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2019 (4) TMI 1110 - AT - Income TaxAssessment of income - inclusion /exclusion of income which the assessee has itself included in the return of income filed by the assessee for these two Assessment Years - HELD THAT - When the assessee has accepted in various statements recorded u/s. 131 that these two amounts are undisclosed income of the assessee and the assessee has also included these two amounts in the return of income filed by the assessee for these two Assessment Years, the assessee can still plead for reduction of these two amounts from the taxable income of the assessee if the assessee can bring cogent evidence on record to establish beyond doubt that these two amounts are not the income of the assessee. In the present case, the assessee is making various arguments in this regard but no cogent evidence could be brought on record by assessee to establish beyond doubt that these two amounts are not income of the assessee in these two years. Addition based on entries of seized cash book - HELD THAT - Explanation of the assessee should not be rejected outrightly and should be examined on merit and if no merit is found therein then only it can be rejected. AO has also stated that assessee has failed to establish that how the payment made to Saikrupa Minerals is related with the amounts paid in cash to Ashwathnarayan Singh Co. AO also says that ledger account of Saikrupa Minerals does not indicate payment of ₹ 52.23 Lakhs on a single day. In the absence of any narration against this amount of ₹ 52.23 Lakhs in the seized material, this is only an assumption of the AO that this is on account of cash payment but such assumption is not supported by the entry in the seized material. As per the ledger copy of Saikrupa Minerals appearing on page no. 69 of paper book, it is seen that amount of ₹ 57,41,404/- is credited to the account of this party in respect of Transportation Hire Charges for 7,794.340 MT @ ₹ 455/- per MT 4,739.760 MT @ ₹ 465/- per MT. The total quantity comes to 12,534.100. This explanation of the assessee is acceptable particularly when there is no such narration in the seized material that this amount of ₹ 52.23 Lakhs noted on page no. 7 of the seized cash book is on account of cash payment to any party. Explanation of the assessee in relation to entries on page 41 of the seized material as find the amount of ₹ 105,63,900/- against date 29.03.2010 with narration Payment was struck off and therefore, we enclose the photo copy of this page 41 of the seized material as available on page 57 of the paper book. In our opinion, this amount cannot be considered for addition in view of these facts that the amount in question is struck off in the seized material itself and the reasons about such striking off are explained by the assessee being on account payment by cheque of ₹ 1 Crore and no further enquiry is made by the department whether DDIT (Investigation) or the AO in spite of retraction by the assessee as early as on 29.03.2011 i.e. before expiry of 15 days from the date of the first statement u/s 131 on 15.03.2011 in which declaration was made after including these two amounts. In view of this, we delete this addition also.
Issues Involved:
1. Legality of the assessment order under Section 153A read with Section 143(3) of the Income Tax Act. 2. Justification of additions made based on alleged cash payments outside the books of accounts. 3. Charging of interest under Sections 234A, 234B, and 234D of the Income Tax Act. 4. General grounds related to law, equity, and evidence. Detailed Analysis: Issue 1: Legality of the Assessment Order The assessee argued that the assessment order passed under Section 153A read with Section 143(3) was void ab initio as there was no justification to issue the warrant to search the premises. The conditions specified under Section 132(1)(a), (b), and (c) of the Act did not exist, making the search action illegal. This argument was supported by references to the Supreme Court's decision in the case of Ajith Jain and the Karnataka High Court's decision in the case of C. Ramaiah Reddy. However, this ground was not pressed by the assessee's representative during the hearing and was subsequently rejected by the tribunal. Issue 2: Justification of Additions Based on Alleged Cash Payments Assessment Year 2010-11: - Ground No. 3: The addition of ?92,07,500/- was contested by the assessee, who argued that this amount was erroneously included in the return of income but later clarified during the assessment proceedings that it was not taxable. The tribunal found that the assessee included this amount in the return of income and various statements, and no cogent evidence was provided to establish that this amount was not the income of the assessee. Therefore, this ground was rejected. - Ground No. 4: The addition of ?1,57,86,900/- was based on entries found on two pages of a seized cash book. The tribunal examined the entries and the explanations provided by the assessee. For the entry of ?52.23 lakhs on page 7, the tribunal found that there was no narration indicating a cash payment, and the explanation provided by the assessee regarding transportation charges was found acceptable. For the entry of ?1,05,63,900/- on page 41, the tribunal accepted the assessee's explanation that the amount was struck off due to an on-account payment by cheque and no further cash payment was made. Consequently, this ground was allowed, and the addition was deleted. Assessment Year 2011-12: - Ground No. 2: The addition of ?80,00,000/- was contested similarly to the ?92,07,500/- in AY 2010-11. The tribunal found that the assessee included this amount in the return of income and various statements, and no cogent evidence was provided to establish that this amount was not the income of the assessee. Therefore, this ground was rejected. Issue 3: Charging of Interest under Sections 234A, 234B, and 234D The assessee contested the charging of interest under Sections 234A, 234B, and 234D for AY 2010-11 and Sections 234A, 234B, and 234C for AY 2011-12. These grounds were deemed consequential and did not require separate adjudication. Therefore, no relief was granted on these grounds. Issue 4: General Grounds Related to Law, Equity, and Evidence The general grounds raised by the assessee for both assessment years were considered general and did not call for separate adjudication. Therefore, these grounds were dismissed. Conclusion: - Assessment Year 2010-11: The appeal was partly allowed. The addition of ?1,57,86,900/- was deleted, but the addition of ?92,07,500/- was upheld. - Assessment Year 2011-12: The appeal was dismissed. The addition of ?80,00,000/- was upheld.
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