2023 (4) TMI 57 - AT - Income Tax

Undisclosed income - addition of value of unaccounted assets - addition adopting the figure of unaccounted assets offered by the assessee in the return of income filed under section 153A - DR supporting the order of AO stating that the figure of unaccounted assets /unaccounted capital/ unaccounted liability/ unaccounted sales have been given by the assessee itself and the AO has rightly adopted the highest figure as unaccounted income - CIT- A deleted the addition - HELD THAT - In the instant case, we find that the AO has not raised any doubt on various figures shown for undisclosed and unaccounted assets/liabilities/capital/sales or the method of computation of undisclosed income. It is judicially well settled that when a document is found during the course of search, it has to be relied upon in entirety and there is no discretion available with the assessee or the Department to rely upon a part of the document favourable to it and plead for rejection of the other part which is not favourable to it, or in respect of which no supporting material is found. We, therefore, under the given facts and circumstances of the case and also the ratio laid down in Radhasoami Satsang 1991 (11) TMI 2 - SUPREME COURT find no inconsistency in the finding of the ld. CIT(Appeals) deleting the addition made by the ld. Assessing Officer wrongly adopting the figure of unaccounted assets in place of the unaccounted capital offered by the assessee in the return of income filed under section 153A of the Act. Grounds No. 1 to 3 raised by the Revenue are dismissed.

Summary

Issues Involved:
1. Deletion of addition of Rs.3,47,53,664/- on account of undisclosed income.
2. Consideration of assessment years as separate and independent proceedings.
3. Genuineness of unaccounted liability of Rs.3,50,55,906/-.

Issue-wise Detailed Analysis:

1. Deletion of Addition of Rs.3,47,53,664/- on Account of Undisclosed Income:
The Revenue contended that the CIT(A) erred in deleting the addition of Rs.3,47,53,664/- as undisclosed income. The assessee, a Private Limited Company, was subjected to a search and seizure operation, and certain incriminating material was found. The Assessing Officer (AO) added the highest value of unaccounted assets as undisclosed income. The CIT(A) found merit in the assessee's method of accounting for undisclosed income and noted that the AO had accepted this method for other assessment years. The CIT(A) observed that the AO should not adopt different principles for different years without cogent reasons and deleted the addition. The Tribunal upheld the CIT(A)'s decision, stating that the AO erred in adopting a different principle for the current assessment year and emphasized the need for consistency in taxing undisclosed income.

2. Consideration of Assessment Years as Separate and Independent Proceedings:
The Revenue argued that each assessment year should be considered a separate and independent proceeding. However, the CIT(A) and the Tribunal noted that the AO had accepted the assessee's method of computing undisclosed income for other assessment years and group companies. The Tribunal referenced the Supreme Court's judgment in Radhasoami Satsang vs. CIT, emphasizing the need for consistency and stating that a settled position should not be changed without strong and compelling reasons. The Tribunal found no inconsistency in the CIT(A)'s approach and dismissed the Revenue's appeal on this ground.

3. Genuineness of Unaccounted Liability of Rs.3,50,55,906/-:
The Revenue contended that the CIT(A) erred in not considering the genuineness of the unaccounted liability of Rs.3,50,55,906/-. The CIT(A) observed that the AO had not raised any doubts about the figures shown for undisclosed assets, liabilities, or capital. The Tribunal noted that the AO had not rebutted the presumption under section 292C of the Act that the contents of the seized documents were true. The Tribunal upheld the CIT(A)'s finding that the AO had not provided any cogent reasons for enhancing the disclosure in the current year and directed the deletion of the addition made by the AO. The Tribunal emphasized that a document found in a search should be relied upon in its entirety and that the AO had accepted the figures for other assessment years.

Conclusion:
The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to delete the addition of Rs.3,47,53,664/- on account of undisclosed income. The Tribunal emphasized the need for consistency in taxing undisclosed income and found no merit in the Revenue's arguments regarding the separate consideration of assessment years and the genuineness of the unaccounted liability. The Tribunal's decision was based on the detailed findings of the CIT(A) and the principles laid down by the Supreme Court in similar cases.