2023 (4) TMI 1046 - AT - Income Tax

Assessment u/s 153A - additions as based on incriminating material or not? - HELD THAT - Various incriminating material in the form of loose sheets and electronic data has been unearthed by the search team and the additions are based on incriminating material. AO has extensively referred to these documents while making the impugned additions. These transactions have also been confirmed by the Managing Director of the assessee company in statement recorded u/s 132(4). There is nothing on record to support the legal grounds urged by the assessee. No interference is called for in the impugned order on legal grounds. Unaccounted Receipts from GHPL - Amount so received by the assessee from GHPL represent advance for development of project - part of the amount has been received in cheque whereas part of the payment has been received in cash. If the project had not materialized and the advances have been repaid in cash, the same would not constitute the income of the assessee. In such a case, the assessee would have refunded the cheque amounts also. AO is directed to verify the same. If the cheque amount has also been refunded and no income has accrued to the assessee from this transaction then this addition would not be sustainable in the hands of the assessee. Grounds stand allowed for statistical purposes. Unexplained Cash Receipts out of Jewel Loans - As assessee has received certain loans by pledging the jewellery of its various employees. The assessee could not explain the difference of receipts and payments and accordingly, additions for differential amount has been made in all the years. Before us also, the assessee is unable to substantiate / explain the difference. Therefore, the impugned additions stand confirmed in all the years. Unaccounted cash receipts - certain payment is stated to be made directly by STN to landowners which are not found recorded in the books of accounts. The assessee has submitted that these transactions have been recorded in the excel sheets to keep track of the commission payment. However, the assessee could not substantiate the same during assessment proceedings. Considering the principal of natural justice, we deem it fit to provide another opportunity to the assessee to substantiate its case. Unexplained Cash Receipts - The assessee has also kept record of the payments made by purchaser directly. The same has been added as the income of the assessee since the assessee could not explain the source of such receipts. Considering the facts of the case, we deem it fit to provide another opportunity to the assessee to substantiate the fact that the impugned receipts do not constitute assessee s income. Addition of unaccounted receipts from sale of land for AY 2014-15 - assessee failed to produce the sale deeds and stated that the said transaction was normal business transaction and admitted in the return of income. The sale deeds were stated to be executed by the assessee as power holders only. However, in the absence of any documentary evidences forthcoming from the assessee, the same was added to the income of the assessee. The position remained the same during appellate proceedings which resulted into confirmation of this addition. Ld. AR has reiterated that the said transaction has already been accounted for in the books of accounts and therefore, the same could not be added separately - we restore this issue back to the file of Ld. AO for de-novo adjudication. All the appeals stand partly allowed for statistical purposes.

Issues Involved:
1. Validity of assessment proceedings under Section 153A.
2. Addition of unaccounted receipts from GHPL.
3. Addition of unexplained cash receipts out of jewel loans.
4. Addition of unaccounted cash receipts from M/s. STN Properties Pvt. Ltd.
5. Addition of unexplained cash receipts from various parties.
6. Addition of unaccounted receipts from the sale of land.

Summary of the Judgment:

1. Validity of assessment proceedings under Section 153A:
The Tribunal found that the legal issues were correctly adjudicated by the CIT(A). The search unearthed various incriminating materials, including loose sheets and electronic data. The Managing Director confirmed these transactions in a statement recorded under Section 132(4). Therefore, the legal grounds raised by the assessee were dismissed, and no interference was called for in the impugned order on legal grounds.

2. Addition of unaccounted receipts from GHPL:
The Tribunal noted that the amount received from GHPL was an advance for a project, part of which was received in cash and not accounted for in the books. The Managing Director admitted that the project did not materialize and the cash was repaid. The Tribunal directed the AO to verify if the cheque amounts were also refunded. If no income accrued to the assessee from this transaction, the addition would not be sustainable. The corresponding grounds were allowed for statistical purposes.

3. Addition of unexplained cash receipts out of jewel loans:
The Tribunal confirmed the additions made by the AO, as the assessee could not explain the difference between receipts and payments. The assessee was unable to substantiate the difference before the Tribunal as well. Therefore, the impugned additions were confirmed in all the years.

4. Addition of unaccounted cash receipts from M/s. STN Properties Pvt. Ltd.:
The Tribunal found that the assessee received land advances from STN, part of which were not recorded in the books of accounts. The Tribunal provided another opportunity to the assessee to substantiate its case and restored the issue back to the AO for de-novo adjudication. The corresponding grounds were allowed for statistical purposes in all the years.

5. Addition of unexplained cash receipts from various parties:
The Tribunal noted that the assessee received cash from various parties and kept records of payments made by purchasers directly. The Tribunal provided another opportunity to the assessee to substantiate that the receipts did not constitute income. The issue was set aside to the AO for de-novo adjudication, and the corresponding grounds were allowed for statistical purposes in all the years.

6. Addition of unaccounted receipts from the sale of land:
For AY 2014-15, the Tribunal noted that the assessee received cheque payments and cash from the sale of land, but failed to produce sale deeds. The Tribunal restored the issue back to the AO for de-novo adjudication with a direction to the assessee to substantiate its claim. The corresponding grounds raised in AY 2014-15 were allowed for statistical purposes.

Conclusion:
All the appeals were partly allowed for statistical purposes. The order was pronounced on 29th March 2023.

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