2021 (5) TMI 77 - AT - Income Tax

Invocation of provisions of section 153A - HELD THAT - A Search was conducted in case of the appellant on 05.07.2017. The appellant filed original Return of Income on 06.02.2018 returning income of ₹ 31,52,080/- Notice u/s.153A was issued on 19.02.2018 and Return of Income in response to notice u/s 153A was filed on 25.09.2018 admitting income. The appellant included additional income admitted during the course of Search. Since this is not a concluded assessment, the contentions raised by the appellant as to 'absence of incriminating material' are not relevant to facts of the case. Accordingly, the grounds raised is rejected. Admission additional income u/s 132(4) - HELD THAT - We are of the view that only real income should be brought to tax. Once the income has not accrued to the assessee, no tax can be charged on the notional income. We are of the view that there is no basis for addition as there was no separate declaration in detail i.e., year-wise, head-wise, group concern-wise and quantities etc. during the course of search and seizure operation, which forms the basis for making addition. From the statements of the assessee as quoted above, there is no real income accrued in the hands of the assessee. Therefore, we set aside the order of the CIT(A) and allow the grounds raised by the assessee on this issue. Unexplained cash deposits u/s 68 - HELD THAT - As observed that while examining the books of account produced before us i.e. copy of ledger and the cash book, we find that the assessee has sufficient cash balances, which has not been rejected by the lower authorities and also on the date of deposit of the cash into bank, there was sufficient cash balance available, therefore the explanation of the assessee was accepted on this issue. Accordingly, we uphold the order of the CIT(A) in deleting the addition made by the AO towards unexplained cash deposits u/s 68 of the Act and dismiss the Cross objections raised by the revenue on this issue.

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Legality of invoking provisions of Section 153A of the Income Tax Act.
3. Validity of the assessment order without prior approval from the competent authority.
4. Consideration of the affidavit withdrawing the admission made under Section 132(4).
5. Admissibility of revised computation of income.
6. Addition of ?26,00,00,000 as additional income.
7. Addition of ?2,39,00,000 as unexplained cash deposits.

Detailed Analysis:

1. Condonation of Delay:
The assessee's appeal suffered a delay of three days due to the Covid-19 pandemic. Citing the case laws of Collector Land Acquisition vs. Mst. Katiji & Ors and University of Delhi vs. Union of India, the tribunal condoned the delay, considering it neither intentional nor deliberate but due to circumstances beyond control.

2. Invocation of Provisions of Section 153A:
The assessee contested the invocation of Section 153A, arguing no incriminating material was found during the search. The CIT(A) rejected this argument, noting the search was conducted, and the assessee filed a return admitting additional income of ?26,00,00,000. Since it was not a concluded assessment, the tribunal upheld the CIT(A)'s decision to invoke Section 153A.

3. Validity of Assessment Order Without Prior Approval:
The assessee argued that the assessment order was passed without obtaining prior approval from the competent authority under Section 153D. The tribunal did not find merit in this argument and upheld the CIT(A)'s decision.

4. Consideration of Affidavit Withdrawing Admission Under Section 132(4):
The assessee retracted the statement given under Section 132(4) by filing an affidavit, claiming the declaration was incorrect upon verification of records. The CIT(A) rejected the retraction, noting the assessee's inconsistent conduct and lack of acceptable reasons for revising the computation. The tribunal observed that mere admission under Section 132(4) is not conclusive evidence and cited various case laws supporting the principle that only real income should be taxed.

5. Admissibility of Revised Computation of Income:
The assessee submitted a revised computation of income during assessment proceedings, declaring correct income at ?31,62,080. The CIT(A) did not accept this revised computation, citing inconsistent conduct by the assessee. The tribunal, however, noted that the admission made by the assessee is not conclusive evidence for addition. The tribunal allowed the revised computation, emphasizing the principle of taxing only real income.

6. Addition of ?26,00,00,000 as Additional Income:
The tribunal found no basis for the addition of ?26,00,00,000 as there was no detailed declaration during the search. The tribunal cited various case laws and CBDT circulars, concluding that the addition was erroneous. The tribunal set aside the CIT(A)'s order and allowed the grounds raised by the assessee, emphasizing that only real income should be taxed.

7. Addition of ?2,39,00,000 as Unexplained Cash Deposits:
The CIT(A) deleted the addition of ?2,39,00,000 made by the AO towards unexplained cash deposits. The tribunal upheld the CIT(A)'s decision, noting that the assessee had sufficient cash balances on the date of deposit, which were not rejected by the lower authorities. The tribunal dismissed the cross-objections raised by the revenue on this issue.

Conclusion:
The tribunal partly allowed the appeal filed by the assessee, setting aside the addition of ?26,00,00,000 and upholding the deletion of ?2,39,00,000. The cross-objections filed by the revenue were dismissed.

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