2022 (11) TMI 443 - AT - Income Tax

Reopening of assessment u/s 147 - unaccounted transactions - information received from Investigation Wing and statement recorded of Shri Akshay Doshi u/s. 131 - HELD THAT - We find the CIT(A) has considered the facts, provisions of law and judicial decisions and observed that in the case of search in Bhoomi group , the incriminating material was found, were the aassesee is one of the investor in the land and it was not disclosed by the Assessee in the original return of income or during original assesseement U/sec 143(3) of the Act. We find the statement recorded above are linked with the assessee undisclosed income and these facts were not disclosed in the return of income filed u/sec 148 - A.O. found that the assessee is one of the investor/partner along with the others to acquire the land for TDR generation which cannot be disputed and was admitted in the post search statement by the director and the assessee was provided the benefit of cross examination of the director to test check the authenticity of the transactions. We considering the material information and the statements recorded do not find merit in this ground of appeal and up hold the decision of the CIT(A) on the validity of re assesseement and dismiss the grounds of appeal including the additional ground raised by the assessee. Addition of cash on the basis that it has been offered in the AOP - contentions of the Ld.AR are that though there is no mapping/ correlation of each entries with the A.O.P funds individually but the said money is part of the search proceedings and which has been taxed in the case of AOP - HELD THAT - We find that the CIT(A) has passed an order considering the fact that the cash invested as contribution by the assessee in the capacity as partner is liable to taxed in the hands of the AOP but these facts are without any supporting evidences nor from the material information filed to explain how the transactions are routed. Basically the CIT (A) should have verified how the transactions have been reflected in the AOP on case to case basis but not on the general assumptions/ presumptions before granting the relief. Accordingly, we found the CIT(A) has only considered the facts of the scrutiny assessment and the assessee submissions and there is no finding on the facts that how the money has been disclosed in the AOP. We considering the overall facts, circumstances and provisions of law, and to meet the ends of justice shall provide one more opportunity to the assessee to substantiate with evidences and mapping of entries between the assessee and the AOP books of accounts and the statements duly supported with the material evidences. Accordingly, we restore this disputed issue to the file of the CIT(A) to adjudicate afresh on merits as discussed above and allow the grounds of appeal of the revenue for statistical purposes.

Issues Involved:
1. Validity of the reopening of assessment under Section 147.
2. Whether the reassessment should have been initiated under Section 153C instead of Section 147.
3. Legality of the addition of Rs. 6.8 crores as unaccounted income.
4. Attribution of cash contributions to the AOP and double taxation concerns.

Issue-wise Detailed Analysis:

1. Validity of the Reopening of Assessment under Section 147:
The assessee contested the reopening of the assessment under Section 147, arguing it was based merely on information from the Investigation Wing and the statement of Shri Akshay Doshi under Section 131. The Tribunal upheld the reopening, noting the AO had tangible material from the search action on Bhoomi Group, which included digital data indicating undisclosed cash transactions. The Tribunal emphasized that the AO had "reason to believe" that income had escaped assessment, satisfying the conditions for reopening under Section 147.

2. Whether the Reassessment Should Have Been Initiated under Section 153C Instead of Section 147:
The assessee argued that the AO should have initiated proceedings under Section 153C, as the case involved a search on a third party. However, the Tribunal found that the provisions of Section 153A/153C are specific to search cases, while Section 147 applies to all types of income escapement. The Tribunal concluded that the AO's action under Section 147 was valid, as the incriminating material linked the assessee to undisclosed income, which was not disclosed in the original return.

3. Legality of the Addition of Rs. 6.8 Crores as Unaccounted Income:
The AO added Rs. 6.8 crores as unaccounted income based on the ledger found during the search, which indicated cash contributions by the assessee. The CIT(A) directed the AO to delete this addition, reasoning that the cash contributions were part of the AOP's income, which had already been taxed. The Tribunal, however, found that the CIT(A) did not verify the mapping of these transactions with the AOP's books and thus restored the issue to the CIT(A) for fresh adjudication, emphasizing the need for concrete evidence linking the transactions to the AOP.

4. Attribution of Cash Contributions to the AOP and Double Taxation Concerns:
The CIT(A) had accepted the assessee's claim that the cash contributions were part of the AOP's income and thus should not be taxed again in the assessee's hands to avoid double taxation. The Tribunal noted that the CIT(A) failed to substantiate this claim with proper evidence. The Tribunal highlighted the necessity of verifying the correlation between the assessee's contributions and the AOP's funds. Consequently, the Tribunal remanded the issue back to the CIT(A) for a thorough examination of the evidence and proper adjudication.

Conclusion:
The Tribunal dismissed the assessee's appeals on the validity of the reassessment and upheld the AO's action under Section 147. However, it allowed the revenue's appeals for statistical purposes, remanding the issue of the addition of Rs. 6.8 crores back to the CIT(A) for fresh adjudication with proper verification of the evidence linking the transactions to the AOP. The Tribunal emphasized the importance of concrete evidence to avoid double taxation and ensure accurate attribution of income.

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