2020 (9) TMI 1009 - AT - Income Tax

Addition on the basis of Central Bureau of Investigation (CBI) report - criminal conspiracy - Assessee being govt officer (treasury officer) - allegation of dishonestly caused withdrawal from the public exchequer against a Letter of Credit (LOC) - AO considering the charge sheet filed by CBI, was of the opinion that assessee was involved in the LOC scam and the assessee might have received pecuniary benefit i.e. a share of the scam - HELD THAT - Assessee was not even made an accused by the CBI while submitting the offence/charge under sec. 173 of the Cr. P. C. and was not convicted also by the Special Judge, CBI and also taking note of the corroborative evidence which is the certificate issued by the Special Judge, CBI (supra) dated 07.07.2015 showing the assessee was not proceeded against by CBI or Special Court in the case, therefore, there was no basis for the addition. We note that the AO has made the addition only on the basis of the allegation on the part of the Investigative Agency i.e. CBI investigating the LOC scam at the F.I.R. stage where assessee s name also figured and that event made the AO saddle the assessee with the addition. Now since the foundation of the addition has gone, the addition cannot be sustained. We note that the AO in the second and third round has simply reiterated the addition and there was no other material other than his reiteration of the original assessment. Therefore, taking note that the foundation of the addition since has been removed, the super structure cannot survive and it falls, therefore, the addition made by the AO and confirmed by the Ld. CIT(A) is directed to be deleted. Assessee appeal allowed.

Summary

Issues:
Appeal against order of Ld. CIT(A) for AY 1992-93 - Addition of ?2,42,473/- confirmed - Alleged involvement in LOC scam - Repeated litigation before Tribunal.

Analysis:
The appeal pertains to the addition of ?2,42,473/- confirmed by Ld. CIT(A) for AY 1992-93, related to the alleged involvement in a LOC scam as per CBI allegations. The AO made the addition based on the charge sheet filed by CBI, estimating the assessee's share of pecuniary benefit at 10% of the total scam amount. The Tribunal remanded the matter to AO for fresh assessment in a previous round, directing the assessee to provide evidence. The AO, upon re-assessment, reiterated the addition despite the assessee presenting a certificate from the Special Judge's Court stating non-involvement in the case. The Ld. CIT(A) upheld the addition, leading to the current appeal.

The Tribunal noted that the AO's addition was solely based on CBI allegations without concrete evidence against the assessee. The certificate from the Special Judge, CBI, confirmed that the assessee was not sent for trial or charged in connection with the case. The judgment passed by the Special Judge also did not mention the assessee as an accused. The Tribunal found no basis for the addition of ?2,42,473/- as the assessee was not even made an accused by CBI during the investigation. The AO's repeated reiteration of the addition without substantial evidence was deemed insufficient to sustain the addition.

Conclusively, the Tribunal allowed the appeal, directing the deletion of the addition of ?2,42,473/- as the foundation for the addition was unfounded due to the lack of evidence against the assessee. The judgment was pronounced on 18th September 2020.