2015 (10) TMI 2575 - AT - Income Tax

Addition u/s 69A - addition has been made mainly on the basis of Parvez Sir appearing on the loose paper bearing No. 4 & 5 and cash statement dated 18.11.2006 - Held that - AO had made the addition only on surmise that the impounded papers bearing No. 4 & 5 were containing entries which are dated 11.11.2006 whereas the assessee retired from the firm on 15.11.2006. Assessee in his statement before the Assessing Officer has categorically denied that he is not Parvez Sir as mentioned in the impounded papers in respect of Alliance Hotel. Apart from the above the Assessing Officer did not have any other ground for arriving at the conclusion that the entry Parvez Sir is referring to assessee. It is undisputed fact that Alliance Hotel had carried out reconstruction work which was subsequently turned out to be illegal and was demolished. This fact was further corroborated by the order of the Brihyan Mumbai Mahanagar Palika bearing No. ACA/180/MOHA/ di. 19.03.2009 clearing mentioned that the said firm had constructed unauthorized construction of mezzanine floor and additional room with attached toilet in Alliance Hotel 3rd floor Empire Building. The fact of reconstruction of Alliance Hotel was accepted by Shri Kasan Ghaswala being Managing Partner of the firm. In view of this it is absolutely evident that the Assessing Officer has made the addition on conjuncture and surmises without concrete evidence in his possession. The Assessing Officer of Alliance Hotel did not make any separate addition of Rs. 40, 00, 000/-. In fact in the aforesaid computer sheet did not add this amount to the total income of Alliance Hotel. This sum of Rs. 1.08 Crores included the sum of Rs. 4000, 000/- added by Assessing Officer of the assessee to the total income of the assessee. Thus Assessing Officer of Alliance Hotel was of the opinion that over and above Rs. 2, 62, 40, 000/- no further addition of Rs. 40, 00, 000/- is required to be made. In view of our discussion coupled with the fact that provisions of section 69A has no application on the act of assessee s case therefore the addition of Rs. 40, 00, 000/- made by Assessing Officer under section 69A of the Act was rightly directed to be deleted. Accordingly both the additions of Rs. 2, 62, 40, 000/- plus Rs. 40, 00, 000/- aggregating to Rs. 3, 02, 40, 000/- were rightly directed to be deleted. This reasoned findings of the CIT(A) need not any interference from our side.

Summary

Issues Involved:
1. Addition of Rs. 2,62,40,000 under Section 69A of the Income Tax Act.
2. Addition of Rs. 40,00,000 under Section 69A of the Income Tax Act.
3. Addition of Rs. 10,69,420 under Section 69A of the Income Tax Act.

Issue-wise Detailed Analysis:

1. Addition of Rs. 2,62,40,000 under Section 69A of the Income Tax Act:
The primary issue revolves around the addition of Rs. 2,62,40,000 made by the Assessing Officer (AO) under Section 69A, based on loose papers found during a survey. The AO claimed that the amount was paid to "Parvez Sir," identified as the assessee. The assessee contested this, stating that the term "Parvez Sir" did not refer to him and that he had retired from the partnership before the transactions in question. The CIT(A) deleted the addition, noting that the impounded papers were not in the assessee's handwriting, were found at the premises of Alliance Hotel, and there was no concrete evidence linking the amount to the assessee. The Tribunal upheld this decision, emphasizing that the AO's addition was based on conjecture and lacked concrete evidence.

2. Addition of Rs. 40,00,000 under Section 69A of the Income Tax Act:
The AO also added Rs. 40,00,000, which appeared in the cash statement dated 18.11.2006, to the assessee's income under Section 69A. The assessee argued that this amount was part of the Rs. 2,62,40,000 already discussed and that he was not found to be the owner of any money or valuables. The CIT(A) agreed, noting that the AO of Alliance Hotel did not make a separate addition of Rs. 40,00,000, considering it part of the Rs. 6,88,22,000 already assessed in the hands of Alliance Hotel. The Tribunal upheld the CIT(A)'s decision, stating that the provisions of Section 69A did not apply as the assessee was not found to be the owner of the said amount.

3. Addition of Rs. 10,69,420 under Section 69A of the Income Tax Act:
The AO added Rs. 10,69,420 based on digitalized information found during a survey at Alliance Hotel, indicating cash transactions between the assessee and the hotel. The assessee challenged the reopening of the assessment and the addition itself. The CIT(A) deleted the addition, noting that the AO failed to establish a nexus between the documents and the assessee. The Tribunal upheld this decision, emphasizing that the AO did not provide any evidence linking the notings in the documents to the assessee and that the assessee was no longer a partner at the time of the survey.

Conclusion:
In all three issues, the Tribunal found that the AO's additions were based on insufficient evidence and conjecture. The CIT(A)'s decisions to delete the additions were upheld, and the appeals by the Revenue were dismissed. The Tribunal emphasized the need for concrete evidence to link the impounded documents and amounts to the assessee, which was lacking in these cases.