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TMI Blog2025 (3) TMI 1048X X X X Extracts X X X X X X X X Extracts X X X X .....
Addition u/sec.69 towards payment made as unexplained - HELD THAT:- On perusal of cash flow statement filed by the assessee, AO has recorded a categorical finding that there is time gap of more than 4 years when compared to advance received in the year 2012 and payment made in the year 2016. Even before us, the assessee could not explain the source, except reiterating the very same arguments made before the AO and the CIT(A).
Therefore, we are of the considered view, that assessee could not establish the source of payment to Shri Shoukat Ali from known source of income. CIT(A) after considering the relevant material on record, sustained the addition made by the AO. Thus, we uphold the findings of the learned CIT(A) on this issue and reject the ground taken by the assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... instant appeals before the Tribunal and admit the appeals for adjudication. 3. The brief acts of the case are that, the assessee is an individual and has filed his original return of income for the assessment year 2014-15 on 11.11.2014 declaring total income of Rs. 1,648/- and for the assessment year 2015-16 filed his return of income on 21.08.2015 declaring total income of Rs. 1,01,767/-. A search and seizure operation u/sec.132 of the Income Tax Act, 1961 [in short "the Act"] was carried-out at the residential premises of the assessee on 06.12.2016. Consequent to search, notice u/sec.153A of the Act was issued for assessment years 2011-2012 to 2016-2017 on 22.11.2017 and 11.01.2018. In response to the above notices, Smt. B. Ramadevi, wife of the assessee filed letter dated 22.02.2018 stating that the assessee Sri Banapuram Lakshman Rao was expired on 24.02.2017 and further enclosed copy of Death Certificate issued by the GHMC. Accordingly, the Assessing Officer issued notices u/sec.153A of the Act to the legal heirs of the assessee i.e., Smt. B. Rama Devi, W/o. Sri B. Laxman Rao, Sri B. Pramodh, elder son of Sri B. Laxman Rao and Sr. BV Santosh, younger son of Sri B. Laxman Rao ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A). Before the CIT(A), the assessee challenged the reference to the special auditor as per the provisions of section 142(2A) of the Income Tax Act, 1961 in light of the return of income filed by the assessee and argued that the assessee derived income from house property and other sources and does not maintain books of accounts. Therefore, the Assessing Officer without application of mind as to the nature of books of accounts maintained by the assessee and it's complexity, simply invoked provisions of sec.142(2A) of the Act on 31.12.2018 i.e., on the last date of time limit for completion of assessment to buy time for completion of assessment and, therefore, the reference to special auditor is invalid and consequently, the assessment order passed by the Assessing Officer on 23.08.2019 is invalid and barred by limitation. The assessee had also challenged various additions made by the Assessing Officer towards long term capital gains from the sale of property and unexplained investment etc. 6. The learned CIT(A) after considering the relevant submissions of the assessee and also taking note of provisions of section 142(2A) of the Act and the reasons given by the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mechanically referred the case for special audit, that too on last date of completion of assessment for both assessment years 2014-2015 and 2015-2016 on 31.12.2018 which is nothing, but, a case of attempt made by the Assessing Officer to extend the "due date" for passing the assessment order by way of reference to special audit, but, not a case of voluminous books of accounts maintained by the assessee and complexity involved in the books of accounts maintained by the assessee. Therefore, he submitted that reference to special audit by the Assessing Officer and consequent assessment order passed by the Assessing Officer for both the assessment years 2014-2015 and 2015-2016 dated 23.08.2019 is invalid and, therefore, the extended time for passing the assessment order is not available to the Assessing Officer and consequently, the assessment order passed by the Assessing Officer dated 23.08.2019 for both the assessment years 2014-2015 and 2015-2016 is barred by limitation and liable to be quashed. In this regard, he relied upon various judicial precedents, including decision of Hon'ble Madras High court in the case of SRS Mining vs., Union of India [2022] 141 taxman.com 272 (Mad.). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f business of the assessee, must be satisfied. In other words, before referring to special auditor as per provisions of sec.142(2A) of the Act, the Assessing Officer must come to the conclusion that the books of accounts maintained by the assessee are complex in nature, which needs the assistance of a specialised auditor to determine the correct income of the assessee for the relevant assessment year. Unless the Assessing Officer makes-out a case that, books of accounts maintained by the assessee are complex in nature and, there are multiplicity of transactions in the accounts, he cannot mechanically refer the case for special audit. 11. Further, various Courts have interpreted the term "complexity" in the accounts and the power of the Assessing Officer to invoke the provisions of sec.142(2A) of the Act and as per the judicial precedents, including the decision of Hon'ble Allahabad High court in the case of Swadeshi Cotton Mills vs. CIT [1988] 171 ITR 634 (All.) that the word "complexity" is a word and unless it is difficult to understand cannot be regarded as "complex". The power u/sec.142(2A) of the Act by the Assessing Officer cannot be exercise lightly. It must be based on obj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 018 i.e., almost nearly one year after the date of search. Further, when the assessee has filed letter on 22.02.2018 stating that the assessee [(late) Shri Bhanapuram Lakshmana Rao] was expired, the Assessing Officer has issued 153A notice to legal-heirs on 26.09.2018 after a period of 6 months. Further, although, the assessee has filed her return of income on 17.11.2018, the Assessing Officer has taken-up the case for verification only on 04.12.2018 by issuing a notice u/sec.142(1) of the Act and further, upon careful verification of the notice issued by the Assessing Officer, we find that it is a general in nature calling for various information without any reference to the cash flow statement filed by the assessee and the alleged complex nature in books of accounts maintained by the assessee. Therefore, in our considered view, the reference to the special auditor by the Assessing Officer dated 31.12.2018 i.e., on the last date of time limit available for the Assessing Officer to complete the assessment for both the assessment years 2014-2015 and 2015-2016, in our mind, the only inference that can be possibly taken is, the Assessing Officer has made an attempt to extend the time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer, on the basis of cash flow statement filed by the assessee observed that, the assessee has made payment of Rs. 6 lakhs to Shri Shoukat Ali owner of "Rice Pulling" copper article. The assessee has explained the source of payment, out of advance received from sale of property in the year 2012 and filed relevant cash flow statement before the Assessing Officer. The assessing officer made addition of Rs. 6 lakhs on the ground that, there is a huge gap between the payment made by the assessee on 18.08.2016 and the advance received by the assessee in the year 2012. Although, the assessee has shown some withdrawal from bank account on 02.02.2016, but, that is very meagre amount which is not sufficient to explain payment of Rs. 6 lakhs to Shri Shoukat Ali. Therefore, the Assessing Officer rejected the arguments of the assessee and made addition of Rs. 6 lakhs as unexplained investment u/sec.69 of the Act. 17. In appeal, the learned CIT(A) has confirmed the additions made by the Assessing Officer. 18. The Learned Counsel for the Assessee submitted that the learned CIT(A) has erred in sustaining the additions made by the Assessing Officer towards payment made to Shri Shoukat Ali, eve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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