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2022 (12) TMI 579 - AT - Income TaxAddition u/s 69 - Search Seizure action u/s 132 - information as available in the seized records - Discharge of onus - unexplained investment was opening capital of assessee - HELD THAT - Here in this case the revenue did not controvert the contention of the assessee from the same very evidence that the opening capital is in fact the income of the current year. We have also observed that the ld. AO has made the addition u/s. 69 of the Act. On careful perusal of the provision of the act the AO can make the addition if the assessee is found to have made investments which are not recorded in the books of accounts whereas when the assessee has accepted the content making the addition u/s. 69 is also not correct as the ld. AO has not established that the investments in fact really belonged to the assessee and thus even on this aspect the ld. AO has not discharged his onus casted upon him. CIT(A) has dealt and made in detailed observation while dealing with the appeal of the assessee and we do not find any infirmity in the reasoned finding recorded by the CIT(A) and the revenue has not controverted any of the findings of the CIT(A) even though the bench has also granted proper opportunity to the revenue to place their contentions. Since, there is no refuting submission that the opening capital is in fact is income of the assessee when from the said tally data income for the current year is duly accepted. Thus, we do not find any infirmity in the finding of the CIT(A) that the opening capital reflected in the same tally data cannot be considered as income for the year under consideration. In terms of these observations, we do not find any merit in the ground no. 2 3 raised by the revenue and thus, the same is dismissed.
Issues Involved:
1. Applicability of the peak credit theory. 2. Deletion of addition made under Section 69 r.w.s. 115BBE of the Income Tax Act, 1961. 3. Validity of approval given by the Additional CIT under Section 153D. 4. Charging of interest under Sections 234B and 234C. 5. Initiation of penalty proceedings under Section 271AAB. Detailed Analysis: 1. Applicability of the Peak Credit Theory: The revenue contended that the CIT(A) erred in law and on facts by granting relief to the assessee by holding that the peak credit theory was applicable, even though the assessee failed to explain the source, destination, identities, and creditworthiness of persons involved. However, this issue was considered general in nature and did not require specific adjudication. 2. Deletion of Addition Made Under Section 69 r.w.s. 115BBE: The primary issue was the deletion of an addition of Rs. 26,23,34,627/- made under Section 69 r.w.s. 115BBE of the Income Tax Act, 1961. The AO had added this amount as unexplained investment based on tally data found during a search, which showed a capital introduction of Rs. 52,46,69,253/-. The assessee argued that this amount represented the opening capital brought forward from previous years, not fresh capital introduced during the year. The CIT(A) found that the AO had accepted the opening stock, gross profit, and net profit figures from the same tally data but did not accept the opening capital. The CIT(A) noted that the AO had not made any inquiries to ascertain whether it was fresh capital introduced during the year. The CIT(A) also pointed out that the AO had not formed his opinion based on any material or information that the assessee had made unexplained investments. The CIT(A) relied on various judicial precedents to conclude that the AO could not partly accept the books of accounts and reject the opening capital. The Tribunal upheld the CIT(A)'s decision, stating that the AO had not discharged his onus of proving that the investments belonged to the assessee. The Tribunal also noted that the AO had accepted the income for the current year from the same set of books found in the pen drive, making it inconsistent to reject the opening capital. Therefore, the addition made by the AO was deleted. 3. Validity of Approval Given by the Additional CIT Under Section 153D: The assessee challenged the approval given by the Additional CIT under Section 153D, claiming it was done in a routine and mechanical manner without application of mind. However, since the Tribunal concurred with the CIT(A) on merits, this ground became technical and infructuous and did not require adjudication. 4. Charging of Interest Under Sections 234B and 234C: The assessee contended that the AO had erred in charging interest under Sections 234B and 234C. The Tribunal noted that this issue was consequential in nature and directed the AO to give necessary effect as per law. 5. Initiation of Penalty Proceedings Under Section 271AAB: The assessee also challenged the initiation of penalty proceedings under Section 271AAB. The Tribunal noted that the levy of penalty was not the subject matter of challenge before them and was premature, thus not requiring adjudication. Conclusion: In the result, the appeals of the revenue in ITA Nos. 334 & 336/JP/2022 were dismissed, and the cross objections filed by the assessee in CO Nos. 23 & 25/JP/2022 were allowed for statistical purposes. The Tribunal upheld the CIT(A)'s decision to delete the addition made under Section 69 r.w.s. 115BBE, finding that the AO had not adequately substantiated the addition and had inconsistently accepted parts of the same tally data.
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