2020 (9) TMI 415 - HC - Income Tax

Cash found and seized in search proceedings - non-availability of evidence in respect of the claim at the time of search and availability of such proof only subsequent to the search especially when the assessee had not mentioned about the availability of evidence when statement was recorded under Section 132(4) - Tribunal setting aside the orders of the lower authorities with a direction to AO to do the same assessment afresh - Whether Appellate Tribunal is correct in entertaining the afterthought submission of the assessee that the excess cash found at the time of search relates to sales and the bills were pending for updation at the time of search? - HELD THAT - Substantial Questions of law need not be answered in the instant case as they have become academic. It is true that a Superior Tribunal or a Court cannot mechanically remand matters for fresh consideration or de novo adjudication unless and until it finds a justifiable need for such a remand. In the instant case, the Assessing Officer has passed a given effect to order under Section 143(3) r/w. Section 254 of the Act dated 31.12.2018 and such order is adverse to the assessee as the assessee was not able to establish anything and therefore, the Assessing Officer held that the assessee has concealed the particulars of income and had no explanation worthwhile to offer. We are informed that the assessee has filed an appeal to the Commissioner of Income Tax (Appeals) against the order dated 31.12.2018 and the same is pending. Tax case appeal is disposed of and the Substantial Questions of law are left open as we find that the issue has become academic in the case due to developments which have taken place during the pendency of this appeal.

Summary

Issues:
Appeal under Section 260A of the Income Tax Act, 1961 against ITAT order for assessment year 2013-14.

Analysis:
The appeal raised substantial questions of law regarding the Tribunal's decision to set aside orders for fresh assessment, allowing the assessee to produce evidence contradicting earlier statements, entertaining afterthought submissions, and the sanctity of statements made under Section 132(4) of the Act. The assessee, a retail trader in jewellery, faced a search operation resulting in the seizure of gold, bullion, and cash. The assessment added undisclosed amounts to the income based on evidence and lack of explanation for the seized cash. The CIT(A) partly allowed the appeal, but the Tribunal remanded the case for de novo assessment, which was challenged by the revenue. The revenue argued against the remand, citing the probative value of statements under Section 132(4) and the risk of fabricated evidence. The respondent contended that the remand was complied with, leading to an adverse order by the Assessing Officer, now under appeal.

The High Court found that the substantial questions of law had become academic due to subsequent developments. The Assessing Officer's adverse order post-remand, where the assessee failed to establish claims, rendered the initial questions irrelevant. The Court noted that remands should not be mechanical but justified, and in this case, the subsequent order and pending appeal to the CIT(A) had addressed the issues raised during the appeal. Consequently, the Court disposed of the tax case appeal, leaving the substantial questions of law open, given their academic nature post the Assessing Officer's adverse order and pending appeal.

This comprehensive analysis covers the issues raised in the appeal under Section 260A of the Income Tax Act, 1961, the Tribunal's remand for de novo assessment, arguments by both parties, subsequent developments, and the High Court's decision based on the current status of the case.