2016 (9) TMI 604 - AT - Income Tax

Refund or adjustment of any amount deposited pursuant to the filing of the return of income in response to the notice U/s 153C - addition on account of adopting the revised return - withdrawal of admitted tax liability accepted by filing the revised return - Held that - It is admitted case that the assessee received the notices for filing the return of income for the A.Y. 2003-04 to 2009-10 U/s 153C of the Act. The assesse filed the return of income for an amount of ₹ 12,57,412/- for the A.Y. 2003-04 and has also deposited the tax with the department. However, the A.O. instead of accepting the return of income had made the addition of ₹ 20.00 lacs which was restricted to an amount of ₹ 10.00 by the ld. CIT(A). In the proceedings before us, the ld AR has submitted that even the addition sustained by the ld CIT(A) is required to be deleted as there was no satisfaction in the eyes of law and the amount of addition of ₹ 10.00 lacs on account of adopting the revised return in pursuant to the notice U/s 148/153C of the Act was incorrect/unsustainable. In our view, the revised return of Rs. of ₹ 12,46,130/- was filed by the assessee in response to the notices issued by the A.O. under the provions of the Act. The ld CIT(A) has upheld the addition to the extent of ₹ 10.00 lacs by accepting the revised return filed by the assessee. In our view, the assessee has admitted the tax liability by filing the revised return and now therefore the assessee cannot be permitted to withdraw the admitted tax liability accepted by him by filing the revised return of income. Though the assessment proceedings U/s 153C are cancelled on account of lack of satisfaction in accordance with law but the assessee is not entitled to refund or adjustment of any amount deposited by him pursuant to the filing of the return of income in response to the notice U/s 153C of the Act, in view of the judgment of the Hon ble Supreme Court in the case of CIT vs. Micro Nova Pharmaceutical (P.) Ltd. 2014 (2) TMI 948 - SUPREME COURT OF INDIA .

Summary

Issues Involved:
1. Validity of the application of Section 153C.
2. Validity of assessment proceedings and satisfaction recorded under Section 153C.
3. Addition of ?10,00,000 based on presumptions.
4. Entitlement to refund of tax paid pursuant to the notice under Section 153C.

Issue-wise Detailed Analysis:

1. Validity of the application of Section 153C:
The assessee contended that the provisions of Section 153C were not applicable as no incriminating material was found during the search that connected the assessee with the concealment of income. The CIT(A) held that the provisions of Section 153C were applicable since the survey led to the declaration of ?20,00,000 as undisclosed income, and a revised return was filed incorporating part of the declared amounts. The Tribunal upheld this view, noting that the revised return was filed in response to the notice under Section 153C.

2. Validity of assessment proceedings and satisfaction recorded under Section 153C:
The assessee argued that the satisfaction recorded by the Assessing Officer (AO) was not in accordance with law, citing various judicial precedents. The Tribunal examined the satisfaction recorded in the ordersheet and found it lacking in material particulars, noting that it did not reflect that the documents recovered belonged to the assessee. The Tribunal held that the satisfaction recorded was not in accordance with law and set aside the proceedings initiated under Section 153C.

3. Addition of ?10,00,000 based on presumptions:
The CIT(A) had restricted the addition made by the AO from ?20,00,000 to ?10,00,000, noting that the assessee had offered ?10,00,000 as additional income in the revised return. The assessee argued that the addition was based merely on the statement recorded during the survey and that the amounts should be treated as purchases. The Tribunal found that the assessee failed to establish that the amounts represented purchases and upheld the addition of ?10,00,000 as unexplained investment, treating it as unaccounted income.

4. Entitlement to refund of tax paid pursuant to the notice under Section 153C:
The Tribunal addressed whether the assessee was entitled to a refund of the tax amount deposited pursuant to the notice under Section 153C. It noted that the assessee had filed a revised return admitting the tax liability and deposited the tax accordingly. Citing the Supreme Court's judgment in CIT vs. Micro Nova Pharmaceutical (P.) Ltd., the Tribunal held that the assessee was not entitled to a refund or adjustment of the tax amount deposited, even though the assessment proceedings under Section 153C were cancelled.

Conclusion:
The Tribunal partly allowed the assessee's appeal, setting aside the proceedings initiated under Section 153C due to improper satisfaction recording but denying the refund of the tax paid pursuant to the notice under Section 153C. The order was pronounced in the open court on 03/08/2016.