2016 (2) TMI 408 - HC - Income Tax

Addition on protective basis on account of coal business carried out by the assessee through the syndicate of Bhutoria Group - Held that - On perusal of the records, statement recorded during the course of search at Kolkata and also the impugned seized computer sheets, it is seen that the said transactions as embodied in these seized document, actually represent the trading transactions of the syndicate working as a unit and, therefore, the assessment of such income can be done only in the hands of the said syndicate . So addition made on protective basis cannot survive. See Commissioner Of Income-Tax Versus Smt. Saraswati Devi 1994 (7) TMI 46 - RAJASTHAN High Court - Decided in favour of assessee

Summary

Issues:
1. Appeal against the judgment and order passed by the Income Tax Appellate Tribunal.
2. Addition of amounts in assessment years 2005-06 and 2006-07 based on seized documents and statements.
3. Deletion of additions by the Commissioner of Income Tax and subsequent appeals.
4. Allegations of error by the ITAT in deleting the additions made by the Assessing Officer.
5. Lack of cross-examination of witnesses affecting the Tribunal's reliance on statements.
6. Assessment of income in the hands of a syndicate AOP rather than an individual.
7. Legal precedents supporting the Tribunal's decision.
8. Dismissal of appeals due to lack of substantial legal questions.

Analysis:
The High Court heard appeals against the judgments of the Income Tax Appellate Tribunal regarding additions made in assessment years 2005-06 and 2006-07 based on seized documents and statements. The Tribunal had deleted these additions, prompting the Department to appeal. The Tribunal's decision was based on the lack of cross-examination of witnesses, including Sri Prakash Bhutoria, whose statements were crucial. The Tribunal cited legal precedents to support its stance that untested statements cannot be relied upon. The Assessing Officer's view that income from coal business belonged to a syndicate AOP rather than the individual assessee led to the deletion of protective additions. This aligns with the case law precedent of CIT Vs. Smt Saraswati Devi. Consequently, the Tribunal's decision was upheld, and no substantial legal questions were found, resulting in the dismissal of the appeals at the admission stage.