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2019 (4) TMI 1111 - AT - Income TaxBlock assessment u/s 158BC and 158BD - Non filing of Income Tax returns - assessee had not filed its return of income for the assessment years falling within the block period before the date of search and thereby made addition - HELD THAT - Revenue Authorities have not conducted any investigation on that regard. Revenue Authorities also ought to have examined the copy of the returns filed by the assessee that was produced before them and thereafter arrived at a proper conclusion. Revenue Authorities had not taken any coercive action for the alleged fraud committed by the assessee. In this situation we can neither hold the matter in favour of the Revenue nor the assessee - addition made by the AO in the block assessment is devoid of merits because there is no conclusive finding by the Revenue that the assessee had not filed its return of income for the assessment years 1997-98 to 2003-04. Hence we hereby direct the Ld.AO to delete the addition made in the block assessment. Addition towards money advanced being the money advanced as unexplained investment - HELD THAT - With respect to the addition made towards the advance of ₹ 10,00,000/- extended to M/s. Vicky Films, we find that the finding of the Ld.AO to be vogue which is further confirmed by the Ld.CIT(A) by general discussion in his order. Revenue had simply rejected the returns filed by the assessee and also not examined the detailed explanation offered by the assessee, needless to mention that the books of accounts of the assessee was incomplete. In this situation, we do not find any merit in the order of the Ld.Revenue Authorities for making addition for ₹ 10,00,000/- and ₹ 4,50,000/- towards advance extended to M/s. Vicky Films and M/s. Nadiadwala Grandson Entertainment without conclusive finding. Therefore we hereby direct the Ld.AO to delete the addition made for ₹ 10,00,000/- and ₹ 4,50,000/- with regard to the advances extended to M/s. Vicky Films and M/s. Nadiadwala Grandson Entertainment respectively. Addition towards various investment - HELD THAT - The decision rendered in the case of the assessee s related parties Shri Rakesh Sarin and Smt. Renu Sarin, Shri Akshay Sarin M/s. B.R. Sarin Sons HUF holds good in the case of the assessee also and accordingly we hereby direct the Ld.AO to delete the addition of ₹ 4,500/- towards investment in shares, ₹ 50,000/- towards investment in RBI Bonds, ₹ 25,000/- towards investment in various UTI/IDBI and HDFC Relief bonds, ₹ 20,000/- towards investment in Kisan Visan Patras, ₹ 3,50,000/- and ₹ 41,50,000/- towards investment in RBI relief bonds which was assigned to Standard Chartered Bank as the undisclosed investments / income of the assessee Addition towards cash deposit in bank account as unaccounted investment and towards deposit in RD account - HELD THAT - In similar situation herein above, we have deleted the addition made by the Ld.AO because the Ld.AO had failed to examine the return filed by the assessee and the explanation submitted. Therefore the same decision holds good for this issue also. Accordingly as we have held in the case of the assessee s related parties SMT. RENU SARIN, 2019 (4) TMI 1054 - ITAT CHENNAI , SHRI RAKESH SARIN, 2011 (6) TMI 977 - ITAT CHENNAI we hereby direct the Ld.AO to delete the addition Addition towards negative cash balance - HELD THAT - It is apparent that the books of accounts maintained by the assessee in its computer were incomplete; however the assessee had furnished certain explanations along with the copies of the return of income filed by it. It is also apparent that the Ld.A.O had rejected the returns filed by the assessee and failed to examine the particulars filed along with the return of income. In this circumstance we do not find merit in the addition made by the Ld.AO towards negative cash balance of ₹ 4,72,112/- because the addition is made without proper investigation and conclusive finding. Therefore we hereby direct the Ld.AO to delete the addition made. Addition towards unaccounted pro-notes - HELD THAT - This Bench of the Tribunal in the case of the assessee s related parties Smt. Renu Sarin 2019 (4) TMI 1054 - ITAT CHENNAI held the issue in favour of the assessee stating the pro-notes were incomplete in all aspects and therefore presumption cannot be made that the assessee had lend money though there is some air of doubt. Moreover peak credit concept