2012 (8) TMI 1053 - AT - Income Tax

Assessment u/s 153A/153B - Held that - So far as the time limit for assessment is concerned, it is provided in Sec. 153B(1)(b). The Ld Counsel fairly admitted that the assessment is completed as per the time limit as povided in the said proviso i.e. within the period of 2 years from the end of F.Y. 2004-05 as admittedly, the assessment is completed on 29.12.2006. Hence, the A.O has made the compliance of the mandatory condition in completing the assessment as provided u/s. 153B(1)(b) of the Act. Benefit of the peak credit - Held that - We find that the Ld CIT(A) has considered the plea of the assessee on the issue of considering the addition on the peak. As per the statement of the assessee, the cash inwards were related to the sales but the cash outwards were in respect of the money given by the assessee s customers for deposing the same in their Bank Account. As per the own explanation of the assessee, the outward entries of the cash which have the different nature of the transactions. We find that the A.O issued summons to the persons and recorded their statements but the person whose names were appearing denied having either brought cash from MIDC office of the assessee to his city office or the persons who were allegedly given cash to the assessee for depositing the same in their bank account. The Ld CIT(A) has rightly held that nature of the transactions are totally different and having no nexus with each other, the benefit of the peak cannot be given. So far as the merits are concerned, the evidence is against the assessee. Nothing has been placed before us to show that there was no denial by those parties in respect of claim of the assesse. In our opinion, no interference is called for in the order of the Ld CIT(A). Accordingly, the addition is confirmed.

Issues Involved:
1. Legality of the assessment order under Section 143(3) instead of Sections 153A/153B.
2. Justification of the addition of Rs. 44,54,950/- on account of unrecorded loan transactions.
3. Deletion of interest levied under Sections 234-A, 234-B, and 234-C.

Detailed Analysis:

1. Legality of the Assessment Order under Section 143(3) Instead of Sections 153A/153B:

The assessee argued that the assessment order for the A.Y. 2005-06 should have been passed under Sections 153A/153B due to a search and seizure action under Section 132 on 2.2.2005. The Tribunal admitted this additional ground as it was purely legal and based on the existing record.

The assessee's counsel contended that the assessment should be framed under Sections 153A/153B, which cover the assessment relevant to the previous year in which the search took place. The non-obstante clause in Section 153A indicates that it overrides Sections 139, 147, 148, 149, 151, and 153, making it an independent code for search-related assessments.

The Tribunal referenced the case of Sushil Kumar Jain, where it was held that assessments for the year in which a search is conducted should be made under Section 153A. The Tribunal agreed with this interpretation, noting that the assessment must comply with Sections 153A and 153B, even if Section 143(3) is mentioned in the order. The substance of the assessment, which considered seized material, was found to be in conformity with Sections 153A and 153B. Consequently, the additional ground raised by the assessee was dismissed.

2. Justification of the Addition of Rs. 44,54,950/- on Account of Unrecorded Loan Transactions:

The A.O. observed unrecorded transactions of cash inward and outward from 1.5.2004 to 12.7.2004, totaling Rs. 44,54,950/-, which were not reflected in the assessee's books. The assessee claimed these were merely cash transfers by acquaintances acting as postmen, but the A.O. rejected this explanation due to inconsistencies and lack of verification from the named individuals.

The A.O. treated the entire amount as unrecorded loans/advances. The assessee's explanation that the cash outward transactions were deposits made on behalf of customers was also rejected, as statements from those customers denied giving any cash to the assessee.

The Tribunal found that the A.O. had rightly rejected the assessee's explanations and confirmed the addition. The plea for considering the peak of transactions was also dismissed, as the nature of inward and outward transactions were different and had no nexus.

3. Deletion of Interest Levied Under Sections 234-A, 234-B, and 234-C:

This issue was not separately addressed in the detailed analysis of the judgment. However, given the dismissal of the primary grounds, it can be inferred that the interest levied under Sections 234-A, 234-B, and 234-C was not deleted.

Conclusion:

The Tribunal upheld the legality of the assessment order under Sections 153A/153B, confirmed the addition of Rs. 44,54,950/- on account of unrecorded loan transactions, and implicitly upheld the interest levied under Sections 234-A, 234-B, and 234-C. The assessee's appeal was dismissed in its entirety.

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