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2021 (12) TMI 921 - AT - Income TaxInitiation of assessment proceedings u/s. 147 r.w.s. 148 - according to the assessee ought to have been initiated u/s. 153C - whether the details of seized material found during the course of search were belonging to assessee so as to issue notice u/s. 153C of the Act.? - HELD THAT - In the present case, it is not possible for the AO to assume jurisdiction u/s. 153C of the Act since the pre-requisite is that any money, bullion, jewellery or other valuable article or things or books of account or documents seized or requisitioned belong or belongs to a person other than the person in whose case search is conducted u/s. 132 of the Act. Therefore, initiation of section 153 of the Act for framing assessment u/s. 153C r.w.s. 143(3) of the Act is not satisfied. The only way to frame assessment is by way of issue of notice u/s. 148 invoking the provisions of section 147 of the Act which was rightly exercised by the present AO. Accordingly, we do not find any infirmity in the action of the AO for issuing notice u/s. 148 - this ground of the assessee is dismissed and the reopening of assessment is confirmed. Addition u/s 69A - unexplained money - In course of search of PDP certain Compact Discs(CD) were found which contained data pertaining to unaccounted receipts and payments by PDP - seized document AK/PDP/06 and DTTE which was owned up by PDP and CHDC and determined income arising out of the same and taxed the same - Assessee reiterated his stand that the Assessee was only acting as liaison and the ledger was an imprest account where sums were spent on behalf of PDP and CHDC and Assessee has no interest whatsoever except as agent of PDP - HELD THAT - SC in the case of CHDC that the entries arising from DTTE were offered to tax by the peak credit method. This has been accepted by the CIT(A). The CIT(A) has however gone on the premise that expenditure of PDP or CHDC would be income in the hands of the Assessee. This is contrary to the claim of PDP that the Assessee was acting as liaison for and on behalf of the Assessee that the ledger account was imprest account meaning thereby that whatever is found in the ledger is entries of PDP and CHDC and the Assessee has no interest whatsoever in respect of the sums reflected in the ledger account. It is undisputed that the entire entries in DTTE were considered in the proceedings before SC in determining the income of PDP and CHDC. Therefore the claim of the Assessee ought to have been accepted by the CIT(A). Even before the AO the Assessee has taken a stand regarding the entries in the ledger account being subject matter of proceedings before SC by PDP and CHDC. The fact that the Assessee disowned the entries in one AY and claimed that it is part of receipts disclosed in another AY cannot be the basis to reject the claim of the Assessee. Admissions are good piece of evidence but are not conclusive. The person making the admission is entitled to show that admission is incorrect or was made under erroneous belief or owing to other circumstances. The circumstances of the present case clearly demonstrate the correctness of the plea raised by the Assessee. We therefore direct that the addition made in this regard deserves to be deleted and is hereby deleted. AY 2007-08 - Addition made in the hands of the Assessee cannot be sustained. It is clear from perusal of the ledger account based on which the addition has been made is in the name of D.N. Associates. Though the description in the relevant entries for a sum of ₹ 86 lacs has reference to Anand Nadig i.e., the Assessee, it cannot be attributed to the Assessee in his individual capacity. The Assessee is partner of D.N. Associates and if at all any addition is to be made it can be only in the hands of the firm. D.N. Associates had declared additional income of ₹ 3.64 Crores in AY 2007-08 and ₹ 50 lacs in AY 2008-09 thus total sum of ₹ 4.14 crores were offered in the return of income of D.N. Associates. With regard to the remaining sum of ₹ 86 lacs, there is no mention in the order of Assessment for AY 2007-08 in the case of D.N. Associates, a copy of which is placed at page-162 to 164 of the Assessee s paper book. The Assessee has disowned the transaction in his individual capacity to the extent of ₹ 86 lacs even before the AO. In such circumstances, the addition made is unsustainable and hence the same is directed to be deleted.
Issues Involved:
1. Initiation of assessment proceedings under Section 147 read with Section 148 vs. Section 153C of the Income-tax Act, 1961. 2. Validity of additions made under Sections 68 and 69 of the Income-tax Act, 1961 for the assessment years 2006-07 to 2009-10. Issue-wise Detailed Analysis: 1. Initiation of Assessment Proceedings: The primary issue raised is whether the assessment proceedings should have been initiated under Section 147 read with Section 148 or Section 153C of the Income-tax Act, 1961. The assessee argued that the assessments should have been made under Section 153C, as the material for the additions was unearthed during a search action under Section 132. However, the Tribunal concluded that the documents found during the search did not "belong to" the assessee but merely contained information pertaining to the assessee. The Tribunal emphasized the distinction between "belong to" and "pertains to" or "relates to," noting that Section 153C could not be invoked unless the documents seized actually belonged to the assessee. Consequently, the Tribunal upheld the initiation of assessment proceedings under Section 147 read with Section 148, as the conditions for invoking Section 153C were not satisfied. 2. Validity of Additions Made: Assessment Year 2006-07: The addition of ?16,11,774 under Section 69A was based on entries found in a ledger account in the DTTE (Dummy Tally Training Environment) seized during the search. The assessee argued that the amounts were part of the gross receipts already declared and were merely imprest amounts spent on behalf of PDP (P. Dayananda Pai) and CHDC (Canara Housing Development Company). The Tribunal accepted the assessee's contention, noting that the entire entries in DTTE were considered in the proceedings before the Settlement Commission (SC) in determining the income of PDP and CHDC. Therefore, the addition was deleted. Assessment Year 2007-08: The addition of ?86,00,000 under Section 68 was based on entries in the ledger account of D.N. Associates, where the assessee was a partner. The Tribunal found that the entries pertained to the firm and not to the assessee in his individual capacity. Since D.N. Associates had already declared additional income, the Tribunal held that the addition in the hands of the assessee was unsustainable and directed its deletion. Assessment Year 2008-09: The additions of ?1,75,10,000 and ?50,00,000 were based on similar ledger entries. The Tribunal reiterated its findings from the previous years, holding that the amounts were part of the imprest account and had been offered to tax by PDP and CHDC before the SC. Consequently, the additions were deleted. Assessment Year 2009-10: The addition of ?11,00,000 was based on entries in the same ledger extract as in AY 2006-07. The Tribunal, consistent with its earlier findings, directed the deletion of the addition, noting that the sum in question was part of the imprest account and recorded money received and spent on behalf of PDP. Conclusion: The Tribunal upheld the initiation of assessment proceedings under Section 147 read with Section 148 and directed the deletion of the additions made under Sections 68 and 69 for the assessment years 2006-07 to 2009-10, based on the findings that the amounts in question were part of the imprest account and had already been considered in the proceedings before the Settlement Commission. The appeals were partly allowed.
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