2019 (6) TMI 351 - AT - Income Tax

Addition of non-genuine agricultural income - HELD THAT - We observe that the Revenue authorities have nowhere disputed that the assessee holds agricultural land measuring 10 acres since last many years. It is a known fact that regular maintenance of books of accounts and documentary evidences for each and every transactions entered into during the course of agricultural operations for buying the seeds, labour charges, sale of produced, purchase of fertilizers etc. cannot be fully documented for various practical reasons. AO has also not placed any contrary material to support its finding. Only remedy is estimation of income per acre. In certain cases as referred in the finding of the Ld. CIT(A), the tribunal has estimated income per acre at ₹ 15000/- during A.Y. 1998-99 and ₹ 25000/- during A.Y. 2005-06. We are of the view that Ld. CIT(A) has rightly estimated the agricultural income of ₹ 30000/- per acre for A.Y. 2009-10. No interference is therefore called for in the well reasoned finding of the Ld. CIT(A). We uphold the same and dismiss the revenue s ground. Unexplained investment in gold - HELD THAT - CIT(A) has rightly given the benefit of 350 gms of gold jewellery (250 gms for daughter and 100 gms for son) thereby giving relief of ₹ 5,80,555/- and confirming the remaining amount as unexplained investment at ₹ 86,535/-. No reason to interfere in the finding of Ld. CIT(A) deleting the addition of ₹ 5,80,555/- and same is upheld. Addition for unaccounted investment - on money paid for purchase of land - adition based on seized loose papers - HELD THAT - The impugned addition for unaccounted investment in the land has rightly been deleted by CIT(A) as they were merely based on the rough jottings on the alleged seized loose papers which were not signed by any of the parties, nor transaction mentioned therein have actually taken place nor revenue has been successful to place any contrary material in the form of valuation report of the impugned land to support the market price of land adopted for making the addition ON MONEY payment. Therefore the alleged seized loose papers are Dumb documents and addition cannot be made on such dumb documents. Rather the jottings on the seized papers were stated to be a part of future planning and references of the transaction in the loose papers are not supported by any corroborative evidence and the evidence in the form of registered sale deeds only indicates that the transaction of purchase/sale of land between the various concerned parties was actually entered at consideration of ₹ 5 crores only and no evidence of any ON MONEY of ₹ 8,74,60,600/- has been paid - No reason to interfere in the finding of Ld. CIT(A) deleting the addition Addition of non-genuine unsecured loans - admission of additional evidence - HELD THAT - In the interest of justice we accept the request of both the parties and set aside this issue of unexplained cash credit to the file of CIT(A)for afresh adjudication with a direction that the additional evidences filed by the assessee which were not placed before the assessing officer should be sent to the assessing officer calling for remand report and thereafter decide the issue afresh as per the provisions of law after giving reasonable opportunity of being heard to the assessee. Validity of reassessment u/s 148 - HELD THAT - There was certain information relating to these 14 assessee s found by the search team during the search u/s 132 of the Act conducted on 21.7.2008 at the premises of Mr. Mukesh Sharma including a memorandum of agreement for purchase of land by Mr. Mukesh Sharma and 14 other parties. Certain loose papers were also seized which as per the Ld. A.O indicated some undisclosed investment. Return were filed on 31.03.2010 and notice u/s 148 of the Act issue within 4 years i.e. before 31.03.2014. Proper opportunity was given to assessee(s) to reply to the reasons recorded for reopening. In our considered view the cases of 14 assessee s were fit case for issue of notice u/s 148 of the Act and for conducting reassessment proceedings u/s 147. Addition on protective basis in the hands of the assessee s for the unaccounted investment in purchase of 1.9 hectare land jointly with Mr. Mukesh Sharma purchased from Mr. Vinod Vaish - addition based on loose papers - HELD THAT - Following the holding in Assessment Year 2009-10, we are of the view that both the lower authorities were not justified in making the addition on protective basis in the hands of all the 14 assessee s. We accordingly allow this common issue in the case of the 14 assessee s and delete the addition made on protective basis on un accounted investments in purchase of land Disallowance for expenses - difference between the amount deposited in the bank/amount of land taken and the amount admitted as undisclosed income - HELD THAT - In the instant case though the actual source of earning the undisclosed income has not been stated but claiming certain expenses against the earning of said undisclosed income cannot be brushed aside. However, Ld. CIT(A) failed to adjudicate this issue and in the interest of justice we are of the view that this common issue needs to be set aside to the file of Ld. CIT(A) for adjudication after giving reasonable opportunity of being heard to the assessee s. Power of CIT(A) - exceeding of Jurisdiction - direction to the Ld. A.O to reopen the cases for A.Y. 2010-11- appeal relates to A.Y. 2009-10 - HELD THAT - CIT(A) has the powers to decide the appeal against the assessee of a particular assessment which he/she may confirm/reduce or enhance or annulled. The order of the assessment relates to particular assessment year or assessment years. Ld. CIT(A) is bound to adjudicate the issues emanating out of the appeal for the respective assessment year. Giving directions to the A.O to consider for re-assessment for other assessment years for which no appeal is pending before CIT, in our view seems to be out of his/her jurisdiction. In the instant case it seems that Ld. CIT(A) has exceeded her jurisdiction of giving direction for reopening of cases for Assessment Year 2010-11 because the appeals of the assessee(s) were pertaining to Assessment Year 2009-10 only. We therefore allow this common issue raised by the respective assessee s.

