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Monday, 05 December 2016 15:17

Addition of Unaccounted Income u/s 68 Cannot be made on the basis of Unsigned, Undated Document found during Search - Delhi Tribunal Featured

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Samta Khinda vs. ACIT Samta Khinda vs. ACIT Taxpundit.org

Can Addition be made on the basis of Unsigned, Undated Document found during search - Held No

Whether presumption stated u/s. 292C of the I.T. Act is a rebuttal presumption - Held Yes

Can penalty u/s 271AAA be levied where regular assessment u/s 143(3) is made - Held No

 

The AO has proceeded to make an assessment u/s. 143(3) of the I.T. Act. Therefore, the Appellant succeeds on the issue of satisfaction in view of the CBDT’s Circular and also on the merit as the sole addition has been based on the document in which one transaction is allegedly sold without mentioning the date and further no corroborative evidence of any investment made by the assessee was found. Further the document is also unsigned and undated, the addition made in the hands of the assessee of Rs. 96 lacs cannot be sustained. In view of this, we reverse the finding of the Ld. CIT(A) by confirming the addition of Rs. 96 crores in the hands of the assessee under the provisions of section 292C of the I.T. Act, 1961. It is also surprising to note that in the present case the penalty has been initiated under the provisions of section 271AAA of the Act, this relates to the search assessment, but the AO has made assessment under the regular provisions of the I.T. Act

Facts

Facts of the case 1. The grounds raised in Assessee’s ITA No. 336/Del/2012 (AY 2009-10) read as under:-

i) The Learned CIT ( Appeals) has grossly erred in law and on the facts of the case in confirming the addition of Rs. 96 lacs (Ninty Six lacs) in the hands of the assessee as Unaccounted income from- sources in terms of Sec 69/698/69C of the Income Tax Act.

ii) The Learned CIT (Appeals) has grossly erred in law and on the facts of the case in appreciating that there is no corroborating evidence of the figure of Rs 96 lacs mention d on the loose paper.

iii) The Lea ed CIT (Appeals) has grossly erred in law and on the facts of the case in applying Sec. 292C of the Income Tax Act merely because some papers were found from the premises of the assessee while ignoring vital facts and contentions of the assessee.

iv) The Ld. CIT (Appeals) has grossly erred in law and on the facts of the case in confirming the addition of Rs 5.671acs (Five lacs Sixty Seven thousand) in the hands of the assessee as unexplained jewelle:y u/s 698 of the Income Tax Act.

v) The appellant craves leave to add, alter, demand, supplement or raise fresh grounds of appeal, if considered expedient and advisable at the time of hearing of appeal.

It is prayed that the appellant appeal be allowed

2. Original return of income was filed u/s 139 of the Income Tax Act, 1961 on 27.3.2010 at a total income of Rs. 4,27,00,340/-

3. Search and seizure u/s. 132 of the I.T. Act was carried out at the business and residential premises of Nimitaya and Khinda group during which the residential premises of Sh. Sandeep Singh Khinda and his wife Ms. Samta Khinda were also searched on 6.11.2008 wherein certain documents were found and seized

4. In response to the notice issued under section 143(2) and 142(1) of the I.T. Act, 1961 alongwith detailed questionnaire issued on 12.8.2010 the assessee’s AR attended the proceedings and filed the submissions from time to time as called for

5. Thereafter, the AO assessed the income of the assessee at Rs. 6,06,09,770/- u/s. 143(3) of the I.T. Act, 1961 by making the various additions vide his order dated 31.12.2010

6. Aggrieved by the aforesaid order of the Assessing Officer dated 31.12.2010, assessee filed an appeal before the Ld. First Appellate Authority, who vide impugned Order dated 28.11.2011 has partly allowed the appeal of the Assessee and confirmed the addition 96 lacs on account of unaccounted income from undisclosed sources in terms of Section 69/69B/69C of the I.T. Act, 1961 and Rs. 5.67 lacs as unexplained jewellery u/s. 69B of the I.T. Act, 1961

7. Aggrieved with the impugned order of the Ld. CIT(A), Assessee preferred appeal before the Tribunal

8. Tribunal decided in favour of the Assessee

Assessee's Arguments

Taxation of GiftsAt the time of hearing Ld. Counsel of the assessee stated that Ld. CIT(A) was erred in confirming the addition of Rs. 96 lacs in the hands of the assessee of the assessee as Unaccounted income from sources in terms of Sec 69/698/69C of the Income Tax Act. He further stated that there is no corroborating evidence of the figure of Rs 96 lacs mentioned on the loose paper. He further stated that Ld. CIT (Appeals) has also erred in applying Sec. 292C of the Income Tax Act, 1961 merely because some papers were found from the premises of the assessee while ignoring vital facts and contentions of the assessee. It was the further contention of the ld. Counsel of the assessee that the addition of Rs 5.671acs in the hands of the assessee as unexplained jewellery u/s 698 of the Income Tax Act.