may also be applicable in the case of the assessee due to rotation of advances and repayments. It appears that the Ld.AO has not examined those aspects. There is every probability that if such exercise would have been carried out the source of the amount utilized in the finance business would have been explainable as the amount utilized in the business would have been much less than the addition made by the Ld.AO. Therefore adhoc addition of the amount mentioned in the entire pro-notes is not justifiable. Addition towards purchases of fixtures amenities as unexplained investment - HELD THAT - Revenue Authorities have not arrived at any conclusive finding on the issue after proper investigation. Therefore we do not find any merit in the orders of the Ld.Revenue Authorities for making addition
Issues Involved:
1. Non-filing of Income Tax returns. 2. Addition towards money advanced to M/s. Vicky Films and M/s. Nadiadwala Grandson Entertainment as unexplained investment. 3. Addition towards various investments as undisclosed income. 4. Addition towards cash deposits in bank accounts as unaccounted investment. 5. Addition towards negative cash balance. 6. Addition towards unaccounted pro-notes. 7. Addition towards purchases of fixtures and amenities as unexplained investment. Detailed Analysis: 1. Non-filing of Income Tax Returns: During the investigation, it was observed that the assessee had made substantial investments and advanced loans, which were claimed to be disclosed in their returns. However, the acknowledgments provided did not match the records. The Revenue Authorities did not conduct a thorough investigation nor took coercive action for the alleged fraud. The Tribunal noted similar views in related cases and directed the deletion of the addition of ?14,28,240/- due to lack of conclusive findings by the Revenue. 2. Addition towards Money Advanced to M/s. Vicky Films and M/s. Nadiadwala Grandson Entertainment: The assessee was found to have transacted undisclosed funds through a bank account. The AO added ?10,00,000/- and ?4,50,000/- as unexplained investments. However, the Tribunal found the AO's findings vague and noted that the Revenue had not examined the detailed explanations or returns filed by the assessee. Consequently, the Tribunal directed the deletion of these additions. 3. Addition towards Various Investments as Undisclosed Income: The AO treated investments in shares, bonds, and other instruments as unaccounted income due to the rejection of the assessee's returns. The Tribunal found no justification in the Revenue's approach, noting that the AO did not examine the returns or the sources of investments. Citing similar cases, the Tribunal directed the deletion of additions amounting to ?4,500/-, ?50,000/-, ?25,000/-, ?20,000/-, ?3,50,000/-, and ?41,50,000/-. 4. Addition towards Cash Deposits in Bank Accounts: The AO added ?13,41,800/- and ?14,106/- as unexplained cash deposits due to the transactions not being accounted for in the assessee's books. The Tribunal, referencing similar cases, directed the deletion of these additions, noting the AO's failure to examine the returns and explanations provided by the assessee. 5. Addition towards Negative Cash Balance: The AO added ?4,72,112/- due to negative cash balance based on incomplete books of accounts. The Tribunal found no merit in this addition, noting the lack of proper investigation and conclusive findings by the AO. The Tribunal directed the deletion of this addition. 6. Addition towards Unaccounted Pro-notes: During the search, certain pro-notes were found, and the AO added ?25,50,000/- as undisclosed investments. The Tribunal, referencing similar cases, noted that the pro-notes were incomplete and that the AO did not conduct proper investigations. The Tribunal directed the deletion of this addition, emphasizing the lack of corroborative evidence. 7. Addition towards Purchases of Fixtures and Amenities: The AO added ?5,84,529/- as unexplained investment for fixtures and amenities. The Tribunal found no merit in the Revenue's findings due to the lack of conclusive investigation. The Tribunal directed the deletion of this addition. Conclusion: The Tribunal allowed the assessee's appeal, directing the deletion of all contested additions due to the lack of proper investigation and conclusive findings by the Revenue Authorities. The order was pronounced on April 3, 2019, in Chennai.
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