2024 (4) TMI 135 - AT - Income Tax

Validity of assessment order passed u/s 153C - addition u/s 69A r.w.s. 115BBE - cash deposited in various bank accounts post demonetization - search and seizure operation carried out in case of Sh. Mohit Goel, erstwhile Director of RBPL third paty and CCTV Footage obtained from bank as close relatives and associates carrying cash to bank Difference in opinion between the Ld. Members constituting the Division Bench - appointment of Third Member - HELD THAT - Only enquiry conducted by the AO was with Kotak Mahindra Bank, Noida Branch and as a result of such enquiry, AO received CCTV footages and number of deposit slips. In the CCTV footage some close relatives/associates of Shri Rajesh Chawla were found in the bank along with one of the Directors of M/s RBPL, Sh. Anmol Goel. It is not understood how the AO could, with absolute certainty, conclude that the close relatives/associates of Sh. Rajesh Chawla were carrying demonetized cash. In so far as cash deposits made in Kotak Mahindra Bank on other dates, the Assessing Officer has absolutely no evidence to establish that any close associate or relative of Sh. Rajesh Chawla went to the bank for depositing the cash. In fact, the deposit slips indicating deposit of cash in the bank account of M/s RBPL clearly reveal that they bear signatures of either Sh. Sumit Kumar or Sh. Anmol Goel. None of the close relatives/associates of Sh. Rajesh Chawla were found to have signed the deposit slips recovered from the concerned bank. Surprisingly enough, the AO has chosen not to examine Sh. Sumit Kumar, who had signed most of the deposit slips, or employees of the concerned bank to ascertain the identity of the person who carried cash and deposited in the bank account. Thus, the CCTV footage obtained from the bank only leads to a presumption and does not contain any conclusive evidence to establish that the close relatives and associates of Sh. Rajesh Chawla were carrying demonetized cash for depositing in the bank account of M/s RBP L. It is fairly well settled, presumption howsoever strong cannot be substitute for evidence. No addition can be made purely on the basis of presumption and suspicion unless there are evidences on record to justify the addition. In the facts of the present appeal, the AO has not brought any conclusive evidence to establish beyond reasonable doubt that it is the assessee who has given demonetized cash for depositing in the bank accounts of M/s RBPL. It may be a fact that Sh. Anmol Goel, one of the directors has also stated in his statement recorded u/s 132(4) of the Act that cash to the tune of Rs. 30 Crores was received from Sh. Rajesh Chawla was deposited in the bank accounts of M/s RBPL post demonetize, however, the statement recorded cannot be taken on its face value as there is every possibility that to explain the source of unaccounted cash deposited in the bank accounts, Sh. Anmol Goel might have taken the name of Sh. Rajesh Chawla to save his own skin. In any case of the matter, Sh. Anmol Goel, being the Director of M/s. RBPL, is an interested person, hence, without any other corroborative evidence his statement cannot be relied upon. In any case of the matter, cash was found deposited in the bank accounts of M/s RBPL. Deposit slips also bear signature of either the directors or persons connected to M/s RBPL. Therefore, in terms with section 132(4A) r.w.s 292C of the Act, the presumption has to be drawn against the person from whose possession/custody the money was found/seized. Though, the presumption postulated u/s 132(4A) r.w.s 292C of the Act is a rebuttable presumption, however, the initial burden is entirely on the person from whose possession the money was found to establish through proper evidence that either it does not belong to him or it is from explainable source. Facts recorded by Ld. First Appellate Authority clearly establishes that the Assessing Officer has not made detailed enquiry and has not brought enough material on record to conclusively prove that demonetized cash deposited in the banks account of M/s RBPL came from the assessee company. Except Kotak Mahindra Bank, Noida Branch, the Assessing Officer has not conducted any enquiry worth its name in respect of cash deposited in other bank accounts. On the contrary, the finding of facts recorded by Ld. First Appellate Authority clearly reveal various missing links in the enquiry conducted by the Assessing Officer with regard to the cash deposited in the bank accounts of M/s RBPL. Thus, based on such half backed enquiry the assessee cannot be hauled up for the cash deposited in the bank accounts of M/s RBPL by ignoring the statutory mandate of Section 132(4A) r.w.s 292C of the Act. AO should have directed his energy in conducting enquiry with M/s RBPL and with people closely associated with it to ascertain the source of cash deposits in the bank accounts of M/s RBPL. Instead of doing that the Assessing Officer has simply relied upon the statement recorded u/s 132(4) of the Act from Sh. Mohit Goel, who was no way connected with M/s RBPL and is a person of questionable integrity, considering the fact that he was involved in fraud and absconded for a considerable period before being arrested by law enforcement agency. Thus upon considering the totality of facts and circumstances of the case, third member agree with Ld. Accountant Member that the addition a part of which was sustained by Ld. Commissioner (Appeals), cannot be made. Consequently, the alleged commission payment is also unsustainable. Decided in favour of assessee. Additions representing labour expenses and unaccounted/unexplained purchases and unexplained liability - As Accountant Member has not recorded any specific finding on these issues. Whereas, Ld. Judicial Member has sustained the addition and has restored the addition to Ld. First Appellate Authority - HELD THAT - In absence of any specific finding recorded by Ld. Accountant Member on these two issues, according to third member, there is no difference of opinion on the issues. Therefore, agree with the view expressed by Ld. Judicial Member. However, as discussed earlier, these issues are purely academic, considering the fact that I have agreed with the view of Ld. Accountant Member that the assessment order passed u/s 143(3) r.w.s 153C of the Act is invalid, hence, deserves to be quashed. Therefore, the matter ends there, as, the Assessing Officer cannot proceed any further.

