2020 (7) TMI 70 - AT - Income Tax

Validity of assessment proceedings u/s 153A - unexplained foreign expenditure u/s 69C - HELD THAT - We find that for Assessment Year 2011-12 assessee has not requested for any relief in the written submission filed before Ld. CIT(A). The relief claimed for other years was only regard to wrong application of package rates for preceding years. Since for Assessment Year 2011-12 no relief has been requested by the assessee himself as there is no difference in the expenditure incurred at the time of visit and the package rates. We thus find no merit in Ground raised by the assessee and the same deserves to be dismissed. Undisclosed cash investment u/s 69B - HELD THAT - Two plots were purchased by the assessee s wife and his father in law by registered deed dated 13.6.2010. The mutation was pending for these two plots and the two cheques were kept as security from Universal Agro Farm. Apparently revenue authorities have failed to prove any live connection between the assessee and Universal Agro Farm relating to the two cheques found during the course of search. Whereas the documentary evidence filed by the assessee clarifies the transactions. No other efforts were made by the revenue authorities to confront Shri Shardendu Kumar Mishra. We find no justification in the action of the Ld. A.O making the addition of unexplained cash investment since the addition made by the Ld. A.O seems to be made merely on the suspicion and surmises. We accordingly set aside the finding of Ld. CIT(A) and delete the addition u/s 69B of the Act and allow Ground No.4 of the assessee s appeal. Cash and foreign currency found u/s 69 - unexplained cash and foreign currency - HELD THAT - Since the cash amount has been accepted to have been received by the assessee cash found at the residential premises and locker of the assessee get duly explained and in the cash flow statement also the amount seized by the Income Tax Department has been considered. Since the revenue authorities have failed to challenge the correctness of the cash flow statement and were merely questioning that why the cash was kept in locker and not deposited in bank are not good ground to make addition for unexplained cash in the hands of the assessee - since assessee has successfully explained the source of cash found during the course of search, addition for unexplained income u/s 69A the Act deserves to be deleted. Voluntary disclosure u/s 132(4) - HELD THAT - There is no evidence placed on record to show that unaccounted professional receipts which assessee failed to offer in the previous years has been offered to tax as surrendered amount so as to cover up the undisclosed gold and diamond jewellery and paid income from other source which the assessee failed to offer in the earlier years. In this situation the statement given under oath u/s 132(4) is a perfect documentary evidence because the amount surrendered is not linked to any material evidence found during the course of search on the basis of which the income could have been computed and the assessee has himself honoured the surrender made during search. We are thus of the considered view that the assessee was required to honour the surrendered income and offered it to tax in the Income Tax return. Though the difference is of ₹ 1,69,014/- but since the addition in challenge is only ₹ 1,40,914/- we confirm the same and dismiss assessee s. Unexplained expenditure u/s 69C - undisclosed income arising out of the loose paper - HELD THAT - It is well settled that additions cannot be made on the basis of unsigned loose papers unless and until any corroborative evidence is available which shows the nexus of the transaction appearing in such loose sheet. In the instant case also though there is no direct nexus of the assessee with this loose paper except that it was found at his residential premises. But only because the loose sheet is written in the handwriting of the assessee s wife and the incomplete transactions/entries appearing in this loose sheets are connected to assessee s fathere in law and mother in law prima facie no addition is called for in the hands of the assessee. Even otherwise sufficient material have been placed on record to explain the rough jottings in the loose sheet which are basically the cash amount advanced to assessee s wife from her parents to be spend for purchase/maintenance of duplex/house at Bhopal and Smt. Alka Gupta maintained the details on behalf of her parents. No addition was called for by the Ld.A.O in the hands of the assessee for undisclosed income based on the loose paper appearing in page no.9 10 Annexure A-I/1 seized during the course of search. Short-term capital gain u/s 50C by adopting cost of acquisition - HELD THAT - Expenses, brokerage incurred by the assessee at the time of purchase of plot were not considered by Ld. CIT(A) which includes transfer charges paid to the society, bank charges for draft preparation and legal fees. These expenses have been incurred in connection with purchase of the property and this form the part of total cost of the land and same deserves to be allowed against the sale consideration received by the assessee. Revenue authorities have not challenged the genuineness of this expenditure, we therefore allow the deduction of ₹ 1,42,103/- and for the remaining amount of ₹ 44,375/- the addition for Short Term Capital Gain stands confirmed. Unexplained investment in the renovation of house situated at Shahpura, Bhopal - HELD THAT - CIT(A) only clinic was constructed and there was no other construction at the time of purchase of the house do not have any merit. The DVO has estimated the total valuation of the renovation of the house which is also not justified since only the renovation of the clinic was in question. However looking to the fact that details prepared by the assessee for the expenditure incurred on renovation is not fully documented, we therefore being fair to both the parties and looking to the smallness of the issue confirm the addition of ₹ 1,00,000/- for the undisclosed investment and delete remaining amount of ₹ 3,36086/-. Thus the assessee gets partial relief. This Ground of the assessee s appeal is partly allowed. Long term capital gain - HELD THAT - The assessee received the value for the equity shares held. This amount was received in part of which some was in cash (which was duly accepted by the assessee during the course of search) and the remaining part in cheque. Since due to ongoing litigation between assessee and WHL delayed the completion of deal between the Bansal Group and the assessee and it was only on 08.02.2012 that the litigation between AMDPL and WHL came to an end. The registration of transfer of shares took place on 14.8.2012 and on the basis of these documents transaction of sale of shares completed in financial year 2012-13. Thus the assessee and other Directors/share holders has rightly disclosed the Long Term Capital Gain from sale of shares in their regular return of income for Assessment Year 2013-14. Therefore the action of the Ld. A.O making the addition for advance cash received on sale of shares during Assessment Year 2011-12 and 2012-13 and addition for the amount receivable post search was not justified and is liable to be deleted. Addition on the basis of loose sheet found during the course of search - HELD THAT - All the transactions appearing in this loose sheet are duly recorded in the in the books of accounts. We therefore set aside the finding of Ld. CIT(A) and delete the addition. Addition advance received from Bansal group as part of the deal mentioned in MOU dated 24.10.2010 - HELD THAT - Addition made by the Ld. A.O for the advance sum received against sale of shares was to be taxed in the year when shares have been transferred i.e. in the Assessment Year 2013-14 and since total consideration received by the share holders/Directors in cash and cheque have been accounted for and offered to tax under the head Long Term Capital Gain in Return of income filed for Assessment Year 2013-14, no addition was called for during the Assessment Year 2011-12 and 2012-13. We therefore delete the addition made in the case of the assessee for advance cash received during the Assessment Year 2011-12 from Bansal Group. Addition of cash investments - HELD THAT - No merit in the contention of the assessee and submission made before lower authorities. No documentary evidence filed to show that loan of ₹ 1,25,000/- and ₹ 25,000/- was received for purchase of equity shares from Smt. Bharti Patel and even the notice issued to Shri Bharat Patel at the address shown by the assessee was not served. In all the facts and circumstances of the case wherein the assessee has not denied that the transaction appearing in the loose sheet and explanation given is not sufficient to justify the submission made by the assessee, we find no reason to interfere in the finding of Ld. CIT(A) and thus confirm the addition. Unexplained cash bribes given on the basis of seized document - HELD THAT - Where the alleged documents primarily seems to be projection for different type of colleges to be established in future and there is no iota of evidence to show that any such investment in colleges has been made, then in such situation no addition could be made for the proposed bribes mentioned in the document. Ld. CIT(A) erred in not taking note of these facts and was thus not justified in confirming the action of the Ld. A.O. We therefore set aside the finding of Ld. CIT(A) and delete the addition made by the Ld. A.O on the basis of seized document. Unexplained expenditure calculated on the basis of seized document - HELD THAT - Addition is on the basis of seized document No.123 of LPS-3 showing the payment of ₹ 39,500/- in total towards bill, stamp, notary and fees. The assessee has merely submitted that it is a dumb document. However looking to the seized document, we find that on this sheet there are other transactions also which have been striked off. There are figures mentioned relating to dividend which is also striked off. This document is certainly relating to the assessee. Since he has unable to give any explanation to it and the action of Ld. A.O needs to be confirmed. We thus find no reason to interfere in the finding of Ld. CIT(A) confirming the action of Ld. A.O for the addition towards unexplained expenditure. Unexplained investment - HELD THAT - LPS-3 are rough calculation for proposed investment in immoveable property, Ld. A.O was not justified in making the addition since no actual transaction has taken place. We therefore set aside the finding of Ld. CIT(A) and delete the addition.

