2019 (10) TMI 234 - AT - Income Tax

Assessment u/s 153A - proof of incriminating material found in the course of the search proceedings - THAT - We find, that as observed by the CIT(A), the said preceding years were distinguishable on facts. As observed by the CIT(A), in the said preceding years as no assessment was pending on the date of search, therefore, the A.O had confined himself to the additions which could be made only on the basis of the incriminating material found in the course of the search proceedings. As the assessment for the year under consideration i.e A.Y 2011-12 was pending on the date of search. therefore, the A.O unlike the preceding years was also vested with the jurisdiction to make the disallowance of the aforesaid bank charges as per the normal assessment provisions envisaged under Sec.143(3). Accordingly, finding no infirmity in the observations of the lower authorities, we uphold the disallowance of the bank charges of ₹ 1,206/- made by the A.O. The Ground of appeal No .1 is dismissed. Unexplained investment u/s 69B - HELD THAT - We are of a strong conviction that neither the assessee had been able to substantially prove that the aforesaid seized papers found from his residential premises did not belong to him, nor the A.O had been able to dislodge the claim of the assessee that the said seized papers which nowhere made any mention of his name or the name of any of his family members, did not belong to either of them. The matter requires to be revisited by the A.O for making necessary verifications. Accordingly, in terms of our aforesaid observations, we restore the matter pertaining to the addition towards alleged unexplained investment in the shares of various companies by the assessee, to the file of the A.O for readjudication. A.O in the course of the set aside proceedings shall afford a reasonable opportunity of being heard to the assessee, who shall remain at a liberty to substantiate his aforesaid claim by placing on record fresh documentary evidence. The order of the CIT(A) is set aside in terms of our aforesaid observations. The Ground of appeal No. 2 is allowed for statistical purposes.

Summary

Issues Involved:
1. Disallowance of bank charges amounting to ?1,206.
2. Addition of ?23,00,000 on account of alleged unexplained investment under Section 69B.

Issue-wise Detailed Analysis:

1. Disallowance of Bank Charges Amounting to ?1,206:

The assessee claimed bank charges of ?1,206 against income shown under the head "other sources." The Assessing Officer (A.O.) disallowed this claim as the assessee failed to establish a nexus between the expenditure and the earning of interest income. The CIT(A) upheld this disallowance. The Tribunal agreed with the lower authorities, noting that the assessee did not provide sufficient evidence to show that the bank charges were expended wholly and exclusively for the purpose of earning the interest income. The Tribunal also addressed the assessee's argument that similar deductions were allowed in previous assessment years (A.Y 2006-07 to A.Y 2008-09), stating that those years were distinguishable on facts as no assessment was pending on the date of search, unlike the current year (A.Y 2011-12). Thus, the disallowance of bank charges was upheld, and Ground of appeal No. 1 was dismissed.

2. Addition of ?23,00,000 on Account of Alleged Unexplained Investment Under Section 69B:

During a search and seizure operation, certain loose papers marked as Annexure A-1 were found at the assessee's residential premises, which indicated trading in shares of M/s Valecha Engineering Ltd. and Reliance group. The A.O. added ?23,00,000 as unexplained investment under Section 69B, based on these documents. The assessee claimed these documents did not belong to him or his family and might have been left by visitors. The A.O. rejected this explanation, and the CIT(A) upheld the A.O.'s decision.

The Tribunal examined the issue and noted that while Section 292C allows for the presumption that documents found during a search belong to the person from whose possession they were seized, this presumption can be rebutted. The Tribunal found that the assessee consistently denied ownership of the documents and that the A.O. did not provide concrete evidence to disprove this claim. The Tribunal also noted the absence of the assessee's name on the documents and the lack of verification from the broker mentioned in the documents. Given these considerations, the Tribunal concluded that the matter required further verification and remanded the issue back to the A.O. for re-adjudication, allowing Ground of appeal No. 2 for statistical purposes.

3. General Grounds of Appeal:

The Ground of appeal No. 3, being general in nature, was dismissed as not pressed.

Conclusion:

The appeal was allowed for statistical purposes, with the disallowance of bank charges upheld and the issue of unexplained investment remanded for further verification. The order was pronounced in the open court on 28.06.2019.