2014 (4) TMI 345 - AT - Income Tax

Deletion made u/s 69 of the Act Unexplained investment Held that - CIT(A) rightly held that the AO has not independently established that any such transaction has in fact, taken place - From the perusal of the seized material, it is also not clear whether the same pertained to an asset, liability, loan, advance or any other detail - There is no other document or evidence to suggest that the assessee has advances/ paid a sum of Rs.31,68,750/- to one Kalubhai - there is no justification for presuming that the appellant must have paid a sum of Rs.31,68,750 - The AO has also not carried out any inquiry with the other party of the transaction to find out the facts and has simply rejected the explanation of the appellant and addition has been made on estimate basis thus, there is no justification for making the addition on merely presumptive basis - Revenue could not point out any specific error in the order of CIT(A) revenue could not bring any material to show that Rs 31,68,750/- was any actual transaction made by the assessee during the year under consideration and the relevant seized document was dumb document having no corroborative material found thus, there is no reason to interfere in the order of the CIT(A) Decided against Revenue. Deletion u/s 69B of the Act Unaccounted investment Held that - CIT(A) rightly held that the AO had not pointed out any single defect in the books of accounts of the assessee and had accepted the payment made to seller of bungalow as genuine transactions - the difference in the cost shown and the cost estimated by the DVO is minor and is less than 15% - Revenue could not point out any specific error in the order of the CIT(A) - No material could be brought on record to show that the assessee has made any payment over and above the amount mentioned in the registered deed which was also accepted by the State Government for the purposes of levy of stamp duty thus, there is no reason to interfere in the findings of the CIT(A) Decided against Revenue. Addition on account of unaccounted business receipts Held that - Merely from the document it cannot be concluded that the assessee in fact received Rs 10,00,000/- on 03.06.2005 from any unspecified person and that too in respect of his business on revenue account - no material could be brought on record by the revenue by making a proper inquiry in respect of the said seized document to show that the seized document shows business receipt of Rs 10,00,000/- by the assessee on 03.06.2005 - In absence of any such material having been brought on record by the AO by making specific inquiry there was no reason to interfere with the order of the CIT(A) Decided against Revenue.

Summary

Issues Involved:
1. Deletion of addition on account of unexplained investment under Section 69 of the I.T. Act for Assessment Year 2005-06.
2. Deletion of addition on account of unaccounted investment under Section 69B of the I.T. Act for Assessment Year 2006-07.
3. Deletion of addition on account of unaccounted business receipt for Assessment Year 2006-07.
4. Cross-objections filed by the assessee for Assessment Years 2005-06 and 2006-07.

Issue-wise Detailed Analysis:

1. Deletion of Addition on Account of Unexplained Investment (AY 2005-06):
The Revenue appealed against the deletion of Rs. 31,68,750/- added by the Assessing Officer (AO) as unexplained investment under Section 69 of the I.T. Act. The AO inferred from a seized document containing jottings of figures 12,24,000 and 19,44,750, presumed to be payments made to one Kalubhai. The assessee argued that the AO neither asked for an explanation nor issued a show-cause notice, violating natural justice principles. The assessee contended the document was a rough noting without financial relevance, not in their handwriting, and lacked details of any transaction. The CIT(A) deleted the addition, stating the AO did not independently establish any transaction or corroborate the document with other evidence. The Tribunal upheld CIT(A)'s decision, noting the Revenue could not provide material evidence of an actual transaction.

2. Deletion of Addition on Account of Unaccounted Investment (AY 2006-07):
The Revenue appealed against the deletion of Rs. 3,44,497/- added by the AO as unaccounted investment under Section 69B of the I.T. Act. The AO referred the valuation of a property to the DVO, who valued it at Rs. 25,45,847/- against the assessee's declared value of Rs. 22,01,350/-. The assessee argued the valuation was done at current market rates, and no defects were found in their books of accounts. The CIT(A) deleted the addition, noting the purchase was registered at Jantari Value accepted by the Sub-registrar, and the difference was less than 15%. The Tribunal upheld CIT(A)'s decision, finding no material evidence of payment beyond the registered deed amount.

3. Deletion of Addition on Account of Unaccounted Business Receipt (AY 2006-07):
The Revenue appealed against the deletion of Rs. 10,00,000/- added by the AO as unaccounted business receipt based on a seized document noting "Received Rs 5,00,000/-" twice. The assessee argued the document did not specify the nature, parties, or details of any transaction, and was not in their handwriting. The CIT(A) deleted the addition, stating the AO did not establish any transaction or corroborate the document with other evidence. The Tribunal upheld CIT(A)'s decision, noting the document did not provide sufficient details to conclude it represented business receipts.

4. Cross-objections by the Assessee (AY 2005-06 and 2006-07):
The assessee filed cross-objections against the CIT(A) orders for both assessment years but did not press them during the hearing. Consequently, the Tribunal dismissed the cross-objections as not pressed.

Conclusion:
The Tribunal dismissed the appeals of the Revenue and the cross-objections of the assessee, thereby upholding the CIT(A)'s decisions in all contested matters. The Tribunal emphasized the lack of corroborative evidence and proper inquiry by the AO in making additions based on seized documents.