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2022 (9) TMI 576 - AT - Income TaxAddition of income from other sources u/s 69A - Assessee was found in possession of loose slips - assessee challenged addition as made on assumption and presumption - HELD THAT - As in the case at hand, it abundantly clear that the appellant was neither found to be owner of any money, Bullion or Jewellery etc., nor there was any value of such assets recorded in the books of account of the Assessee and further the explanation offered relating to the alleged amount supported by the statement of Mrs. Balwant Kaur as proves that no such amount was carried by the appellant to the office of Sub Registrar on 30.08.2010. Accordingly, the addition confirmed by the CIT(A) based on assumption and presumption u/s 69A of the act, without support of any cogent material evidence on record to establish that any disputed cash was found in the custody of the appellant and therefore, in our view, the addition confirmed by the CIT(A) is unjustified, unwarranted and illegal. The same is deleted. Thus ground nos. 3 and 4 are allowed. Addition on account of alleged rented building to UCO Ban - as argued the said income belonged to bigger HUF namely Badri Nath Khanna (HUF) up to 20.03.2014 - HELD THAT - After the Assessment Year 2001-02, the total income of Badri Nath HUF being below taxable limits, no Income Tax Return was filed. However, it was also explained vide letter stating that after the demise of Sh. Badri Nath Khanna, the property let out to UCO Bank was transferred in the names of Sh. Rajiv Khanna and Smt. Chand Rani his mother, while Badri Nath Khanna HUF still remained undivided. Since, the said HUF got dissolved on 20.03.2014, on the death of Smt. Chand Rani and thereafter, from assessment year 2015-16, the property income from UCO Bank was shown in the hands of the appellant. We hold that the Ld. CIT(Appeal) was not justified in confirming the addition as property income in the hands of appellant. Accordingly, the addition is deleted. Violation of principles of natural justice - Addition relying upon the statement of Mr. Rohtash Kumar recorded, through the commission appointed under section 131(1)(d) at the back of the Appellant without granting the opportunity of cross examination and ignoring the affidavits filed during the assessment as well as appellate proceedings - It is pertinent to mention that addition based on the statement of the person where there was a clear denial of having made any advance was recorded at the back of the assessee without allowing opportunity to cross-examination in rebuttal is held void in violation of principles of natural justice and against the mandate without being substantiated with corroborative cogent documentary evidences. In the instant case, even the statement of Mr. Rohtash Kumar was recorded on 16.11.2016, at the back of the Assessee, denying the opportunity to cross examine the witness cannot be used against him, being against the principles of natural justice as held by their Lordships of Supreme Court in the case of Andaman Timber Industries 2015 (10) TMI 442 - SUPREME COURT Further, all the case laws relied upon by department in support are distinguishable on peculiar facts of the case. CIT(A) was not justified in confirming the addition ignoring the affidavit and rebuttal in violation of principles of natural justice. As such, the addition is deleted. Appeal of assessee allowed.
Issues Involved:
1. Confirmation of addition of Rs. 34,33,500 as long-term capital gain. 2. Confirmation of addition of Rs. 95,17,875 as income from other sources under section 69A. 3. Confirmation of addition of Rs. 37,494 as property income from UCO Bank. 4. Rejection of additional evidence filed during appellate proceedings. 5. Confirmation of addition of Rs. 10,00,000 based on the statement of Mr. Rohtash Kumar without cross-examination. Detailed Analysis: 1. Confirmation of Addition of Rs. 34,33,500 as Long-Term Capital Gain: The assessee did not press this ground of appeal, and thus, it was dismissed as not pressed. 2. Confirmation of Addition of Rs. 95,17,875 as Income from Other Sources under Section 69A: The AO made an addition of Rs. 1,53,14,125 based on the assessee's statement before the Sub-Registrar regarding possession of Rs. 1,40,17,875 for a land transaction. The CIT(A) partly allowed relief by considering Rs. 45,00,000 from the sale of another land, reducing the addition to Rs. 95,17,875. The assessee argued that the AO wrongly invoked section 69A without any money, bullion, or valuable article found in possession. The Tribunal found that the authorities based their allegations on mere presumption without establishing the source of the amount. The Tribunal held that the addition of Rs. 95,17,875 was unjustified and deleted it, citing the Punjab & Haryana High Court judgment in "CIT vs. Ravi Kumar." 3. Confirmation of Addition of Rs. 37,494 as Property Income from UCO Bank: The AO assessed Rs. 37,494 as property income in the hands of the assessee, which was confirmed by the CIT(A). The assessee argued that the rental income belonged to the bigger HUF, Badri Nath Khanna (HUF), and was declared in the HUF's return for the year 2001-02. The Tribunal found that the CIT(A) was not justified in confirming the addition and deleted it, acknowledging the ownership of the HUF. 4. Rejection of Additional Evidence Filed During Appellate Proceedings: The Tribunal did not specifically address the rejection of additional evidence under Rule 46A of the Income Tax Rules, 1962. 5. Confirmation of Addition of Rs. 10,00,000 Based on the Statement of Mr. Rohtash Kumar Without Cross-Examination: The AO made an addition of Rs. 10,00,000 based on Mr. Rohtash Kumar's statement, recorded under section 131(1)(d), denying any advance given to the assessee. The CIT(A) confirmed the addition. The assessee argued that the amount was returned to Mr. Rohtash Kumar, and the statement was recorded without cross-examination. The Tribunal found that the addition was made without granting the opportunity for cross-examination, violating principles of natural justice. The Tribunal held that section 68 was not applicable as the assessee did not maintain books of accounts, and deleted the addition of Rs. 10,00,000. Conclusion: The Tribunal allowed the appeal of the assessee, deleting the additions of Rs. 95,17,875 and Rs. 37,494, and Rs. 10,00,000, holding that the additions were based on assumptions and without proper evidence. The appeal was allowed in the terms indicated above.
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