2024 (2) TMI 269 - AT - Income Tax

Unexplained investment, unexplained purchases, unexplained investment in excess stock and undisclosed income - additions made by the AOat the hands of the assessee have actually been owned up by one of the directors of the company - assessee made application before the Settlement Commission for settling the dispute regarding those additions FAA did not accept the aforesaid contention of the assessee since the proceedings before the Settlement Commission were not finalized- HELD THAT - As assessee has furnished a copy of the order passed by Interim Board for Settlement, wherein the application filed one of the directors of the assessee company, has been accepted. It is further observed, in the said order the Settlement Commission has observed that since Shri Rajiv Garg is the key person of the group and manages all financial affairs and further that he is responsible for earning undisclosed income emerging from the seized materials, all the transactions, which do not belong to any particular group, should be considered in his hands. Therefore, in view of the aforesaid observations of the Settlement Commission, all the issues relating to the additions made at the hands of the assessee and disputed before us need a fresh look at the end of the AO. Accordingly, we set aside the impugned order of Commissioner (Appeals) and restore the issues back to the AO for fresh adjudication after providing due and reasonable opportunity of being heard to the assessee. Appeal of assessee allowed for statistical purposes.

Summary

Issues involved:
The appeal against the order of the Commissioner of Income-tax (Appeals) for the assessment year 2017-18.

Additions Upheld by CIT(A):
The CIT(A) confirmed various additions made by the Assessing Officer, including on account of unexplained investment, purchases, excess stock, and undisclosed income in the hands of the assessee company.

Ownership Dispute and Settlement Commission:
During the proceedings, it was argued that the additions made actually belonged to one of the company directors, Shri Rajiv Garg, who had approached the Settlement Commission for resolution. The order of the Settlement Commission was not available initially, leading to the CIT(A) upholding the additions. However, a subsequent order from the Settlement Commission accepted Garg's application, stating that transactions not specific to any group should be considered in his hands.

Decision of the Appellate Tribunal:
After reviewing the submissions and evidence, the Tribunal found that the issues related to the additions needed fresh examination by the Assessing Officer in light of the Settlement Commission's order regarding Shri Rajiv Garg. The Tribunal set aside the CIT(A)'s order and directed a reevaluation by the Assessing Officer, ensuring the assessee is given a fair opportunity to present their case.

Outcome:
The appeal was allowed for statistical purposes, and the issues were remanded back to the Assessing Officer for fresh adjudication in accordance with the Settlement Commission's order regarding Shri Rajiv Garg.