Summary

Issues Involved:
1. Validity of reassessment proceedings under section 147 of the Income Tax Act.
2. Addition based on "dumb documents" unrelated to the assessee.
3. Disallowance of expenses claimed by the assessees.
4. Directions by the CIT(A) to reopen cases for subsequent assessment years.

Detailed Analysis:

1. Validity of Reassessment Proceedings under Section 147 of the Income Tax Act
The Tribunal upheld the validity of the reassessment proceedings under section 147 of the Income Tax Act. The Tribunal noted that there was certain information found during the search under section 132 of the Act conducted on 21.07.2008 at the premises of Mr. Mukesh Sharma, including a memorandum of agreement for the purchase of land by Mr. Mukesh Sharma and 14 other parties. Certain loose papers were also seized, which indicated some undisclosed investment. The returns were filed on 31.03.2010, and notices under section 148 of the Act were issued within four years, i.e., before 31.03.2014. Proper opportunity was given to the assessees to reply to the reasons recorded for reopening. The Tribunal found that the cases of the 14 assessees were fit for the issue of notice under section 148 of the Act and for conducting reassessment proceedings under section 147 of the Act. Hence, the Tribunal dismissed the common issue raised in the 14 cases challenging the validity of the reassessment proceedings.

2. Addition Based on "Dumb Documents" Unrelated to the Assessee
The Tribunal addressed the issue of the protective addition in the hands of the assessees for the unaccounted investment in the purchase of 1.9 hectares of land jointly with Mr. Mukesh Sharma, purchased from Mr. Vinod Vaish. The Tribunal noted that this issue had already been adjudicated in the cases of Mr. Mukesh Sharma and Mr. Vinod Vaish, where it was held that no addition was called for the "on money" payment of ?8,74,60,600 as it was based on seized loose papers, which were merely dumb documents having no nexus with any corroborating evidence to prove the transaction. The Tribunal found that both the lower authorities were not justified in making the addition on a protective basis in the hands of all the 14 assessees. Therefore, the Tribunal allowed this common issue in the case of the 14 assessees and deleted the addition made on a protective basis on unaccounted investments in the purchase of land totaling ?8,07,43,547.

3. Disallowance of Expenses Claimed by the Assessees
The Tribunal observed that the alleged disallowance for expenses was the difference between the amount deposited in the bank/amount of loan taken and the amount admitted as undisclosed income by the respective assessees. The Tribunal noted that the incidental expenses claimed were in the range of 10% of the amount admitted as undisclosed income, except in the case of Shri Sukhdev Singh Dhariwal, where the expense claimed was ?17,78,235 against the undisclosed income of ?22,21,765. The Tribunal acknowledged that incidental expenses are expected to be incurred to earn any income, and claiming certain expenses against the earning of said undisclosed income cannot be brushed aside. However, the Tribunal found that the CIT(A) had failed to adjudicate this issue and, in the interest of justice, set aside this common issue to the file of the CIT(A) for adjudication after giving reasonable opportunity of being heard to the assessees. Consequently, this common issue of disallowance totaling ?45,24,621 relating to 10 assessees was allowed for statistical purposes.

4. Directions by the CIT(A) to Reopen Cases for Subsequent Assessment Years
The Tribunal found that the CIT(A) had exceeded her jurisdiction by giving directions to the Assessing Officer to consider reopening the cases for the assessment year 2010-11 and to examine the correctness of the opening capital, which was not within the scope of the CIT(A). The Tribunal noted that the power of the Commissioner (Appeals) is provided in Section 251 of the Act, which relates to the appeal against the assessee of a particular assessment year. The Tribunal concluded that the CIT(A) is bound to adjudicate the issues emanating out of the appeal for the respective assessment year and that giving directions to the Assessing Officer to consider for reassessment for other assessment years for which no appeal is pending before the CIT(A) seems to be out of her jurisdiction. Therefore, the Tribunal allowed this common issue raised by the respective assessees.

Conclusion:
The Tribunal's judgment addressed multiple issues, including the validity of reassessment proceedings, the addition based on "dumb documents," the disallowance of expenses, and the jurisdiction of the CIT(A). The Tribunal upheld the reassessment proceedings, deleted the protective additions based on "dumb documents," set aside the issue of disallowance of expenses to the CIT(A) for fresh adjudication, and found that the CIT(A) had exceeded her jurisdiction by directing the reopening of cases for subsequent assessment years. The appeals were partly allowed for statistical purposes.