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2017 (11) TMI 980 - AT - Income TaxValidity of assessment made u/s 153A - Held that - Departmental representative could not point out any incriminating material before us. In view of this respectfully following the decision of the Hon ble Delhi High Court in case of CIT versus Kabul Chawla (2015 (9) TMI 80 - DELHI HIGH COURT ) and also following the provisions given Commissioner of income tax versus sun pharmaceuticals Ltd 2017 (9) TMI 1416 - GUJARAT HIGH COURT of rule 27 of the income tax appellate tribunal rules were invoked, and also the decision of the coordinate bench in the case of the daughter of the assessee where on identical facts and circumstances the appeal of the revenue is dismissed, we dismiss the appeal of the revenue on this count. Addition of unexplained cash - Held that - Merely because the reason that the assessee and the husband of the assessee are legally separate cannot be the reason for not giving the credit of the cash found during the course of search. It is never established that both are not staying in the same residence and further over and above the sum of ₹ 60,000 per month, the husband of the assessee was not paying her other sums. It is pertinent to note here the assessment proceedings for assessment year 2001 02 which was also before us in a separate appeal wherein a sum of ₹ 58 lakhs was received from the husband of the assessee. Therefore it is apparent that despite the fact being both the assessee and her husband separate the amount of cash found during the course of search is covered by the withdrawal of assessee and her husband. Furthermore it is not the case of the revenue that amount of cash withdrawal by the husband of the assessee has been used somewhere else and is not available. In view of this we reverse the finding of the Ld. Lower authorities and allow the appeal of the assessee directing the assessing officer to delete the addition of ₹ 12.96 Lacs on account of excess cash found during the course of search. In the result ground No. 2 of the appeal of the assessee is allowed. Addition of sum received by the assessee from her husband Mr. Suresh from the account payee cheques - Held that - it is nowhere established by the revenue that money belongs to the assessee and it is rooted through the bank account of her husband. In fact, he held that there is sufficient money in the bank account of the husband of the assessee, and the above sum as been paid on account of order of the Hon ble court who has determined the sum based on the creditworthiness of the payer. The Ld. departmental representative could not point out that how the identity, creditworthiness of the husband of the assessee is not proved and further when the sum is paid in pursuance of a court order, the genuineness of the transaction cannot be doubted. In view of this we confirm the order of the Ld. CIT (A) in deleting the addition of ₹ 1 230700 made in the hands of the assessee on account of some received by assessee from her husband. In the result ground No. 2 of the appeal of the revenue is dismissed. Unexplained jewellery found during the course of the search - Held that - The value of the jewellery found during the course of search was far less than the value of jewellery declared by the family. Further more in para No. 13 of the order. He has considered the individual wealth tax return of the assessee and held that merely because the description of the jewellery do not tally with the description of the jewellery declared by the appellant cannot be added in the hands of the assessee due to the frequent repair, renovation, alteration, modification of jewellery which can be explained in the available cash on hand and withdrawals of the assessee. Therefore in view of the above finding of the Ld. CIT appeal which is not disputed, we do not find any infirmity in the order of the Ld. CIT appeal in deleting the above addition. Validity of assessment order passed under section 153A - whether order cannot be held to be legally valid as the assessment was not pending and no evidence of undisclosed income was found during the course of search and therefore the assessment deserves to be annulled? - AY 2005-06 - Held that - It is provided that the assessing officer shall assess or reassess the total income of the 6 assessment years immediately preceding the assessment year relevant to the previous year in which such searches conducted or requisition is made and further relevant assessment year. It is further provided that if on the date of initiation of the search under section 132 or making of recreation under section 132A. If any of the assessment or reassessment is pending within the period of 6 assessment years, or for the relevant assessment year then they shall abate. Therefore, in the present case the assessment for assessment year 2005 06 was not pending and therefore the assessing officer sell assess or reassess the total income in respect of this assessment year because it is falling within such 6 assessment years. Hence, it cannot be said that the assessment order passed by the Ld. assessing officer is invalid. In view of this ground No. 2 of the appeal of the revenue is allowed and order of the Ld. CIT appeal annulling the assessment order is set aside.
Issues Involved:
1. Validity of assessment under section 153A. 2. Deletion of addition on account of unexplained money received. 3. Deletion of addition on account of unexplained cash found. 4. Deletion of addition on account of unexplained jewelry. 5. Deletion of addition on account of unexplained investment in a car. 6. Penalty under section 271(1)(c) of the Income Tax Act. 7. Wealth tax assessment for unexplained jewelry. Issue-wise Detailed Analysis: 1. Validity of Assessment under Section 153A: The Revenue contended that the assessment under section 153A was valid despite no incriminating material being found during the search. The Tribunal, however, upheld the CIT(A)'s decision that the assessment was invalid since no evidence of undisclosed income was found during the search. This was based on the principle that assessments can only be made on the basis of incriminating material found during the search, as established in the case of CIT vs. Kabul Chawla. 2. Deletion of Addition on Account of Unexplained Money Received: The Tribunal considered the case where the assessee received money from her husband, Suresh Nanda, through cheques from his non-resident external account. The CIT(A) deleted the addition made by the AO, concluding that the identity, creditworthiness, and genuineness of the transaction were established. The Tribunal upheld this decision, noting that the money was received through banking channels and was consistent with the court's maintenance order. 3. Deletion of Addition on Account of Unexplained Cash Found: The Tribunal addressed the issue of unexplained cash found during a search. The assessee claimed the cash was withdrawn from her and her husband's bank accounts. The AO disbelieved this explanation due to the couple living separately. However, the Tribunal found that the withdrawals were substantiated, and no evidence suggested the cash was used elsewhere. Thus, the addition was deleted. 4. Deletion of Addition on Account of Unexplained Jewelry: The Tribunal examined the addition related to unexplained jewelry found during the search. The assessee provided a reconciliation of the jewelry with the valuation reports filed with her wealth tax returns. The Tribunal found that the jewelry declared exceeded the jewelry found during the search. The CIT(A)'s decision to delete the addition was upheld, as the jewelry was part of a common pool used by the family. 5. Deletion of Addition on Account of Unexplained Investment in a Car: The Tribunal considered the addition for the unexplained investment in a Mercedes car. The AO made the addition based on the purchase by the assessee's husband. The Tribunal found no incriminating material supporting this addition and upheld the CIT(A)'s decision to delete it, following the principle that additions must be based on evidence found during the search. 6. Penalty under Section 271(1)(c) of the Income Tax Act: The AO levied a penalty for unexplained cash found during the search. The CIT(A) deleted the penalty, noting that the addition was made in the hands of Suresh Nanda, not the assessee. The Tribunal upheld this decision, as the addition itself was deleted, rendering the penalty unsustainable. 7. Wealth Tax Assessment for Unexplained Jewelry: The AO added the value of unexplained jewelry to the assessee's wealth tax assessment. The CIT(A) deleted this addition, as the corresponding income tax addition was deleted. The Tribunal upheld this decision, noting that without the income tax addition, the wealth tax addition could not stand. Conclusion: The Tribunal dismissed the appeals filed by the Revenue and partly allowed the appeal filed by the assessee, upholding the CIT(A)'s decisions on various grounds, including the invalidity of the assessment under section 153A, deletion of additions related to unexplained money, cash, jewelry, and investments, and the deletion of the penalty under section 271(1)(c). The wealth tax addition was also deleted in line with the income tax proceedings.
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