Summary

Issues Involved:
1. Validity of assessment under section 153A r.w.s. 143(3).
2. Addition on account of unexplained foreign expenditure under section 69C.
3. Addition on account of voluntary disclosure under section 132(4).
4. Addition on account of undisclosed cash investment under section 69B.
5. Addition on account of unexplained cash and foreign currency under section 69A.
6. Addition on account of unexplained expenditure under section 69C.
7. Addition on account of short-term capital gain under section 50C.
8. Addition on account of unexplained investment under section 69B.

Issue-Wise Analysis:

1. Validity of Assessment under Section 153A r.w.s. 143(3):
The assessee did not press this ground, and it was dismissed accordingly.

2. Addition on Account of Unexplained Foreign Expenditure under Section 69C:
The assessee challenged the addition of ?75,000 for foreign travel expenses. The tribunal found that similar additions for other years were partly allowed based on lower package rates applicable in previous years. However, for AY 2011-12, no relief was requested, and the addition was upheld.

3. Addition on Account of Voluntary Disclosure under Section 132(4):
The tribunal examined the voluntary disclosure of cash received from Bansal Group for the sale of shares. It was found that the amounts were received as advances and were part of the total consideration offered to tax in AY 2013-14. The tribunal concluded that taxing these amounts in AY 2011-12 and 2012-13 would result in double taxation. The additions were deleted.

4. Addition on Account of Undisclosed Cash Investment under Section 69B:
For the addition of ?4,50,000 based on seized cheques, the tribunal found that the cheques were obtained as security for a plot purchase and were not related to any cash loan. The addition was deleted.

5. Addition on Account of Unexplained Cash and Foreign Currency under Section 69A:
The tribunal found that the cash and foreign currency were explained through cash flow statements and the statement of a friend who owned the foreign currency. The addition of ?16,26,897 was deleted.

6. Addition on Account of Unexplained Expenditure under Section 69C:
The tribunal examined the additions based on seized documents showing projected expenses and found that these were rough calculations for future projects. No actual transactions were evidenced. The addition of ?15,00,000 was deleted.

7. Addition on Account of Short-Term Capital Gain under Section 50C:
The tribunal allowed the deduction of certain expenses related to the cost of acquisition and confirmed the remaining addition. The addition was partly allowed.

8. Addition on Account of Unexplained Investment under Section 69B:
The tribunal found that the seized documents were rough calculations for a proposed property purchase that did not materialize. The addition of ?21,16,800 was deleted.

Conclusion:
The appeals were partly allowed, with several additions being deleted based on the tribunal's findings that the amounts were either explained or related to future projections and not actual transactions. The tribunal emphasized the importance of considering the overall context and evidence before making additions based on seized documents.