2017 (11) TMI 1223 - HC - Income Tax

Property transactions in USA - addition u/s 69 - loan of US Dollar 6,59,000/- given to one Mr. Vijay Kumar Kataria, who had executed the power of attorney in favour of the assessee s Son-in-law Sh. Mohit Mehra - protective assessment addition - Held that - In the final charge sheet filed by the CBI there is no mention about the property transactions in USA. The charge sheet is only about booking air tickets for the appellant and his family members by some of the contractors. The CBI court in its decision passed on 26.03.2013 had stated that the appellant was not found guilty of even on this charge. Since, the assessment order was based on the FIR filed by the CBI and as the CBI itself had not found any material to pursue the matter regarding the property transaction in USA against the appellant in the charge sheet, the addition of ₹ 2,86,86,270/- is sustainable as the addition was not made on the basis of any evidence. Even on the basis of the FIR the addition can be made at best on the son in law only, who is a permanent resident of USA and assessed to tax in USA, and not on the appellant. Moreover, the appellant s AR during the appellate proceedings had informed that the same property in USA was added in the hands of Shri Vijay Kumar Kataria, the actual purchaser of the property in USA by DCIT Central Circle-11 in his order u/s 153A passed on 27.03.2009. Since the addition of ₹ 2,86,86,270/- made by the AO in hand of the appellant is not a protective assessment and the department cannot tax the same property twice on the appellant and on the actual purchaser of property. Therefore, it is of the view that the addition made by the AO as the value of property in USA is not sustainable - Decided against revenue

Summary

Issues:
1. Deletion of assessed amount in the hands of the respondent.
2. Inclusion of amounts in assessment under Section 69 as Benami.
3. Reversal of AO's findings by CIT(A).
4. Affirmation of CIT(A)'s findings by ITAT.
5. Claim by Revenue based on power of attorney.

Analysis:

1. The Revenue contended that a substantial question of law arose due to the deletion of a significant amount assessed in the hands of the respondent. The respondent, a former Chief Executive Officer, was accused of manipulating a contract awarded to M/s. Kaveri Infrastructure Pvt. Ltd. and M/s. Pipeway Ltd. The disputed amount was a loan given to Mr. Vijay Kumar Kataria, executed through a power of attorney held by the respondent's son-in-law.

2. The amounts in question were sought to be included in the assessment as Benami transactions under Section 69. The CIT(A) reversed the AO's findings, emphasizing that the evidence presented was insufficient to establish the respondent's ownership of a property in the USA, which was the basis of the assessed amount. The charge sheet filed by the CBI did not mention any property transactions in the USA involving the respondent.

3. The CIT(A) highlighted that the addition of the assessed amount was not sustainable as it lacked evidence linking the respondent to the property in question. Moreover, it was noted that the property was actually purchased by Mr. Vijay Kumar Kataria, not the respondent. The CIT(A) allowed the appeal and deleted the added amount from the assessment.

4. The ITAT upheld the CIT(A)'s decision after considering that the respondent had been acquitted by a competent court. The ITAT affirmed that the Revenue failed to establish a substantial legal question based on the power of attorney held by the respondent's son-in-law.

5. The Court, after reviewing the circumstances and facts, concluded that the Revenue's claim lacked a legal basis through the power of attorney or any related enactments. Consequently, the Court dismissed the appeal, stating that no substantial question of law arose from the case.