2021 (2) TMI 743 - AT - Income Tax

Assessment u/s 153A - HELD THAT - During the course of search itself assessee was asked the questions about the brokerage income received on the land transaction between the two parties, the proof of which was found during the course of search. It is not the case that the Ld. A.O has initiated fresh enquiry during the assessment proceedings carried out u/s 143(3) r.w.s. 153A - Had there been no reference to any seized material qua the statement given during the course of search the assessee had a strong case on legal ground but it is not so in the instant case. Since there is a specific reference in the assessment order of the incriminating material found during the course of search which instigated the search team to ask various questions regarding the actual income earned by the assessee, it cannot be said that the alleged addition is made without referring to any incriminating material. Therefore the assessee fails to succeed on this legal ground which in our considered view deserves to be dismissed. Accordingly the additional ground raised by the assessee is dismissed. Addition for unaccounted brokerage income - HELD THAT - We find that during the course of search assessee was asked specific question regarding the alleged unaccounted brokerage income which was subsequently confronted to the assessee during the assessment proceedings. There is no issue with regard to the income offered for Assessment Year 2009-10 and 2010-11. Out of the brokerage the fact that ₹ 10,00,000/- has been offered to tax is accepted by the Ld. A.O. Regarding the remaining amount of ₹ 17,00,000/-, sum of ₹ 7,00,000/- is claimed by the assessee to have not been received till date. Revenue has failed to discharge its onus by bringing any material on record found during the course of search or post search by way of gathering information from the parties who agreed to give brokerage to assessee that the assessee has actually received the brokerage of ₹ 7,00,000/-. Departmental Representative could not controvert the fact that the assessee is showing the income on cash basis and in absence of any material against the assessee we find no justification in the addition of ₹ 7,00,000/- for the income which the assessee has not received yet. However Ld. Counsel for the assessee has stated that in case it is received in subsequent year/years the same shall be offered to tax. As regards the remaining amount which the assessee has accepted to have received in cash during financial year 2013-14 relevant to Assessment Year 2014-15 and duly claimed to have been offered to tax, the same can be examined by Ld. A.O by calling necessary details relevant to Assessment Year 2014-15 in order to ascertain the correctness of the assessee s claim. In case it is found correct then the Ld. A.O will delete the addition of ₹ 10,00,000/- A.O is directed to extend reasonable opportunity of being heard to the assessee to place necessary submission and documents on record. Addition of ₹ 17,00,000/-, the addition of ₹ 7,00,000/- stands deleted and the remaining addition of ₹ 10,00,000/- shall stand deleted if the assessee is able to prove to the satisfaction of Ld. A.O that sum towards brokerage income earned from the transaction of immoveable property between M/s D.S. Enterprises and late Maharani Laxmi Kumari (concluded during Assessment Year 2009-10) have been offered to tax in the Income Tax Return filed for Assessment Year 2014-15.

Summary

Issues:
1. Addition of brokerage income of ?17,00,000 without considering facts and circumstances.
2. Legal ground regarding non-abated/concluded assessment and incriminating material.
3. Merits of the case concerning unaccounted brokerage income.

Analysis:

Issue 1: Addition of ?17,00,000 brokerage income
The appeal pertains to the assessment year 2009-10, where the assessee, engaged in brokerage and commission business, declared income of ?4,25,650. Following a search and seizure action, the Assessing Officer (AO) added ?17,00,000 as undisclosed brokerage income, totaling the income at ?21,25,650. The assessee contended that the income was offered on a cash basis, with ?20,00,000 already declared in previous years. The remaining ?7,00,000 was claimed as outstanding. The Tribunal found that the revenue failed to prove the receipt of ?7,00,000, deleting this addition. The AO was directed to verify the ?10,00,000 claimed to have been received in cash during the financial year 2013-14 for Assessment Year 2014-15.

Issue 2: Legal Grounds and Incriminating Material
The assessee raised a legal ground based on non-abated/concluded assessment and the absence of incriminating material during the search. However, the Tribunal noted that specific documents seized during the search prompted questions about the brokerage income, indicating a connection to the incriminating material. Consequently, the Tribunal dismissed the additional ground raised by the assessee.

Issue 3: Merits of the Case - Unaccounted Brokerage Income
The assessee acknowledged receiving ?20,00,000 out of the total brokerage of ?27,00,000. The AO questioned the remaining ?7,00,000, which the assessee claimed as not received. The Tribunal found no evidence presented by the revenue to support this claim, leading to the deletion of the ?7,00,000 addition. The Tribunal directed the AO to verify the ?10,00,000 claimed to have been received in cash for Assessment Year 2014-15, instructing deletion if proven.

In conclusion, the Tribunal partly allowed the appeal for statistical purposes, deleting the addition of ?7,00,000 and directing verification of the remaining ?10,00,000. The order was pronounced on 18.02.2021.