2023 (8) TMI 765 - AT - Income Tax

Assessment u/s 153A - Unaccounted investment - assessee did not give any substantial evidence in respect of the contention taken by them, nor could prove that the said deal did not materialize in form of satakhat or other documents, therefore an addition as made by the AO - assessee submitted that entire addition made by Assessing Officer based on the unsigned memorandum of understanding (MoU) - HELD THAT - We note that in assessee s case under consideration, the other partners scrutiny assessment were completed by the assessing officer u/s 143(3) r.w.s. 153A and the proportionate addition for impugned amount were not made by the assessing officer. As decided in the case of Late Shri Mohanlal Ambelal Desai 2021 (2) TMI 345 - ITAT SURAT it is vivid that being co-owner, the assessee is also entitled for similar treatment. The Revenue cannot treat the assessee indifferently. We have gone through the scrutiny assessments completed by the AO u/s 143(3) r.w.s. 153A of the Act and we note that the proportionate addition for impugned amount were not made by the assessing officer, in respect of above partners. The assessee, being co-owner, is also entitled for similar treatment. Decided in favour of assessee. Addition made on the basis of loose papers found and seized from the third person - HELD THAT - We note that Assessing Office did not make any inquiry from buyers of flat in respect of actual prices paid by them. He also did not make any other inquiry in order to corroborate his conclusion. There is no incriminating evidence to show that the assessee has sold the flats at a higher rate. we note that the impounded loose sheet can at the most be termed as dumb document which did not contain full details about the dates, and its contents were not corroborated by any material and could not relied upon and made the basis of addition. Therefore, we observe that ld CIT(A) has rightly held that the jottings on the loose papers found have not been corroborated with any other evidence or the property purchased or invested by the assessee. Therefore, the jottings made without identification of any asset or investment cannot be the basis for making the addition of unexplained investment as done by the assessing officer. Therefore, ld CIT(A) deleted the addition correctly. Unexplained gift - gifts received by the assessee from his brother were accommodation entry - HELD THAT - AO held that the gifts were the accommodation entries without any basis or any investigation to that effect. The assessing officer has not been able to prove that the cash was deposited before the gifts were given in the bank donor to form a reasonable belief that the gifts were accommodation entries. During the appellate proceedings the bank account statement of the donor was produced as part of the submission and it was found that in the said case no any cash was deposited in the bank account of the donor and on the contrary donor had the receipts out of his own sources/businesses. Therefore, the view of the assessing officer that the gifts received by the assessee from his brother were accommodation entry has not been proved. As the donor has given all the required details of his creditworthiness and capacity to give gifts to the assessee and as he has confirmed the gifts u/s 133(6) of the Act before the assessing officer, the gift received cannot be held to be accommodation entry. Accordingly, the addition made by the assessing officer was deleted by ld CIT(A) correctly. Unaccounted investment/ contribution by the assessee for becoming partner of the firm - HELD THAT - The addition made just on the basis of two loose sheets of papers containing the details of offer received but cannot be sustained in the absence of any other corroborative. In view of above facts, ld CIT(A) held that addition made towards the unaccounted/ unexplained investment/ contribution for becoming partner into the said Firm M/s. Shree Kuberji Enterprise and its land cannot be sustained. The incriminating material relied upon by the assessing officer do not suggest any contribution/ investment actually made by the assessee. Therefore, the addition made by the assessing officer was deleted by ld CIT(A) correctly. That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions.

Issues Involved:

1. Addition of Rs. 3,61,00,000/- based on incriminating documents.
2. Validity of unsigned assessment order.
3. Validity of rectification order under section 154.
4. Addition of Rs. 2,10,62,281/- based on loose papers.
5. Addition of Rs. 60,30,000/- towards unexplained gift.
6. Addition of Rs. 3,15,15,350/- for unexplained investment in land.

Summary:

Issue 1: Addition of Rs. 3,61,00,000/- based on incriminating documents

The Revenue's appeal contended that the Ld. CIT(A) erred in restricting the addition from Rs. 3,61,00,000/- to Rs. 12,62,500/- based on the MoU for land at Umarwada. The Tribunal upheld the CIT(A)'s decision, noting that the MoU was unsigned and the transaction was not executed. Therefore, the addition was partly sustained at Rs. 12,62,500/- in the hands of the assessee, proportionate to his share in the partnership.

Issue 2: Validity of unsigned assessment order

The assessee argued that the assessment order was unsigned and invalid. The Tribunal noted that since the entire addition had been deleted, this technical ground was rendered infructuous.

Issue 3: Validity of rectification order under section 154

The assessee contended that the rectification order was invalid as it was passed before the assessment order was delivered. The Tribunal found this issue moot since the main addition had been deleted.

Issue 4: Addition of Rs. 2,10,62,281/- based on loose papers

The Revenue's appeal argued that the addition was based on loose papers found during the search. The Tribunal upheld the CIT(A)'s decision to delete the addition, noting that the loose papers were dumb documents without corroborative evidence.

Issue 5: Addition of Rs. 60,30,000/- towards unexplained gift

The Revenue's appeal contended that the addition was based on unexplained gifts. The Tribunal upheld the CIT(A)'s decision to delete the addition, noting that the gifts were received through banking channels and the donor had sufficient funds and confirmed the gifts.

Issue 6: Addition of Rs. 3,15,15,350/- for unexplained investment in land

The Revenue's appeal argued that the addition was based on a draft partnership amendment agreement. The Tribunal upheld the CIT(A)'s decision to delete the addition, noting that the agreement was not executed and there was no corroborative evidence of the investment.

Conclusion:

All appeals filed by the Revenue were dismissed. The assessee's appeals and cross objections were partly allowed to the extent indicated. The Tribunal emphasized the need for corroborative evidence and the validity of unsigned documents in making additions.

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