2024 (4) TMI 1163 - AT - Income Tax

Reopening of assessment u/s 147 - Unexplained investment u/s 69 - assessee had advanced/paid cash for booking/purchase of a unit in Iskon Platinum - HELD THAT - Department has not brought forth any concrete evidence to substantiate that the assessee had made payment in cash towards purchase of property in J P Iskon group. From the documents placed on record, it is seen that the name of the assessee has not been specifically mentioned in any of the documents, no document has been found containing the handwriting of the assessee, there is no allotment letter in the name of the assessee which would show that the assessee had paid advance towards booking of flat, the amount advanced by way of cheque to J P Iskon group had also been returned back to the assessee etc. all substantiate that the Department had no concrete/corroborative evidence to come to the conclusion that the assessee had in fact made any unaccounted cash payments for purchase of flat. As relying on Kaushik Nanubhai Majithia 2024 (3) TMI 1339 - GUJARAT HIGH COURT erred in sustaining the aforesaid additions made in the hands of the assessee. Decided in favour of assessee.

Summary

Issues:
1. Reopening of assessment under Section 147 of the Act
2. Failure to provide adverse materials/statements and cross-examination
3. Addition of Rs. 19,65,150/- under Section 69 of the Act
4. Deletion of entire addition requested by the appellant

Analysis:

Issue 1: Reopening of assessment under Section 147 of the Act
The appeal was filed against the order passed by the Ld. Commissioner of Income Tax (Appeals) regarding the reopening of assessment under Section 147 of the Act for A.Y. 2013-14. The reasons for reopening were based on information received from ACIT, Central Circle-2(4), Ahmedabad, and a statement recorded on oath of a Sales Manager. The Ld. AO proceeded to make an addition of Rs. 19,65,150/- as unexplained investment under Section 69 of the Act. The assessee challenged the reopening, arguing that there was no concrete evidence linking the information available to the AO and the formation of belief. The Ld. AO's decision to reopen the assessment was based on loose evidence, lacking a crucial link between the information and the belief formed.

Issue 2: Failure to provide adverse materials/statements and cross-examination
The appellant contended that the AO erred in not providing adverse materials/statements and denying cross-examination of concerned persons during the addition process. The appellant requested relevant documents and explanations to support the additions made, but the AO failed to provide substantial evidence or allow cross-examination. This lack of transparency and denial of procedural rights raised concerns regarding the validity of the assessment process.

Issue 3: Addition of Rs. 19,65,150/- under Section 69 of the Act
The Ld. AO added Rs. 19,65,150/- as unexplained investment under Section 69 of the Act, alleging cash payment for property purchase with Iskon Group. The appellant disputed this, highlighting the absence of concrete evidence linking the cash payment to the appellant. The appellant argued that the AO failed to provide any corroborative evidence, such as allotment letters or receipts, to support the addition. Additionally, the appellant claimed that the amount advanced by cheque to Iskon Group was later returned, further questioning the basis of the addition.

Issue 4: Deletion of entire addition requested by the appellant
The Ld. CIT(Appeals) dismissed the appeal, upholding the addition made by the AO. However, the Tribunal disagreed with this decision, citing a similar case where the Gujarat High Court ruled in favor of the assessee due to lack of concrete evidence and corroborative material. The Tribunal found that the Department failed to substantiate the cash payment allegation against the appellant, as the name of the appellant was not specifically mentioned in any documents, and no concrete evidence linked the appellant to the alleged transactions. The Tribunal concluded that the additions were made without a proper basis or supporting evidence, leading to the success of the appellant in the appeal.

This detailed analysis of the judgment highlights the key issues raised by the appellant and the subsequent decisions made by the authorities and the Tribunal, ultimately resulting in the appellant's success in the appeal.