2023 (1) TMI 888 - AT - Income Tax

Addition based on seized documents in search - Double addition - treat the cash outflow made by the assessee based on the said seized documents of pen drive / excel sheet wherein cash payments was reflected as unexplained expenditure made by the assessee - application before the Hon ble Income Tax Settlement Commission (ITSC) and in that application, the transactions reflected in the said pen drive had been duly considered by them and income offered thereon - HELD THAT - All the seized documents that were found during the course of search in Kamala group cases which includes the transactions belonging to the assessee in the form of excel sheet which is reproduced supra have been subject matter of detailed consideration by the PCIT in Rule 9 report filed before the Hon ble ITSC. It is a fact on record that the said excel sheet had been duly considered by Shri Ravi S Bhandari in his application filed before the Hon ble ITSC u/s.245C(1) of the Act and the same has been accepted by the Hon ble ITSC vide their order u/s.245D(4) of the Act dated 20/09/2016. When these facts are staring on us, we do not find any justifiable reason to sustain the very same addition emanating out of the very same seized documents in the hands of the assessee company herein. In other words, taxing a sum in the hands of the assessee company would only result in double addition. When Shri Ravi S Bhandari had already owned up the impugned transactions together with the said seized documents, there is absolutely no case for making addition in the hands of the assessee company herein. Hence, we have no hesitation in directing the ld. AO to delete the addition made in the hands of the assessee company herein. Accordingly, the ground Nos. 2 3 raised by the assessee are allowed.

Issues Involved:
1. Assessment of Rs.3,66,30,100/- in the hands of the assessee company.
2. Additional evidences submitted by the assessee during appellate proceedings.
3. Double addition of the same amount in the hands of the assessee company and Shri Ravi S Bhandari.
4. Validity of ground No.1 raised by the assessee.

Issue-wise Detailed Analysis:

1. Assessment of Rs.3,66,30,100/- in the hands of the assessee company:
The primary issue in this appeal is whether the sum of Rs.3,66,30,100/- could be assessed in the hands of the assessee company. The assessee is engaged in the business of redevelopment of existing buildings. A search and seizure action under section 132 of the Income Tax Act, 1961, was carried out on 09/01/2013 in Kamala Group cases, during which certain documents belonging to the assessee were found. A pen drive seized from the residence of an individual connected with Kamala Group contained an excel sheet with cash receipts and expenses. The Assessing Officer (AO) questioned the assessee about the cash outflow of Rs.3,66,30,100/- reflected in the seized document. The assessee contended that the document was seized from Kamala Mills Ltd and should be explained by them, not by the assessee. The AO, however, proceeded to treat the cash outflow as unexplained expenditure and added the amount to the total income of the assessee.

2. Additional evidences submitted by the assessee during appellate proceedings:
During the appellate proceedings, the assessee submitted additional evidences to support their claim that the sum of Rs.3,66,30,100/- was considered and offered by Shri Ravi S Bhandari in his petition before the Income Tax Settlement Commission (ITSC). The additional evidences included a letter from Ravi S. Bhandari, the settlement application before the ITSC, fund flow of unaccounted funds, statement of capitalization, and the order under section 245D(4) dated 20/09/2016 in the case of Kamala Group. The Commissioner of Income Tax (Appeals) [CIT(A)] admitted the additional evidences and forwarded them to the AO for rebuttal. Since no reply was received from the AO, the CIT(A) examined the additional evidences but upheld the AO's action due to lack of cooperation from the assessee.

3. Double addition of the same amount in the hands of the assessee company and Shri Ravi S Bhandari:
Before the Tribunal, the assessee reiterated that Shri Ravi S Bhandari had owned up the entire excel sheet found during the search in Kamala Group cases and considered the transactions in his application before the ITSC. The ITSC had accepted the application and passed an order under section 245D(4) of the Act. It was noted that Shri Ravi S Bhandari, a Director in the assessee company, had already offered the impugned transactions in his settlement application. The Tribunal found no justifiable reason to sustain the same addition in the hands of the assessee company, as it would result in double addition. Hence, the Tribunal directed the AO to delete the addition of Rs.3,66,30,100/- in the hands of the assessee company.

4. Validity of ground No.1 raised by the assessee:
The ground No.1 raised by the assessee did not emanate from the orders of the lower authorities. The assessment for A.Y.2013-14 was framed under section 143(3) of the Act, which is a regular assessment and not a search assessment framed under sections 153A/153C of the Act. Therefore, ground No.1 was dismissed.

Conclusion:
The appeal of the assessee was partly allowed, with the Tribunal directing the deletion of the addition of Rs.3,66,30,100/- in the hands of the assessee company, thereby avoiding double addition. Ground No.1 raised by the assessee was dismissed as it did not emanate from the orders of the lower authorities. The order was pronounced on 09/01/2023 by way of proper mentioning in the notice board.

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