2025 (4) TMI 542 - AT - Income Tax

Assessment u/s 153C - Admission of additional ground - HELD THAT - Additions were not made on the basis of incriminating material found during the course of search have been raised for the first time before us and this aspect whether additions have been made on the basis of incriminating materials found during the course of search in our considered view would require further investigation into the facts of the case to assess whether there is any factual force in this ground sought to be taken by the assessee. In our view this additional legal argument would require further investigation into the documents found during the course of search and whether the additions have been made on the basis of such incriminating documents found during the course of search at third party premises. Since this additional ground has been taken before us for the first time and as pointed by us the preceding part of the order that this additional ground would require further enquiry took into the facts the matter is hereby restored to the file of Ld. CIT(A). Addition u/s 69A - addition was confirmed in the hands of the assessee was on the ground that the assessee was unable to show details showing execution of contract with the said party - HELD THAT - It is a fit case where the addition is liable to be deleted. This is for the reason that this amount was advanced to Shri Punabhai Babarbhai was duly reflecting in the books of accounts maintained by the assessee and the fact of refund of such amount back to the assessee was also duly reflecting in the books of account maintained by the assessee. Even as per the cash book available with the assessee the assessee had adequate cash in hand to advance the aforesaid amount to Shri Punabhai Babarbhai. Accordingly even before us during the course of hearing as well the Department has not been able to bring anything on record to controvert these facts we are of the considered view that the addition is liable to be deleted. Credit of set off of Long Term Capital Loss against the additions made under Section 50C - The alternate claim of the assessee with regards to set off of Long Term Capital Loss against the additions made under Section 50C of the Act may be considered and decided by the Assessing Officer in accordance with law.

Summary

ISSUES PRESENTED and CONSIDERED

1. The legality of issuing notice under Section 153C of the Income Tax Act and the validity of the assessment order passed under Section 153C read with Section 143(3) for the assessment year 2016-17.

2. The addition of Rs. 6,62,686/- under Section 56(2)(vii)(b) concerning the difference between the stamp duty value and the actual purchase value of properties for the assessment year 2016-17.

3. The addition of Rs. 1,00,000/- under Section 69A as unexplained money for the assessment year 2018-19.

4. The addition of Rs. 72,325/- under Section 50C concerning the difference between the market value and document value of property sold and the set-off of long-term capital loss for the assessment year 2018-19.

ISSUE-WISE DETAILED ANALYSIS

1. Legality of Notice under Section 153C and Validity of Assessment Order (A.Y. 2016-17)

- Relevant Legal Framework and Precedents: Section 153C of the Income Tax Act allows the issuance of notice to assess or reassess income of any other person if documents or assets seized during a search pertain to them.

- Court's Interpretation and Reasoning: The Tribunal noted that the satisfaction note recorded by the Assessing Officer contained all necessary facts for assuming jurisdiction under Section 153C, and the issuance of notice followed due legal procedure.

- Key Evidence and Findings: Satisfaction notes and the procedural adherence by the Income Tax Officer were pivotal.

- Application of Law to Facts: The Tribunal found no merit in the appellant's contention that the Income Tax Officer was not competent to issue the notice.

- Treatment of Competing Arguments: The appellant's argument that the Income Tax Officer lacked jurisdiction was dismissed.

- Conclusions: The Tribunal upheld the legality of the notice and the assessment order.

2. Addition under Section 56(2)(vii)(b) (A.Y. 2016-17)

- Relevant Legal Framework and Precedents: Section 56(2)(vii)(b) deals with taxation of the difference between the stamp duty value and actual consideration paid for property as income from other sources.

- Court's Interpretation and Reasoning: The Tribunal noted that the appellant did not provide valid reasons to refer the valuation to the Departmental Valuation Officer.

- Key Evidence and Findings: The purchase value of properties was less than the stamp duty value by Rs. 6,62,686/-.

- Application of Law to Facts: The Tribunal deemed the provisions of Section 56(2)(vii)(b) applicable as the consideration was less than the stamp duty value.

- Treatment of Competing Arguments: The appellant's argument regarding the valuation was rejected due to lack of substantiation.

- Conclusions: The addition was upheld, and the appeal was dismissed on this ground.

3. Addition under Section 69A as Unexplained Money (A.Y. 2018-19)

- Relevant Legal Framework and Precedents: Section 69A pertains to unexplained money found in possession of the assessee.

- Court's Interpretation and Reasoning: The Tribunal found that the amount was duly reflected in the books of accounts, and the Department did not challenge the veracity of the accounts.

- Key Evidence and Findings: Ledger accounts showing the advance and its subsequent return were critical.

- Application of Law to Facts: The Tribunal concluded that the addition was unjustified as the transaction was adequately documented.

- Treatment of Competing Arguments: The Department's lack of evidence to counter the appellant's documentation led to the decision in favor of the appellant.

- Conclusions: The addition was deleted, and the appeal was allowed on this ground.

4. Addition under Section 50C and Set-off of Long-Term Capital Loss (A.Y. 2018-19)

- Relevant Legal Framework and Precedents: Section 50C deals with the adoption of stamp duty value as the sale consideration for capital gains computation.

- Court's Interpretation and Reasoning: The Tribunal noted the contradictory observations by the CIT(A) regarding the set-off of long-term capital loss.

- Key Evidence and Findings: The operative part of the CIT(A)'s order allowed the set-off, but the concluding part dismissed the appeal.

- Application of Law to Facts: The Tribunal directed the Assessing Officer to consider the set-off in accordance with law.

- Treatment of Competing Arguments: The Tribunal focused on resolving the contradiction in the CIT(A)'s order.

- Conclusions: The matter was remanded to the Assessing Officer for proper adjudication.

SIGNIFICANT HOLDINGS

- Core Principles Established: The Tribunal emphasized the importance of procedural adherence in issuing notices under Section 153C and the necessity of substantiating claims for valuation disputes under Section 56(2)(vii)(b).

- Final Determinations on Each Issue: The Tribunal upheld the legality of the notice and the assessment order for A.Y. 2016-17, confirmed the addition under Section 56(2)(vii)(b), deleted the addition under Section 69A for A.Y. 2018-19, and remanded the issue of set-off under Section 50C to the Assessing Officer.