2013 (11) TMI 940 - AT - Income Tax

Assessment u/s 153A - Name not appearing on warrant or authorization (WOA) - search being authorized in the name of more than one person - Held that - even assessment in the hands of the person/s other than whose names stand mentioned in the WOA, as for example AOP comprising some such persons, can also be validly made if material as to its undisclosed income is found in the search, thus initiated. That is, in case of mis-match between the person/s in respect of whom search is initiated and in respect of whom assets/income is (also) found. The law is comprehensive and contemplates such a situation, prescribing a separate procedure for such cases per section 153C. - Decided against the assessee. Decision of Allahabad High Court in the case of Vandana Verma (2009 (10) TMI 52 - ALLAHABAD HIGH COURT) dismissed wherein it was held that a WOA in joint names of different individuals can lead to a valid assessment/s u/s.153A only in the hands of the AOP or Body of Individuals (BOI) comprising them. Deduction u/s 54F - investment in specified bonds u/s.54EC having been found to be within the prescribed time limit of six months of the date of transfer. The denial of deduction u/s.54F is for the reason that the investment in the residential flat at Pune was made by the assessee only on 15.12.2006. Though the assessee could do so; the limit for the same being two years from the date of transfer, i.e., 26.11.2005, he had to, in terms of section 54F(4), deposit the sum not appropriated toward such investment in the capital gains account scheme with a specified bank or institution by the due date of filing the return of income u/s.139(1) for the relevant year. That having admittedly not being done, the assessee could not validly claim deduction u/s.54F. The facts and circumstances of the case being undisputed, we find the Revenue s basis for denial of deduction u/s.54F, are completely valid - Decided against assessee. Unexplained income u/s 68 - Held that - the explanation with regard to that nature and source of credit being satisfactory or not, keeping the entirety of the facts and circumstances of the case into account, is to be drawn. The decisions cited by the assessee have been with reference to the one of positive inference. It is the cumulative effect of all the facts and circumstances of the case on the basis of which the decision as to the capacity or genuineness being established is to be taken. In the present circumstances, we have no hesitation in stating that both the capacity and the genuineness of the impugned credit have not been proved by the assessee, so that no infirmity as to non-satisfaction therewith of the A.O., since confirmed by the ld. CIT(A), supporting his order with a host of case law, has been found by us. We, it would be noticed, have also not referred to the decisions referred to by the first appellate authority, and for the same reason; the law, as summarily explained hereinabove, being trite, with the said decisions being, therefore, cases of application of those principles, on which there is no doubt or dispute, nor possibly could be. The treatment of the impugned credit as the assessee s unexplained income u/s.68 of the Act is, accordingly, upheld - Decided against assessee.

Issues Involved:
1. Validity of assessments due to plurality of names in the warrant of authorization (WOA).
2. Year of assessment for long-term capital gains.
3. Eligibility for deductions under sections 54EC and 54F of the Income Tax Act.
4. Addition of Rs. 5 lakhs received as a gift under section 68 of the Income Tax Act.

Issue-wise Detailed Analysis:

1. Validity of Assessments Due to Plurality of Names in the Warrant of Authorization (WOA):
The assessee challenged the validity of assessments made under section 143(3) read with section 153A of the Income Tax Act, arguing that the warrant of authorization (WOA) was issued in joint names of multiple family members, but the assessments were made individually. The Tribunal examined decisions from various high courts and concluded that there is no restriction in law against issuing a common authorization for multiple persons. The Tribunal held that a valid search could be conducted based on a common WOA, and assessments could be made individually for each person named in the WOA. The Tribunal dismissed the assessee's plea, stating that the issuance of a common WOA does not imply the existence of a joint entity or an Association of Persons (AOP).

2. Year of Assessment for Long-term Capital Gains:
The issue was whether the long-term capital gains from the transfer of land should be assessed in the year of receipt of full payment or the year of the arbitration award. The Tribunal held that capital gains arise on the date of transfer, which in this case was the date of the arbitration award (26/11/2005), and not on the receipt of full payment. The Tribunal emphasized that the charge to tax under section 45 is attracted on an accrual basis and not on a receipt basis. The Tribunal dismissed the assessee's claim that the transfer took place in the financial year 2006-07 and upheld the Revenue's position that the capital gain arose in the financial year 2005-06.

3. Eligibility for Deductions Under Sections 54EC and 54F of the Income Tax Act:
The Tribunal examined the assessee's claim for deductions under sections 54EC and 54F. The assessee had claimed deductions under section 54EC for investments made within the prescribed time limit. However, the claim under section 54F was denied because the investment in the residential flat was made beyond the due date for filing the return of income. The Tribunal upheld the Revenue's denial of deduction under section 54F, stating that the assessee did not deposit the unappropriated sum in the capital gains account scheme within the prescribed time limit. The Tribunal found the Revenue's basis for denial of deduction under section 54F to be valid.

4. Addition of Rs. 5 Lakhs Received as a Gift Under Section 68 of the Income Tax Act:
The assessee challenged the addition of Rs. 5 lakhs received as a gift, arguing that no incriminating material was found during the search. The Tribunal referred to the decision of the Hon'ble Delhi High Court in the case of CIT vs. Anil Kumar Bhatia, which clarified that the Assessing Officer (A.O.) is empowered to assess the total income for the six years preceding the assessment year relevant to the year of search, irrespective of whether incriminating material was found. The Tribunal dismissed the assessee's plea, stating that the jurisdiction to assess or reassess is based on the search, and the A.O. is obliged to assess the total income. On merits, the Tribunal upheld the addition, finding that the assessee failed to prove the creditworthiness of the donor and the genuineness of the gift. The Tribunal noted discrepancies in the donor's financial capacity and the absence of a credible explanation for the gift.

Conclusion:
The Tribunal dismissed the assessee's appeals for both assessment years, upholding the validity of the assessments, the year of assessment for capital gains, the denial of deduction under section 54F, and the addition of Rs. 5 lakhs under section 68.

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