2022 (10) TMI 766 - AT - Income Tax

Initiation of proceedings and violation of principle of natural justice - HELD THAT - As perused the material available on record and gone through the orders of the authorities below. In the absence of any specific evidence in support of the claim of the assessee, we do not see any reason to interfere in the finding of authorities below, the same is hereby affirmed. Thus, Ground Nos. 1 2 raised by the assessee are dismissed. Unexplained expenditure u/s 69C - HELD THAT - When the assessee was confronted with above seized documents and asked to furnish an explanation, he failed to submit any proper creditable explanation and simply stated that these are rough jottings by staff. In light of the analysis of seized material and accounts of the assessee and the companies, the replies filed by him are found to be inadequate and unexplained. Therefore, it is rejected and income assessed accordingly.Therefore the expenses incurred by assessee during the year which are treated as unexplained expenditure u/s 69C in his hands and added to his total income.

Summary

Issues:
- Assessment year 2007-08: Validity of assessment under section 153A, unexplained expenditure, addition based on seized documents, violation of natural justice.
- Assessment year 2011-12: Validity of assessment under section 153A, unexplained expenditure, addition based on seized documents, violation of natural justice.

Assessment Year 2007-08:
- The appeal challenged the assessment under section 153A, arguing that no assessment was pending during the search and no seized material was referred to. The appellant also claimed a violation of natural justice and inadequate opportunity to represent their case.
- The AO made an addition of Rs. 2,45,925 as unexplained expenditure under section 69C based on seized documents indicating a pattern of expenditure by the assessee. The CIT(A) upheld this addition.
- The appellant failed to provide any material to rebut the AO's findings, leading to the dismissal of the appeal. The Tribunal affirmed the decisions of the lower authorities on the grounds of lack of specific evidence supporting the appellant's claims.

Assessment Year 2011-12:
- Similar to the previous assessment year, the appellant challenged the assessment under section 153A, alleging no pending assessment during the search and no reference to seized material. They also raised issues of natural justice violation.
- An addition of Rs. 1,50,000 as unexplained expenditure under section 69C was made based on seized documents, which the CIT(A) upheld.
- The Tribunal, adopting a consistent view with the previous year's case, dismissed the grounds raised by the appellant, affirming the decisions of the CIT(A) due to the lack of new evidence or arguments presented.
- Consequently, both appeals for the assessment years 2007-08 and 2011-12 were dismissed by the Tribunal, emphasizing the importance of providing substantial evidence and complying with procedural requirements in tax assessments.

This detailed analysis of the judgment highlights the key issues, arguments, and outcomes for each assessment year, providing a comprehensive understanding of the legal proceedings and decisions made by the authorities and the Tribunal.