2021 (9) TMI 289 - AT - Income Tax

Assessment u/s 153A - Addition u/s 68 - assessee has received gift during the year in cash - assessee could not explain the various credits appearing in the bank accounts of the assessee and could not establish the genuineness of the said transactions - HELD THAT - As noted that during the course of assessment proceedings assessee had not filed the requisite details to the satisfaction of the Assessing Officer for which huge additions have been made - As seen that various additions have been made by the AO which amounts to double addition of the same amount i.e. in the hands of the assessee as well as in the hands of two companies and other relatives. The submission of the assessee during the course of search in his statement recorded u/s 132(4) of the Act that he was a moderator or facilitator of accommodation entries and that only commission income should be considered as his income also has not been considered by the lower authorities. Considering all we deem it proper to restore the issue to the file of the Assessing Officer with a direction to grant one more opportunity to the assessee to substantiate his case and decide the issue as per facts and law. AO while deciding the issue shall also keep in mind the decision of the Hon ble Delhi High Court in the case of CIT vs Kabul Chawla 2015 (9) TMI 80 - DELHI HIGH COURT - Appeal of assessee allowed for statistical purposes.

Summary

Issues Involved:
1. Validity of the proceedings initiated under Section 153A.
2. Legitimacy of the search conducted.
3. Additions made under Section 153A in the absence of incriminating material.
4. Addition of ?1,68,42,943/- under Section 68 due to unexplained deposits in bank accounts.
5. Addition of ?24,000/- under Section 68 for unexplained gifts received.
6. Procedural fairness and opportunity of being heard.

Detailed Analysis:

1. Validity of the Proceedings Initiated under Section 153A:
The assessee contested the validity of the proceedings initiated under Section 153A, arguing that the order passed by the AO was without jurisdiction. The Tribunal noted that the AO had issued statutory notices and followed due process, but the assessee failed to comply adequately. The learned CIT(A) also upheld the AO's actions, emphasizing that the appellant failed to substantiate objections regarding the proceedings initiated under Section 153A.

2. Legitimacy of the Search Conducted:
The assessee argued that the search itself was unlawful and invalid. The Tribunal, however, did not find any substantial evidence to support this claim. The AO and CIT(A) both maintained that the search was conducted as per the provisions of the Income Tax Act, 1961, and the documents seized were incriminating.

3. Additions Made under Section 153A in the Absence of Incriminating Material:
The assessee contended that the additions made under Section 153A were invalid as they were not based on any incriminating material found during the search. The Tribunal acknowledged this argument and referenced the decision of the Hon’ble Delhi High Court in CIT vs Kabul Chawla, which states that additions in search assessments must be confined to the seized material. The Tribunal directed the AO to reconsider the additions in light of this judgment.

4. Addition of ?1,68,42,943/- under Section 68 Due to Unexplained Deposits in Bank Accounts:
The AO made an addition of ?1,68,42,943/- under Section 68, as the assessee could not explain the credits in various bank accounts. The CIT(A) upheld this addition, stating that the assessee failed to discharge the onus of proving the genuineness of the transactions. The Tribunal, however, noted that there might have been double additions and that the assessee's role as a facilitator of accommodation entries was not adequately considered. Therefore, the Tribunal remanded the issue back to the AO for a fresh assessment, allowing the assessee another opportunity to substantiate his case.

5. Addition of ?24,000/- under Section 68 for Unexplained Gifts Received:
The AO added ?24,000/- under Section 68 for gifts received by the assessee, as the assessee could not produce the donor or justify the genuineness of the gift. The CIT(A) upheld this addition. The Tribunal found that the assessee failed to discharge the onus under Section 68 and upheld the CIT(A)'s decision, but still remanded the matter back to the AO for a fresh assessment in conjunction with other issues.

6. Procedural Fairness and Opportunity of Being Heard:
The assessee argued that the CIT(A) passed an ex-parte order without giving adequate opportunity for representation, violating the principles of natural justice. The Tribunal acknowledged that the CIT(A) had passed the order due to non-appearance but also noted that the assessee was seeking adjournments. The Tribunal deemed it proper to restore the issue to the AO, directing that the assessee be given another opportunity to present his case.

Conclusion:
The Tribunal restored the issues to the file of the AO for a denovo assessment, directing the AO to grant the assessee another opportunity to substantiate his case and to consider the decision of the Hon’ble Delhi High Court in CIT vs Kabul Chawla. The Tribunal also directed the AO to ensure procedural fairness and to avoid double additions. All appeals filed by the assessee were allowed for statistical purposes.