2024 (1) TMI 942 - AT - Income Tax

Assessment u/s 153A - Addition u/s 68 - as per AO there was a seizure of incriminating material and failure of the assessee to prove the genuineness of the transaction - CIT(A) deleted addition - HELD THAT - We find that the assessee has offered the income arising from the above agreement reconciled with the reconciliation statement for the respective years. The facilitator agreement is signed by the assessee, which Omkar Developers is part of the regular books of accounts and records of the assessee supporting his Shri Sachin Jagdish Prasad Joshi; A.Y. 2017-18, 19-20 20-21 original return filed. On looking at question which clearly shows that when the assessee was asked about his transactions with Omkar Realtors Pvt. Ltd, assessee explained the nature of transaction and himself, produced the above agreement along with the statement. Assessee categorically stated that he has already included the above sum in his total income. In the remand report submitted by the learned Assessing Officer, it is clear that in the Panchnama, it is stated that no document or accounts were found and seized. Further, the remand report also says that addition is made in the hands of the assessee only based on facilitator agreement and receipt reconciliation. No evidences were found as stated in the order of the learned Assessing Officer, which even remotely suggested that the income offered by the assessee is not correct. Even in the assessment proceedings, no material is brought on record by the learned Assessing Officer. In view of the appellate facts, we do not find any infirmity in the order of the learned CIT (A) in holding that in an unabated assessment order i.e. A.Y. 2017-18, in absence of any incriminating material found during the course of search, no addition could have been made. As following the decision of Honourable Supreme court in case of Abhisar Buildwell Pvt Ltd 2023 (4) TMI 1056 - SUPREME COURT all the grounds of the appeal of the learned Assessing Officer are dismissed. Addition u/s 68 - The paper books filed by the assessee clearly shows that the assessee has discharged his onus by producing confirmation from the parties, agreement of the services rendered, tax invoices, copies of board meetings minutes for the proof of services. Thus, according to him, the assessee has discharged his onus of showing the nature and source of the receipts, if the AO is not satisfied with the same, he should have at least carried out minimum enquiries to throw onus back to the assessee. There is not a single enquiry carried on by the AO to disbelieving the nature and source of the credits shown by the assessee. The LD AO did not even care to examine the parties who have paid these sums to the assessee and whether the above sum is allowed as deduction in the hands of such parties / companies. Naturally, if the claim of revenue is that no services are rendered by assessee to those parties; naturally, such expenses incurred by those parties are also not incurred by them wholly and exclusively for the business purposes of those companies, and it is not allowable to them. In view of this, we find that assessee has discharged its initial onus cast upon him - No merit in the appeal of AO. Decided in favour of assessee.

Summary

Issues Involved:
1. Deletion of addition under Section 68 of the Income Tax Act, 1961 for A.Y. 2017-18.
2. Deletion of addition under Section 68 of the Income Tax Act, 1961 for A.Y. 2019-20.
3. Deletion of addition under Section 68 of the Income Tax Act, 1961 for A.Y. 2020-21.

Summary:

Issue 1: Deletion of Addition for A.Y. 2017-18

The learned Assessing Officer (AO) raised grounds challenging the deletion of an addition of Rs. 13.95 crores under Section 68 of the Income Tax Act, 1961, arguing that the learned CIT(A) erred by not considering the incriminating material seized and the failure of the assessee to prove the genuineness of the transaction. The learned CIT(A) held that the assessment year 2017-18 was a concluded assessment and could not be disturbed without incriminating material found during the search. The facilitation agreement and reconciliation statement were part of the regular records and not incriminating material. The Tribunal upheld the CIT(A)'s decision, finding no infirmity in the order and dismissing the appeal.

Issue 2: Deletion of Addition for A.Y. 2019-20

For A.Y. 2019-20, the AO added Rs. 13.55 crores under Section 68, questioning the genuineness of the facilitation fee received by the assessee. The learned CIT(A) deleted the addition, noting that the income was for services rendered as per an agreement with Omkar Realtors and Developers Ltd. The CIT(A) relied on several documents, including tax invoices and minutes of meetings, to support the genuineness of the transactions. The Tribunal confirmed the CIT(A)'s order, emphasizing that the AO did not conduct any inquiries to disprove the assessee's claims and dismissed the appeal.

Issue 3: Deletion of Addition for A.Y. 2020-21

For A.Y. 2020-21, the AO added Rs. 1.45 crores under Section 68, questioning the receipt from Omkar Realtors Developers Private Limited. The learned CIT(A) deleted the addition, citing similar reasons as for A.Y. 2019-20, and noted that the income was for services rendered per the agreement. The Tribunal upheld the CIT(A)'s decision, reiterating that the AO failed to conduct necessary inquiries to challenge the assessee's evidence and dismissed the appeal.

Conclusion:

The Tribunal dismissed all three appeals filed by the learned Assessing Officer, confirming the orders of the learned CIT(A) for A.Y. 2017-18, 2019-20, and 2020-21, and upheld the deletion of additions made under Section 68 of the Income Tax Act, 1961. The Tribunal emphasized the importance of incriminating material in disturbing concluded assessments and the necessity for the AO to conduct thorough inquiries when challenging the genuineness of transactions.