Revenue's Arguments

On the other hand, Ld. CIT(DR) relied upon the order of the Ld. CIT(A) and stated that Ld. CIT(A) has passed a well reasoned order which does not need any interference and the same may be upheld

Adjudication

Taxation of GiftsWe have heard both the parties and perused the records, especially the Orders of the revenue authorities and the case laws cited by the Ld. Counsel of the assessee. In this case search u/s. 132 of the Act was conducted at the premises of the assessee at 2, Golden Gate, Westend Greens, Rajokari, New Delhi- 110 038 on 6.11.1008. During the course of search a computer printout page 5 of Annexure I was found and seized from the residential premises of the assessee. The seized paper has been shown is a part of the assessment order. On perusal of the same the AO held that RS. 96 lacs. has been given by Samta Singh to Sudhiksha Singh in cash which has not been recorded in the books of the assessee. the AO has made an addition of Rs. 96 lacs in the hands of the assessee on the basis of the document seized from the premises of the assessee. We find that the seized document does not have any signature of the assessee. However, it is a computer print which has not been used / maintained / operated by the assessee. On perusing the said seized document, it is clear that certain nothings have been made which cannot be said to be the actual transaction. This is only an unsigned /undated loose paper with the Department to substantiate its stand. No cheque transaction has taken place between the Sudhiksha Singh and the Assessee during the financial year 2008-09. The addition has been made merely on the basis of this loose paper without any corroborating evidence and on conjecture and surmises. Therefore, the presumption u/s. 292C of the Act is a rebuttable presumption. The presumption as envisaged in section 292C is limited to the correctness of the documents found at the time of search or survey, but that presumption has not been extended by the statute to be presumed to be the income of the assessee.

In the backdrop of judicial pronouncement, we analyse the facts of the present case. Here a paper is found during the course of search on 6.11.2008 and assessment of search made by the AO u/s. 143(3) of the Act. In fact AO should have proceeded to act u/s. 153A of the Act. AO should also have recorded his satisfaction in this case u/s. 153A of the Act. Even otherwise, the document shown before us does not have the date of transaction where amount of Rs. 96 lakhs is alleged to have been transferred by appellant to other person. Further the AO has also stated that the transaction is also corroborated by the date of cheque transaction. We do not found any cheque transaction where assessee is involved in the present transaction which is allegedly taxed in the hands of the assessee. Much to say that there was no date of cash transaction as alleged then it is surprised how AO has correlated the date with other transaction. Even otherwise when the assessee had denied the transactions, AO should have examined the recipient of search stated in that document and then confronted the assessee with the same. All these exercise have not at all been carried out by the AO. Furthermore, the presumption stated u/s. 292C of the I.T. Act is a rebuttal presumption. Therefore, when the assessee herself denied any such transaction, it cannot be stated that the actual transaction has taken place between the assessee and the person concerned whose name mentioned therein. Further the Circular No. 24 of 2015 dated 31.12.2015 also supports the case of the assessee that satisfaction should have been recorded in the case of the appellant u/s. 153A of the I.T. Act. As the Ld. Counsel for the assessee has also argued that no satisfaction has been recorded. The CBDT Circular which is based on the decision of the Hon’ble Supreme Court of India in the case of CIT vs. Calcutta Knitwears (2014) 43 taxmann.com 446 (SC).

The above Circular states that even if the AO of the search person is one and the same then he should also record the satisfaction. Leaving aside the matter on satisfaction in this case the assessment has also been made disregarding the provisions of the search as provided under Chapter XIV-B of the Act. Once again at the cost of repetition the date of search is 6.11.2008 and the assessment year involves before us is assessment year 2009-10 and further addition has been made on the basis of the document impounded during the course of search at the residence of the assessee. The AO has proceeded to make an assessment u/s. 143(3) of the I.T. Act. Therefore, the Appellant succeeds on the issue of satisfaction in view of the CBDT’s Circular stated above and also on the merit as the sole addition has been based on the document in which one transaction is allegedly sold without mentioning the date and further no corroborative evidence of any investment made by the assessee was found. Further the document is also unsigned and undated, the addition made in the hands of the assessee of Rs. 96 lacs cannot be sustained. In view of this, we reverse the finding of the Ld. CIT(A) by confirming the addition of Rs. 96 crores in the hands of the assessee under the provisions of section 292C of the I.T. Act, 1961. It is also surprising to note that in the present case the penalty has been initiated under the provisions of section 271AAA of the Act, this relates to the search assessment, but the AO has made assessment under the regular provisions of the I.T. Act.

In the background of the aforesaid discussions and respectfully following the precedents as aforesaid, we delete the addition in dispute and allow the ground no. 1 to 3 raised by the assessee.

Cases Referred to

1. Vatika Landbase Pvt. Ltd. – 383 ITR 320

2. Delco India Pvt. Ltd.

3. K.V Lakshmi Savitri Devi vs. ACIT (2012) 148 TTJ 157

4. CIT vs. PV Kalyansundaram (294 ITR 49)

5. CIT vs. Girish Chaudhary (2008) 296 ITR 619 (Delhi)

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Additional Info

  • Order Date: Tuesday, 29 November 2016
  • Court: Tribunals
  • Cout Name: Delhi Tribunal
  • Section: 69, 132, 133, 153, 158, 260, 292C
  • Favouring: Assessee
Read 4785 times Last modified on Monday, 06 February 2017 21:22
Deepak Kumar

A Post Graduate and Chartered Accountant Deepak Sinha is a member of Taxpundit's core team. An analytical, result oriented professional with more than 10 years of combined experience in industry and consultancy.

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