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2019 (2) TMI 979 - AT - Income TaxReopening of assessment - A.O. assumed wrong jurisdiction under section 148 - cash found and seized during search - addition u/s 69A - Held that - There is live link of cash found and seized during course of search, with reasons recorded by Ld. AO. It cannot be considered as a borrowed satisfaction the Report of CBI. Ld. AO made his detailed enquiry by verifying return of income, where he did not find disclosure with respect to above cash found. CBI Report already exonerated assessee with respect to cash found and seized, therefore, it cannot be said that assessing officer have relied upon any conclusion in investigation report of CBI. Further in present case; Ld. AO had tangible material in form of huge of cash found by CBI and upon verification return of income found to be undisclosed in the hands of assessee who is deriving only salary income and, therefore, there is a live link between tangible material and formation of reason to believe by Ld. AO as above cash was not disclosed in return of income filed by assessee. In view of this, none of decisions cited by Ld. Counsel does not apply to facts of present case. There was no reference of verification of information received from investigation wing with return of income of assessee. In the present case before us, Ld. AO verified original return of income filed by the assessee where he did not find the amount of cash seized by CBI. Assessee is a salaried person who was searched by CBI from whom cash was found and seized which, was not disclosed in return of income filed by assessee, we do not find any infirmity in action of Ld. AO in initiating reassessment proceedings under section 147 of the Act. The CIT(A) rightly upheld reassessment proceedings. Addition u/s 69A - Held that - Assessee has supported its contention by submitting annual report of companies showing, above payment, reply by companies to assessing officer in response to various notices, confirmation by Sri Vipin Gupta, production of audited financial statement of Shri Vipin Gupta, copies of respective vouchers of above payment, coupled with the copy of agreement to sale. Assessee provided explanation that why property could not be transacted later on, for reason that after CBI search on assessee, buyer was not willing to buy the above property from the assessee. Further, market value determined by Ld. AO was also not based on any credible evidence. Assessee has shown that property was to be transacted for ₹ 2.90 crores and out of which only ₹ 1.40 crores were paid by the buyer as advance. This was shown in the agreement to sell found during course of such. Therefore, explanation given by assessee cannot be rejected in absence of any contrary evidence found by AO. Thus, in our opinion, addition made by Ld. AO cannot be sustained. A.O failed to establish non genuineness of agreement to sell. There is no evidence on record to establish transaction to be bogus. Unexplained money under section 69A - Held that - There is no dispute regarding money having received under a Will, by assessee. Further, Ld. AO himself stated that that Will seems to be genuine. Part of the Will has been accepted by Ld. AO and held ₹ 55 lakhs as explained source of the cash found in the lockers. Ld. AO rejected balance sum of ₹ 13.42 lakhs only for reason that that though money has been found from locker, it has not been mentioned that such sum was kept in lockers. We do not agree with contention of Ld. AO that merely because in the Will, it has not been stated that money is to be kept in locker, it cannot become unexplained money of assessee. In the Will it has been stated that ₹ 12 to 15 lakhs was given to assessee from time to time by his father (grandfather of assessee). The above sum of ₹ 13.42 lakhs is falling within range of ₹ 12 to 15 lakhs stated by Late Father of assessee. Ld. AO believed the Will to be genuine and granted substantial credit of ₹ 55 lakhs out of sum found amounting to ₹ 68.42 lakhs from lockers. We are not inclined to uphold balance addition of ₹ 13.42 lakhs as it was made on flimsy ground. Accordingly, orders of lower authorities are reversed and AO is directed to delete addition of ₹ 13.42 lakh. - decided in favour of assessee.
Issues Involved:
1. Validity of the order passed by the Commissioner of Income Tax (Appeals) [CIT(A)]. 2. Legality of the assumption of jurisdiction under section 148 of the Income Tax Act, 1961. 3. Addition of ?1,40,00,000 under section 69A of the Income Tax Act. 4. Addition of ?13,42,000 out of ?68,42,000 found in the lockers under section 69A of the Income Tax Act. 5. Adherence to judicial precedents by CIT(A). Issue-wise Detailed Analysis: 1. Validity of the Order Passed by CIT(A): The appellant argued that the order passed by CIT(A) was bad in law. However, the Tribunal did not find it necessary to adjudicate this ground as it was general in nature. 2. Legality of the Assumption of Jurisdiction Under Section 148: The appellant contended that the assumption of jurisdiction under section 148 was void ab initio as the Assessing Officer (AO) did not apply his mind to the information received from the CBI. The Tribunal noted that the search by the CBI led to the discovery of ?2,10,56,500 and USD 40,000, which was not disclosed in the original return of income. The AO formed a reason to believe that there was escapement of income based on this tangible material. The Tribunal upheld the reopening of the assessment, stating that the AO had a live link between the material and the formation of the reason to believe that income had escaped assessment. The Tribunal distinguished the present case from the judicial precedents cited by the appellant, noting that the AO had verified the original return of income and found the undisclosed cash. 3. Addition of ?1,40,00,000 Under Section 69A: The appellant argued that ?1.40 crores seized by CBI was an advance received from Mr. K.K. Agarwal against the sale of property. The Tribunal noted that the appellant provided substantial evidence, including balance sheets, payment vouchers, and statements recorded under section 131 of the Act, to support the claim. The Tribunal found that the AO did not establish the non-genuineness of the transaction and relied on surmises and conjectures. The Tribunal concluded that the addition of ?1.40 crores under section 69A could not be sustained and deleted the addition. 4. Addition of ?13,42,000 Out of ?68,42,000 Found in the Lockers: The appellant explained that the entire amount of ?68.42 lakhs found in the lockers was received under the will of the appellant's late father. The AO accepted ?55 lakhs as explained but added ?13.42 lakhs as unexplained money. The Tribunal noted that the will was considered genuine by the AO and that the amount of ?13.42 lakhs fell within the range mentioned in the will. The Tribunal found the AO's reasoning for the addition to be flimsy and directed the deletion of the addition of ?13.42 lakhs. 5. Adherence to Judicial Precedents by CIT(A): The appellant argued that CIT(A) did not follow judicial precedents. The Tribunal, however, focused on the specific issues at hand and did not find it necessary to delve into this ground separately. Conclusion: The Tribunal upheld the reopening of the assessment under section 147, deleted the addition of ?1.40 crores under section 69A, and also deleted the addition of ?13.42 lakhs under section 69A. The appeal was partly allowed.
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