2024 (2) TMI 1334 - AT - Income Tax

Addition based on entries appearing in a diary seized from the assessee - addition as unexplained income of the assessee and also initiated Penalty proceedings u/s. 269SS, 269T and 271AAB - money transaction received for various housing projects - CIT(A) deleted addition - HELD THAT - CIT(A) has already held that the AO did not disprove that the entries in the diary seized are relating to the money transaction received for various housing projects of the Partnership Firms and the assessee was maintaining the accounts of the Partners of the various Firms. AO nowhere in the assessment order rebutted the claim of the assessee with any material evidence. Further the Assessing officer did not give any basis for working out the figure of Rs. 2,53,04,000/- as unexplained cash in the hands of the assessee, as against the workings of Rs. 5,79,61,200/- found in the seized diary. Whereas the assessee produced before us the Return of Income filed by the partnership firm M/s. Yash Buildcon and M/s. Dev Corporation relating to the AY2014-15 and Ld. CIT(A) order in the case of M/s. Yash Buildcon wherein the undisclosed income declared by the assessee. Therefore the ground raised by the Revenue is devoid of merits and the same is liable to be dismissed.

Summary

Issues involved:
The appeal against the appellate order relating to assessment under section 143(3) of the Income Tax Act, 1961 for Assessment Year 2014-15.

Issue 1: Addition of unexplained income based on seized diary entries
- The Revenue made an addition of Rs. 2,53,04,000 as unexplained income of the assessee based on entries in a seized pocket diary.
- The AO disbelieved certain entries in the diary, alleging they were personal transactions of the assessee and not related to the partnership firms.
- The CIT(A) deleted the addition, stating that the AO's findings lacked material evidence and did not disprove the connection of diary entries to the partnership firms.
- The Revenue appealed, arguing that the deletion of the addition was erroneous.

Issue 2: Discrepancy in disclosed income of partnership firms
- The partnership firms, M/s. Dev Corporation and M/s. Yash Buildcon, disclosed undisclosed income in their returns for AY 2014-15.
- The CIT(A) considered the disclosed income of the firms while deciding the penalty, leading to the deletion of the addition in the assessee's case.
- The Revenue contended that the undisclosed income found in the firms' returns did not align with the entries in the seized diary.
- The Tribunal upheld the CIT(A)'s decision, emphasizing the lack of evidence disproving the connection between the diary entries and the firms' transactions.

Conclusion:
The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s decision to delete the addition of unexplained income based on seized diary entries. The Tribunal found no merit in the Revenue's arguments, stating that the CIT(A)'s order was sound and lacked any defects.