2024 (8) TMI 966 - AT - Income Tax

Additions arising out of search proceedings - cash payment was made by the Gokulam Group only towards income of the Appellant during assessment - HELD THAT - It is admitted position that the amount of Rs. 125 Lacs in cash has exchanged hands between SGCFCL and the assessee. The same has not been recorded n the books of any of the parties. It may be true that the assessee was carrying out legal and facilitation work for SGCFCL for taking over of another entity i.e., the South India Wire and Ropes Pvt. Ltd. To settle these amounts, all the payments were received in cheques by the assessee. The same were also settled through banking channels only which is evident from 3 receipts as placed by the assessee on record. The assessee could not produce even minor details of payment to 2500 shareholders stated to be paid in cash before lower authorities. Even before us, the assessee has placed bald list of shareholders which do not show that any such payment was made even to a single shareholder. In our considered opinion, the onus was on assessee to establish that the impugned payment did not constitute the income of the assessee and this amount was disbursed to the shareholders. Assessee has miserably failed to prove the same and there is nothing on record to support this submission. Nothing has been shown to us that the assessee has otherwise admitted any income against the facilitation work stated to be carried on behalf of SGCFCL. Therefore, the arguments of Ld. AR are not acceptable. Ground Nos. 1 to 5 stands dismissed. Assessment was not based on any incriminating material that was ever found during the course of search - This argument is to be summarily rejected since the only basis to make the assessment in the case of the assessee is the incriminating material coupled with the statement made by Shri M. Suresh Babu indicating that the same shall have bearing on determination of total income of the assessee. The assessee himself has admitted the receipt of payment in cash. Therefore, the reasons to make the impugned assessments are well founded and we do not find any infirmity in the jurisdiction of Ld. AO.

Summary

Issues:
1. Addition arising out of search proceedings.

Detailed Analysis:
The judgment pertains to appeals for Assessment Years 2015-16 & 2016-17 arising from a common order by the Commissioner of Income Tax (Appeals). The primary issue is the additions resulting from search proceedings. The delay in filing the appeals was condoned, allowing them to be adjudicated on merits.

In the assessment proceedings, it was found that the assessee, a real estate commission agent, received payments from a chit fund company. The seized material indicated cash payments made to the assessee, which the assessee claimed were for settling shareholders of another company. Despite explanations, the Assessing Officer (AO) rejected the claims and treated the amounts as unaccounted business income.

During appellate proceedings, the assessee failed to provide evidence supporting the claim that the payments were for shareholder settlements. The Appellate Tribunal noted that while the assessee conducted legal work for the chit fund company, payments for such services were made through cheques, not cash. The lack of evidence of cash payments to shareholders led to upholding the additions.

The Tribunal dismissed the appeals, emphasizing that the onus was on the assessee to prove the payments were not income but disbursed to shareholders. The absence of supporting documentation or admission of such income by the assessee led to the rejection of the appeals. The argument that the assessment lacked incriminating material was dismissed, as the cash receipts and statements formed the basis for the assessments.

In conclusion, the Tribunal upheld the additions as unaccounted business income, emphasizing the lack of evidence supporting the assessee's claims regarding the nature of the payments received. The jurisdiction of the AO to make the assessments based on incriminating material and admissions by the assessee was deemed valid, leading to the dismissal of the appeals.