Summary

Issues Involved:

1. Validity of the assessment order dated 29/12/2019 u/s 143(3) r.w.s 153C of the Income Tax Act, 1961.
2. Validity of the addition of Rs. 32,81,19,000 u/s 69A r.w.s. 115BBE of the Act.

Summary:

1. Validity of the Assessment Order u/s 143(3) r.w.s 153C:

The core issue was whether the assessment order dated 29/12/2019 passed u/s 143(3) r.w.s 153C of the Income Tax Act, 1961, is valid. The Tribunal noted that the Assessing Officer (AO) recorded satisfaction for initiating proceedings u/s 153C on 24/09/2018. According to the first proviso to section 153C(1), the date of search is considered the date of recording satisfaction. Thus, the AO should have initiated proceedings for the block period from assessment years 2012-13 to 2017-18. However, the AO failed to record satisfaction for the impugned assessment year 2017-18, rendering the assessment order invalid. The Tribunal quashed the assessment order, agreeing with the view expressed by the Ld. Accountant Member.

2. Validity of Addition of Rs. 32,81,19,000 u/s 69A r.w.s 115BBE:

The Tribunal examined the addition of Rs. 32,81,19,000 based on the statement recorded u/s 132(4) from Sh. Mohit Goel and CCTV footage from Kotak Mahindra Bank. The Tribunal found that the AO heavily relied on inconclusive evidence, such as the presence of close relatives of Sh. Rajesh Chawla in the bank and the statement of Sh. Mohit Goel, who was no longer a director of RBPL at the time of search. The Tribunal noted that the AO did not examine key witnesses or conduct a thorough investigation into the cash deposits in other bank accounts. Consequently, the Tribunal held that the addition was based on conjectures and surmises, not on cogent evidence, and deleted the addition.

Additional Issues:

The Tribunal also addressed other ancillary issues, such as the addition of Rs. 6,65,670 for labor expenses and Rs. 1,16,62,097 for unexplained liabilities. The Ld. Judicial Member sustained the addition of Rs. 6,65,670 and restored the addition of Rs. 1,16,62,097 to the First Appellate Authority. However, these issues were rendered academic as the Tribunal quashed the assessment order.

Conclusion:

The Tribunal quashed the assessment order u/s 143(3) r.w.s 153C of the Act, rendering the other issues academic. The addition of Rs. 32,81,19,000 and the alleged commission payment of Rs. 1.52 Cr. were also deleted due to lack of conclusive evidence.