2024 (7) TMI 25 - AT - Income Tax

Additions against Investment in bank accounts - income from undisclosed sources - A.O. concluded that the assessee s own money has been routed through layering in the bank accounts located in ICICI Bank Junagadh and Dena Bank Mangrol - HELD THAT - Assessee submitted that a statement u/s. 131 of the Act was recorded wherein he was questioned as who operated the list of seven bank accounts. In reply the assessee stated that all such accounts were operated on his advice and suggestions to the respective persons. The assessee further submitted that Shri Amarbhai Bijalbhai Shamra and Shri Varjangbhai Meshurbhai Shamra names appeared in the seven entities. Their respective AO while making assessments u/s. 143(3) r.w.s. 144A and 147 made an addition respectively in their hands. Against the reassessment orders the respective assessee appeals are still pending before Ld. CIT(A) NFAC. Thus the addition made will make double addition on the very same transactions in all the assessees case which is not permissible in law. As the appeals filed by Shri Amarbhai Bijalbhai Shamra and Shri Varjangbhai Meshurbhai Shamra are pending in Faceless Appeal presently before NFAC this issue may be set aside back to the file of Ld. CIT(A) along with the pending appeals thereby correct assessment of additions to be made in the hands of the respective assessee. CIT-DR has no objection in setting aside this issue back to the file of Ld. CIT(A) NFAC along with the other appeals pending before NFAC and also undertaken that necessary appeal details will be furnished from the NFAC portal for disposal of the present appeal. This issue is set aside to the file of Ld. CIT(A) NFAC Delhi to take a final call along with the pending appeals in the case of the Shri Amarbhai Bijalbhai Shamra and Shri Varjangbhai Meshurbhai Shamra. Thus the grounds of appeal raised by the Revenue is allowed for statistical purpose. Addition made on account of investment in flat - CIT(A) deleted the addition made by the A.O. based on presumption and assumption without verification of factual evidences and also against the provision of law. We do not find any infirmity in the order passed by the Ld. CIT(A) and the findings arrived was not distinguished by the Revenue with necessary evidence. Thus this ground no. 2 raised by the Revenue is devoid of merits and the same is hereby dismissed. Investment in gold future contracts - The method of trading in MCX Ltd. is one have to deposit/invest the amount of quantity traded and to settle the contract periodically at the end of the contract credit or debit of difference is made in the account of the respective party. The assessee in this case has not disputed the settlement amount is the amount not invested by the assessee. However the copy of the ledger account provided by MCX Ltd on 25.02.2013 has never been given to the assessee for his rebuttal. Whereas the trading made by the assessee resulted in a loss. Further the Revenue could not place on record any contra findings or evidences as recorded by the Ld. CIT(A). Therefore the findings arrived by Ld. CIT(A) does not require any interference and the grounds raised by the Revenue is hereby dismissed.

Summary

Issues:
Cross appeals by Revenue and Assessee challenging appellate order on undisclosed income additions for AY 2010-11.

Analysis:
1. Revenue's Grounds of Appeal:
- Revenue contested deletion of additions totaling Rs. 2,52,10,390 from undisclosed sources, including bank accounts, flat investment, and gold futures contracts.
- Revenue argued for restoration of full assessment order, challenging CIT(A)'s deletions and application of peak credit for bank account deposits.
- CIT-DR relied on case laws to support restoration of Assessing Officer's additions, emphasizing lack of evidence from the assessee to explain the source of income.

2. Assessee's Grounds of Appeal:
- Assessee raised concerns over non-adjustment of peak amount against declared income, alleging duplication of addition.
- Assessee reserved the right to amend grounds before the hearing.

3. Factual Background:
- Assessee, involved in share sub-broking and jewelry businesses, faced scrutiny due to high-value transactions in bank accounts.
- Assessing Officer added undisclosed income from bank deposits, flat purchase, and gold futures contracts, totaling significant amounts.
- CIT(A) limited undisclosed income additions after considering peak credit, lack of verification, and factual evidence presented by the assessee.

4. Judicial Findings:
- CIT(A) deleted additions based on lack of conclusive evidence, non-verification of facts, and failure to consider relevant submissions by the assessee.
- Revenue's arguments for restoration of full additions were dismissed due to insufficient evidence and reliance on unverified presumptions.
- Assessee's concerns regarding potential double additions in related cases were acknowledged, leading to a remand to CIT(A) for proper assessment.

5. Conclusion:
- Appeals partly allowed, with CIT(A)'s deletions upheld based on lack of substantiated evidence from the Revenue.
- Assessee's issue of peak credit adjustment referred back to CIT(A) for further review, ensuring fair assessment.
- Overall, the judgment balanced the need for evidence-backed assessments while addressing potential procedural errors in the initial order.

This comprehensive analysis highlights the key legal arguments, factual background, judicial findings, and the ultimate resolution of the cross appeals, providing a detailed understanding of the case.