. Addition towards undisclosed investment in pronotes: The AO added ?8,50,000/- towards pronotes found during the search as undisclosed investment. The Tribunal, referencing the cases of the assessee's parents, noted that the pronotes were incomplete and the AO had not conducted proper investigations. Therefore, the Tribunal directed the deletion of the addition made towards unaccounted pronotes. 5. Addition of unexplained advances to M/s. Shibi Travels: The AO added ?2,00,955/- as unexplained investment related to a British Airways ticket purchased from M/s. Shibi Travels. The Tribunal found merit in the assessee's explanation that the amount was an advance against collateral security, which the Revenue failed to verify. Therefore, the Tribunal directed the deletion of this addition. 6. Addition of unexplained advances to M/s. Nadiadwala Grandson: The AO added ?2,50,000/- as unexplained advances to M/s. Nadiadwala Grandson Entertainment. The Tribunal found that the assessee had explained the transaction as an advance on behalf of M/s. Adlab Film Ltd., which was not verified by the Revenue. Therefore, the Tribunal directed the deletion of this addition. 7. Addition of unexplained advances to M/s. Status Enterprises: The AO added ?1,50,000/- as unexplained advances to M/s. Status Enterprises. Since neither the assessee nor his representative provided an explanation, the Tribunal confirmed the addition made by the Revenue authorities. 8. Addition on account of property purchased at Kasthurba Nagar: The AO added ?2,93,517/- towards the purchase of property at Kasthurba Nagar, stating that the source of investment was unexplained. The Tribunal found that the Revenue had partially investigated the matter and had not correlated the investment with the disclosures made under the VDIS scheme. Therefore, the Tribunal directed the deletion of this addition. Conclusion: The appeal of the assessee was partly allowed, with the Tribunal directing the deletion of most additions made by the AO, except for the unexplained advance to M/s. Status Enterprises.
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