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2022 (11) TMI 1264 - HC - Income TaxAddition based on seized document - addition on account of receipt of rent - As stated as per the Seized Document, the Vasant Square Mall was in the possession of the Assessee before 01st October 2006 and the rent started with effect from 01st October 2006 - ITAT has held that the additions made by the AO are factually incorrect, illegal and arbitrary - HELD THAT - In view of the factual finding returned by ITAT in the assessment proceedings to the effect that no fresh material was taken into account by the AO for making additions in the present proceedings and the sole basis for making the additions was the Seized Document, we find that the issues raised in the present appeal are covered in favour of the assessee and against the Revenue by the judgment of this Court VINITA CHAURASIA 2017 (5) TMI 992 - DELHI HIGH COURT - The additions were deleted by the Court after detailed examination of the merits. The Special leave petition filed against the said judgment also stands dismissed. We therefore find that no substantial question of law arises from the impugned order of the ITAT. The appeals is dismissed.
Issues Involved:
Challenge to the order of the Income Tax Appellate Tribunal regarding the addition of undisclosed income and rent for Assessment Year 2007-08. Analysis: Issue 1: Addition of undisclosed income The Revenue challenged the ITAT's decision to delete the addition of Rs.34,06,11,102/- based on a Seized Document showing the acquisition of Vasant Square Mall by the Assessee before October 1, 2006. The Revenue argued that the rent received from the property was undisclosed in the ITR, and investments made with another company were not considered. However, the ITAT found the additions made by the AO to be factually incorrect, illegal, and arbitrary. The ITAT emphasized that the AO failed to provide any corroborating evidence for the investments and that the Seized Document did not relate to the undisclosed income for the relevant assessment year. The ITAT concluded that the action of the Revenue was unsustainable in law due to lack of fresh material for reopening the assessment under Section 147 of the Act. Issue 2: Basis for additions The ITAT highlighted that the entire basis for the additions made by the AO was a single document, i.e., page no. 5 of Annexure A-1 (Seized Document). The ITAT observed that no further investigation was conducted by the AO before making the additions, rendering the action unsustainable. The ITAT noted that the AO did not assign any reason or consider any fresh material for reopening the assessment under Section 147 of the Act. The ITAT's finding was supported by a previous judgment of the High Court, which dismissed the appeal of the Revenue in a similar case. The Court held that no substantial question of law arose from the impugned order of the ITAT, and the appeals were dismissed. Conclusion: The High Court upheld the ITAT's decision to delete the additions of undisclosed income and rent for the Assessment Year 2007-08. The Court emphasized the lack of corroborating evidence and fresh material for the additions, rendering the Revenue's actions unsustainable. The judgment highlighted the importance of conducting thorough investigations before making additions to the assessable income of the Assessee.
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