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2020 (12) TMI 8 - AT - Income TaxAssessment u/s 153A - JCIT has not applied his mind properly before giving approval - limitation as prescribed u/s. 153D - assessee submitted that the AO sent the draft assessment order before the JCIT for taking approval u/s. 153D of the Act of near about 75 cases on 29th December, 2017 and the ld. JCIT approved the draft assessment order on the same date - HELD THAT - The provision of Section 153D of the Act states regarding making of the order within the stipulated period. Further from the reading of the provisions of Section 153D it is clear that there is no mention about the service of the order, however, it is only mentioned that the order shall be made . With regard to service it has clearly been defined in the section 143(2) of the Income Tax Act but in section 153D nowhere about service of order has been mentioned. The case laws relied on by the ld. AR of the assessee in the case of Dilip Constructions Pvt. Ltd. 2019 (12) TMI 311 - ITAT CUTTACK is not applicable in the present facts of the case. Accordingly, we dismiss the legal grounds taken by the assessee. Addition on the documents found in the premises of Jami Siva Sai during the course of search proceedings - HELD THAT - We are of the view that the AO is not justified in making the addition in the hands of the assessee of ₹ 75 lakhs. The AO did not follow the prescribed procedures, which ought to have been followed in cased of documents which was found in the case of other persons as prescribed u/s. 153C of the Act. Therefore, the entire addition made by the AO along with the interest made thereon is not correct. Accordingly, we delete the addition and interest charged. With regard to ground No. 4 since we have deleted the entire addition made by the AO and decided the appeal of the assessee on merits of the case, therefore, this ground is consequential in nature. Thus, the ground taken by the assessee on merits is allowed. Unexplained money u/s. 69 - HELD THAT - Merely found the documents and if there is no transaction it cannot be said that the assessee has done the transactions outside his books of accounts or merely found the documents in the name of anybody cannot be said that the transactions have been occurred unless and until it is not established by confirmation from both the parties. Therefore, this addition made by the AO is deleted and this ground of appeal of the assessee is allowed. Addition u/s. 69 as unexplained money - agricultural income - HELD THAT - Assessee not filed any supporting documents for agricultural income so that the agricultural income can be justified. We also observed that the figures of agricultural income is very zig-zag. Therefore, as per our considered opinion, this issue should go back to the file of AO for verification of accumulation of cash as stated above and the assessee is directed to prove the source of income shown as above. The assessee will also cooperate with the AO for above purpose without seeking any unnecessary adjournments. Needless to say, the assessee shall be provided reasonable opportunity of being heard to substantiate his claims. Thus, this ground of the assessee is allowed for statistical purposes. Unexplained investment in gold ornaments - HELD THAT - CIT(A) has allowed 350 grams of gold ornaments. During the course of search proceedings, total gold were found at 4489.980 grams out of which the authorities below have allowed 2400 grams and remaining gold 1473.580 616.400 2089.980 were disallowed. After going through the records of the authorities below, we noted from the para 9 of the assessment order, that the assessee had filed confirmation letter of the persons whose name as stated above but these confirmations have not been disregarded by the AO as well as it has not been considered by the CIT(A).only 1003.80 grams belongs to the assessee and rest jewellery belongs to the respective names as mentioned above. This fact has not been controverted by any of the authorities below. Therefore, the remaining jewellery should be taxed in the hands of the respective names/owners. The assessee is required to explain only 1003.580 grams. Since the assessee is a male person so he is entitled for as per CBDT Instruction No. 1916 of 1994 and he is entitled for 100 grams of jewellery. Further, considering the status of the assessee, being a senior citizen of 73 years old, who belongs to well-established family and looking to the religious functions and marriage ceremonies in the family of the assessee, we deem it proper to allow 200 grams gold out of 903.580 (1003.580-100) grams. Now, gold remained to be explained by the assessee of 703.580 grams, out of which 616.400 grams gold were purchased from the HUF's fund as claimed by the assessee. Thus, if the assessee would be able to justify the cash availability in the hands of the HUF before the AO and it would be able to nullify the observation of the CIT(A) i.e. production of purchase bill, then the assessee will get relief of 616.400 grams or to the extent possible and the rest quantity is hereby disallowed. Accordingly, we restore this issue to the file of AO to consider the claim of the assessee as per our above observations. This ground of appeal of the assessee is partly allowed for statistical purposes.
Issues Involved:
1. Validity of the assessment order under section 153A. 2. Validity of the approval under section 153D. 3. Addition of ?75,00,000 as an alleged advance. 4. Addition of ?6,25,000 as alleged interest income. 5. Calculation of interest under sections 234A, 234B, and 234C. 6. Limitation period for passing the assessment order. 7. Additional grounds raised by the assessee. Detailed Analysis: 1. Validity of the Assessment Order under Section 153A: The assessee argued that no incriminating material was found during the search and seizure operation, and hence the completed assessment should not be disturbed. The Tribunal noted that the assessment was based on documents found during the search of a third party, Jami Siva Sai. The Tribunal emphasized that for using material found from a third party, the procedure under section 153C should be followed, which was not done in this case. Consequently, the addition made under section 153A was not justified. 2. Validity of the Approval under Section 153D: The assessee contended that the approval given by the Joint Commissioner of Income Tax (JCIT) was mechanical and without proper application of mind. The Tribunal observed that the JCIT had approved the draft assessment orders of multiple cases on the same day, indicating a lack of due diligence. The Tribunal referred to the case of Smt. Shreelekha Damani, where similar mechanical approval was deemed invalid. Thus, the Tribunal found the approval under section 153D to be invalid. 3. Addition of ?75,00,000 as an Alleged Advance: The Tribunal examined the documents seized from Jami Siva Sai, which indicated an advance of ?75,00,000 from the assessee. However, both the assessee and Jami Siva Sai denied any such transaction. The Tribunal noted that the documents were found in a third party's premises, and no satisfaction note under section 153C was recorded by the Assessing Officer (AO). Therefore, the addition was not sustainable and was deleted. 4. Addition of ?6,25,000 as Alleged Interest Income: Similar to the advance, the interest income of ?6,25,000 was also based on documents found with Jami Siva Sai. Given the lack of corroborative evidence and the absence of a satisfaction note under section 153C, the Tribunal deleted this addition as well. 5. Calculation of Interest under Sections 234A, 234B, and 234C: The Tribunal did not specifically address this issue in detail, but it was noted that since the primary additions were deleted, the interest calculations would be consequentially affected. 6. Limitation Period for Passing the Assessment Order: The assessee argued that the assessment order was barred by limitation as it was served after the statutory period. The Tribunal referred to various judicial pronouncements and concluded that the requirement under section 153B is to "make" the order within the stipulated period, not necessarily to "serve" it. Therefore, the assessment order was not barred by limitation. 7. Additional Grounds Raised by the Assessee: The Tribunal allowed the additional grounds raised by the assessee, which included the legal validity of the assessment order and the approval under section 153D. These grounds were admitted and adjudicated in favor of the assessee. Conclusion: The Tribunal found that the assessment order was invalid due to the improper approval under section 153D and the incorrect application of section 153A without following the procedure under section 153C. Consequently, the additions of ?75,00,000 and ?6,25,000 were deleted. The Tribunal also clarified that the assessment order was not barred by limitation. The appeals for the assessment years 2014-2015 and 2015-2016 were dismissed, while the appeal for the assessment year 2016-2017 was partly allowed for statistical purposes.
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