2016 (7) TMI 336 - AT - Income Tax

Assessment u/s 153A - Addition on the basis of noting found in the seized paper - Held that - The document was found exhibiting transactions in respect of division of asset. The onus was upon the assessee to explain the position of this document. The assessee did not deny the document. His bald statement was that ₹ 75 lakhs was not received by him or the family members. Now this statement is to be tested in the light of other circumstantial evidences, which suggested the execution of this document, and fulfillment of the obligations for the purpose of this document, then, how the weight can be given to a simple denial of the assessee vis- -vis the evidence suggesting that transactions performed in compliance of the documents. The next reason given by the ld.counsel for the assessee is that no inquiry was made in the case of Shri Ramesh S. Kasat. The assessment has been framed under section 153A r.w.s. 143(3) of the Act. It is pertinent to note that there is no negative equity in law. It cannot be the case that if one person could not be caught while infringing the law then, other one has also right to infringe or to break the law. Even if no inquiry was made in the case of Shri Ramesh S. Kasat how the assessee would discharge his onus to prove that in compliance of page no.129, he has not received the payments. Thus, taking into consideration of the facts, we do not see any reason to interfere in the concurrent finding of the ld.Revenue authorities. Addition confirmed by the ld.CIT(A) to the extent of ₹ 75 lakhs are upheld. - Decided against assessee Unexplained investment in shop - addition made on the strength of DVO s report - Held that - As during the course of search no incriminating material was found which can help the AO to make additions. Thus additions deleted - Decided in favour of assessee

Summary

Issues Involved:
1. Addition of ?75,00,000 based on noting found in seized paper.
2. Addition of ?2,46,000 out of total addition of ?3,31,800 on account of unexplained investment in shop.

Issue-wise Detailed Analysis:

1. Addition of ?75,00,000 based on noting found in seized paper:

The assessee appealed against the confirmation of an addition of ?75,00,000 by the CIT(A), which was initially added by the AO based on a noting found in a seized paper during a search operation. The search took place at the residential premises of the assessee, and loose papers were found, including a document indicating that ?1.05 crores was to be paid by Shri Ramesh S. Kasat to the assessee. The AO concluded that out of this amount, ?56 lakhs was paid through cheques, some of which were dishonored, leading to an addition of ?79 lakhs as undisclosed income. The CIT(A) confirmed the addition but corrected the amount to ?75 lakhs, considering ?30 lakhs had been received by cheques.

The assessee contended that the addition was based on the admission of his son during the search, which he later retracted. The assessee also argued that the transaction noted on the seized paper occurred in the accounting period relevant to AY 2000-01, not AY 2004-05. The CIT-DR supported the CIT(A)'s order, emphasizing the cumulative consideration of evidence.

The Tribunal observed that the document indicating the division of family business and the payment of ?1.05 crores was not disputed by the assessee. The Tribunal noted that the cheques issued as part of this agreement were partially honored, and the disputes were settled in the relevant accounting year. The Tribunal found that the assessee's denial of receiving ?75 lakhs was not credible in light of the circumstantial evidence. The Tribunal upheld the addition of ?75 lakhs, rejecting the assessee's arguments about the lack of inquiry into Shri Ramesh S. Kasat's case.

2. Addition of ?2,46,000 out of total addition of ?3,31,800 on account of unexplained investment in shop:

The AO made an addition of ?3,31,800 based on the DVO's report regarding the investment in a property at Pan Market. The CIT(A) reduced this addition to ?2,46,000, considering similar cases of Dinesh T. Kasat and Rajesh T. Kasat, where the addition was also based on the DVO's report. The CIT(A) found the DVO's valuation to be on the higher side and estimated the property's value at ?2.46 lakhs.

The Tribunal noted that in similar cases, it had been established that no incriminating material was found during the search to justify the additions. The Tribunal referred to its previous decision in the cases of Dinesh T. Kasat and others, where it was held that no addition could be made under Section 153A unless some incriminating material was found during the search. Following this precedent, the Tribunal deleted the addition of ?2,46,000, allowing the assessee's ground on this issue.

Conclusion:

The Tribunal upheld the addition of ?75,00,000 based on the seized document and the circumstantial evidence but deleted the addition of ?2,46,000 related to the unexplained investment in the shop, following its earlier decisions on similar matters. The appeal of the assessee was partly allowed.