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2023 (4) TMI 464 - AT - Income TaxAssessment u/s 153A - Addition on account of unsecured loans taken during the years under section 68 - HELD THAT - Addition made was devoid of any incriminating material found and seized during the search. The date of search was 10.01.2012. The due date for issue of notice u/s 143(3) for the A.Y. 2011-12 has not expired. No appeal by the revenue for the A.Y. 2011-12. With regard to the earlier assessment years, the due date for issue of notice has been expired. Completed assessments can be interfered with by the AO while making the assessment under section 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. Hence, we decline to interfere with the order of the ld. CIT(A) and the appeal of the Revenue on the issue of addition u/s 68 for the Assessment Years 2007-08 to 2010-11 stands dismissed. Addition on account of alleged plots buy back, sale and interest earned - Addition based on noting in loose papers found during search - Revenue made the addition holding that the assessee could not file any evidence to substantiate the claim that the loose papers do not belong to him - HELD THAT - The contents reveal that there has been a house which has been sold and also purchased 16 plots. The revenue has not even proved that the notings on the loose papers found, were written by the assessee nor his handwriting has been tested for. Further, inspite of conducting a search, no documents pertaining to purchase of the said house or sale of said house and purchase of 16 plots were found. Even in the post search inquiries none of the 17 properties could be traced out. There was no evidence in any of the bank statement with regard to the dealings. The inferences drawn were not backed by any tangible evidences or corroborative evidences. The revenue failed to establish the person to whom these documents belong, name or details of the persons from whom the alleged income was earned, any type of correlation with the business of the assessee. The statement recorded u/s 132(4) on the date of search has also not pointed to any reasonable evidence to come to a conclusion that the figures mentioned on the loose sheets infact constitute income of the assessee. In the instant case, the documents do not meet any of the criteria envisaged in Section 292C. Hence, we hold that an assessment carried out in pursuance of search, no addition can be made simply on the basis of uncorroborated noting in loose papers found during search because the addition on account of alleged receipts made simply on the basis of uncorroborated noting on loose papers made by some unidentified person and having no evidentiary value, is unsustainable. With regard to the interest earned, in the absence of any corroborative material and in the absence of non-taxing of the principle amount, the same is directed to be deleted. Addition u/s 68 - HELD THAT - Before us, as submitted that the ITR, balance sheet has been submitted, the loan was confirmed by the lender, audited financial statement for the concerned year was filed which duly reflected the advance given to Shri Gurmeet Singh of Rs.50,00,000/-. The lender has a capital of Rs.77.53 crores and total advances given were to the tune of Rs.1.72 crores. The said amount has been lent from the regular account of Corporation Bank A/c - The confirmation is also on record and the revenue has not disputed the fact that this said account was not an undisclosed account. Hence we hold that no addition is called for on this account. As owing to the proof of identity, genuineness and creditworthiness of the loan party and the confirmation, the same stands deleted. Assessee appeal allowed.
Issues Involved:
1. Addition on account of sale of a house. 2. Addition on account of interest earned. 3. Addition on account of unexplained unsecured loans under Section 68. 4. Levy of interest under Section 234B. Issue-wise Detailed Analysis: 1. Addition on Account of Sale of a House: The assessee challenged the addition of Rs. 75,00,000/- made on account of the sale of a house, based on undated and unsigned loose papers found during a search. The CIT(A) upheld the addition, relying on Section 292C of the Income Tax Act, 1961, which presumes that documents found in possession during a search belong to the person and their contents are true. The assessee argued that no other corroborative evidence of the sale was found. The Tribunal noted that the loose papers were not in the assessee's handwriting, no sale deed was found, and no corroborative evidence was presented by the Revenue. The Tribunal concluded that the addition was unsustainable as it was based solely on uncorroborated loose papers. 2. Addition on Account of Interest Earned: The assessee contested the addition of Rs. 13,00,000/- made on account of interest earned, again based on the same loose papers. The CIT(A) upheld the addition under Section 292C. The Tribunal found that no evidence of interest-bearing loans was found during the search, and the loose papers did not constitute sufficient evidence. The Tribunal directed the deletion of the addition due to the lack of corroborative material. 3. Addition on Account of Unexplained Unsecured Loans under Section 68: The Assessing Officer (AO) made additions for several assessment years on account of unsecured loans under Section 68, which the CIT(A) deleted, following the decision in CIT Vs. Kabul Chawla. The Tribunal affirmed the CIT(A)'s decision, noting that no incriminating material was found during the search to justify the additions. For A.Y. 2012-13, the AO made additions for loans received from various entities, but the CIT(A) deleted all except the loan from Chanson Pearl Hospitality, citing insufficient proof of creditworthiness. The Tribunal found that the assessee had provided sufficient evidence, including ITRs, balance sheets, and confirmations, and thus directed the deletion of the addition. 4. Levy of Interest under Section 234B: The CIT(A) upheld the levy of interest under Section 234B to the extent of the sustained additions. Given the Tribunal's decision to delete the additions on account of the sale of the house, interest earned, and unsecured loans, the levy of interest under Section 234B was also directed to be deleted. Conclusion: - The addition on account of the sale of the house and interest earned was deleted due to the lack of corroborative evidence. - The addition on account of unsecured loans under Section 68 was deleted for all assessment years due to the absence of incriminating material found during the search. - The levy of interest under Section 234B was also deleted in light of the deletions of the principal additions. Order pronounced in the Open Court on 07/03/2023.
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