2022 (2) TMI 435 - AT - Income Tax

Assessment u/s 153A - investment made as a co-owner for purchase of the flat being unexplained income for assessment year 2012-13 - unexplained investment for 1/10th share in the renovation of 2 Mumbai flats - HELD THAT - Addition has been made merely on the basis of statement of Shri Hitesh Mittal recorded during the course of search and seizure operation. When the Revenue has not brought on record any material, if any, seized during the search and seizure operation as to how and when the alleged renovation of the said flats were carried out no addition is sustainable on the basis of bald statement of the assessee. It is settled principal of law that when no incriminating material is found during the year under consideration, particularly when assessment for the year under consideration is completed one, no addition can be made. When we examine the statement of Shri Hitesh Mittal available it does not support the Revenue, because neither the flat was purchased during the relevant period nor any declaration has been made by the assessee during recording of statement. Hon ble Delhi High Court in the case of CIT Vs. Kabul Chawla 2015 (9) TMI 80 - DELHI HIGH COURT held that in case of completed assessment no addition can be made under Section 153A of the Act when no incriminating material was found. Now this issue is no longer a res integra have been decided by various High Courts on the principle that no addition under Section 153A and 153C of the Act in the absence of no incriminating material found in the search - addition merely on the basis of a bald statement under Section 153A of the Act, hence order to be deleted - Decided in favour of assessee Unexplained investment in purchasing 50,000 equity shares - HELD THAT - In order to make addition Assessing Officer has not relied upon any incriminating material alleged to have been seized during the search and seizure operation nor any such incriminating material was there to make such addition. So we are of the considered view that the addition made by the Assessing Officer and confirmed by the ld. CIT (Appeals) is not sustainable in the eyes of law, hence order to be deleted. Consequently, ground No. 6 is also decided in favour of the assessee. Unexplained investment made for half share in flat situated at Goodwill Apartments, Mumbai - HELD THAT - Bank account of the assessee available shows that complete narration for making investment in purchasing the property in question is made and the entire money paid is appearing in the ledger account maintained by the HDFC Bank in the name of M/s. Satellite Exports. The property in question has been disclosed in the balance sheet the purchase price of which has been paid from disclosed bank account of M/s. Satellite Exports, a proprietorship concern of the assessee. Ledger account of Goodwill Apartments also shows the mode of payment through banking channels from the bank account of M/s. Satellite Exports. Conveyance Deed also shows the mode of payment through cheque drawn at HDFC Bank. Addition made by the Assessing Officer and confirmed by the ld. CIT (Appeals) by passing a cryptic order, without any incriminating material and is also not sustainable on merits is liable to be deleted. Consequently, Ground Nos. 4 and 5 are determined in favour of the assessee. Unexplained jewellery found from residence - HELD THAT - When seized jewellery from the house of assessee worth had already been taxed being part and parcel of income declared by Shri S. C. Mittal, father in law of the assessee as undisclosed income as per findings returned by the co-ordinate bench of Tribunals in Ms. Pallavi Mittal 2021 (9) TMI 1335 - ITAT DELHI case no separate addition against the assessee is sustainable, because the entire unaccounted jewellery seized was belonging to the entire family being subject matter of the same search and seizure operation. So we are of the considered view that the Assessing Officer as well as ld. CIT (Appeals) have erred in making separate addition against assessee on account of unaccounted jewellery, hence ground 5 is also determined in favour of the assessee. Unexplained cash found from the premises of the assessee - HELD THAT - When the statement made by assessee during search and seizure operation that the cash of ₹ 50,000/- belongs to his uncle, Shri Yogesh Mittal, which stood corroborated from the fact of additional income declared by Shri Yogesh Mittal on account of search and seizure operation in assessment year 2014-15 to the tune of ₹ 77,00,000/- including cash of ₹ 6,00,000/-, no separate addition of ₹ 50,000/- in the hands of assessee is sustainable, hence order to be deleted.

Summary

Issues Involved:
1. Validity of the appellate order.
2. Confirmation of best judgment assessment under Section 144.
3. Impact of Jat Reservation Agitation on the assessment proceedings.
4. Additions made without incriminating material.
5. Unexplained investment in renovation and purchase of shares.
6. Unexplained investment in property.
7. Unexplained investment in jewelry and cash.

Issue-wise Detailed Analysis:

1. Validity of the Appellate Order:
The assessee contended that the appellate orders passed on 16.03.2018 were void ab initio and illegal because the CIT(A) continued to seek information until 26.03.2018. The Tribunal did not address this issue substantively, as it was not pressed during the arguments.

2. Confirmation of Best Judgment Assessment under Section 144:
The assessee argued that the best judgment assessment under Section 144 was incorrect as they had participated in the assessment proceedings and furnished the required details. This issue was also not pressed during the arguments and hence dismissed.

3. Impact of Jat Reservation Agitation:
The assessee claimed that the Jat Reservation Agitation in Haryana in February 2016 impeded their ability to appear before the Assessing Authority. This issue was similarly not pressed during the arguments and dismissed.

4. Additions Made Without Incriminating Material:
The Tribunal found that no incriminating material was seized during the search and seizure operations for the assessment years in question. It was held that no additions could be made in the absence of incriminating material, particularly in cases of completed assessments. This principle was upheld following the Delhi High Court's ruling in CIT Vs. Kabul Chawla.

5. Unexplained Investment in Renovation and Purchase of Shares:
For the assessment year 2011-12, the Tribunal noted that the addition of ?5,00,000 for the renovation of Mumbai flats was based solely on the assessee's statement without any corroborating incriminating material. Similarly, the addition of ?10,00,000 for purchasing shares was not supported by any seized material. Both additions were deleted.

6. Unexplained Investment in Property:
For the assessment year 2012-13, the Tribunal found that the addition of ?20,64,300 for the investment in a flat was not based on any incriminating material. The assessee had disclosed the investment in their financials and made the payment through banking channels. Consequently, this addition was also deleted.

7. Unexplained Investment in Jewelry and Cash:
For the assessment year 2014-15, the Tribunal observed that the jewelry worth ?52,32,179 found during the search was part of the total jewelry declared by the assessee's father as undisclosed income. Since this jewelry had already been taxed, no separate addition was warranted against the assessee. Similarly, the addition of ?50,000 in cash was deleted as it was established that the cash belonged to the assessee's uncle, who had declared it in his income.

Conclusion:
The Tribunal allowed the appeals for the assessment years 2011-12, 2012-13, and 2014-15, deleting the additions made by the Assessing Officer and confirmed by the CIT(A). The judgments emphasized the necessity of incriminating material for making additions in cases of completed assessments and upheld the principles established by higher judicial authorities.