2020 (5) TMI 71 - AT - Income Tax

Revision u/s 263 - Unexplained income - Addition based on document found in the course of survey in the case of Vijay Construction as undisclosed income of the assessee - HELD THAT - AO of M/s. Vijay Construction who examined all these details has considered the explanation given therein that the amount of ₹ 1,05,00,000/- included the amount of ₹ 75,00,000/- being the advance from M/s. Ashish Barter Pvt. Ltd., and an amount of ₹ 30,00,000/- representing gift from the mother of Shri Pawan Vijay Jadhav, a partner of M/s. Vijay Construction. It is after considering the explanation that no addition has been made in the hands of either Pawan Vijay Jadhav or Vijay Construction Pvt. Ltd. Said document is in fact the document found in the course of survey of M/s. Vijay Construction Pvt. Ltd. M/s. Vijay Construction Pvt. Ltd. has given an explanation in respect of the said document. AO in respect of M/s. Vijay Construction has accepted explanation given by the assessee therein. Now, it would be farfetched for the A.O in the case of assessee herein to take a stand that the amount belongs to the assessee just because the assessee s name is mentioned in the seized document. Confirmation letters have been produced in respect of amount being the advance received from Ashish Barter Pvt. Ltd. and the gift from the mother of Shri Pawan Vijay Jadhav. This being so, we are of the opinion that the enhancement done by the learned CIT(A) in respect of the amount of ₹ 1,05,00,000/- in the hands of the assessee is unsustainable and is deleted. As we have already held that the amount is the undisclosed income in the hands of the assessee. The said amount does not in any way relate to the assessee and consequently the interest in respect of the said amount cannot be added in the hands of the assessee. - Decided in favour of assessee.

Summary

Issues Involved:
1. Revision under section 263 for bringing undisclosed income to tax based on seized documents.
2. Addition of interest based on documents found during survey of another entity.
3. Assessment order enhancement by CIT(A) for undisclosed income.
4. Justification of the addition in the hands of the assessee based on seized documents.
5. Consideration of explanations and confirmation letters provided.
6. Sustainability of the enhancement by CIT(A) and deletion of the addition.
7. Deletion of interest addition for the assessment years in question.

Detailed Analysis:

1. The first issue in this case revolves around the revision under section 263, where the Principal CIT proposed to tax an amount as undisclosed income based on documents seized during a survey. However, the Tribunal had earlier quashed this revision order, leading to a reevaluation of the matter.

2. The second issue concerns the addition of interest by the Assessing Officer (AO) based on documents found during a survey of another entity, M/s. Vijay Construction. The AO made additions for two assessment years, 2009-10 and 2010-11, totaling significant amounts.

3. Moving on to the third issue, the CIT(A) enhanced the assessment order for the appellant, proposing to tax a specific amount as undisclosed income based on the seized documents. This enhancement led to further disputes and appeals by the assessee.

4. The fourth issue delves into the justification provided for adding the undisclosed income in the hands of the assessee based on the documents seized during the survey of M/s. Vijay Construction. The assessee contested the ownership of the amount mentioned in the documents.

5. Considering the explanations and confirmation letters provided by the assessee, the fifth issue focuses on the credibility and veracity of the claims made regarding the source and ownership of the disputed amount. These documents played a crucial role in determining the legitimacy of the transactions.

6. The sixth issue addresses the sustainability of the CIT(A)'s enhancement in light of the explanations and evidence presented by the assessee. The Tribunal scrutinized the details and explanations provided by M/s. Vijay Construction, ultimately leading to the deletion of the enhancement for the assessee.

7. Finally, the seventh issue pertains to the deletion of the interest addition for the relevant assessment years, 2009-10 and 2010-11, following the Tribunal's decision to delete the undisclosed income addition. The Tribunal's ruling resulted in both appeals of the assessee being allowed, overturning the previous decisions.

This detailed analysis encapsulates the complex legal proceedings and the critical factors considered by the Tribunal in arriving at its final judgment, emphasizing the importance of evidence, explanations, and legal interpretations in tax matters.