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Income Tax - Case Laws
Showing 301 to 320 of 173309 Records
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2025 (4) TMI 1221
Unexplained investment in property - Addition u/s 69C - CIT(A) deleted the said addition made u/s 69 of the Act, and remanded the matter to the AO for verification of certain facts and decision afresh in respect thereof - HELD THAT:- As appellant has not brought to our notice, either by way of any informatory application, or in the course of arguments that the appellant has challenged said assessment order dated 2.4.2024 before the Commissioner of Income Tax(A).
In the given situation, when vide impugned order, Learned CIT(A) deleted the first mentioned addition and remanded the matter to the Assessing Officer, and the Assessing Officer passed fresh order as regards the first addition, present appeal as regards said first addition challenging the impugned order passed by Learned CIT(A) is not maintainable.
Addition on profit on sale of land - Nature of land sold - AO concluded that the said transactions of sale of immovable property were having the element of business transaction and adventure in the nature of trade - HELD THAT:- No merit in the contention of learned AR for the appellant that the period for which land is held by the landowner is not a significant factor. We confirm the decision of the Ld. CIT(A) whereby the view of the Assessing Officer has been confirmed that this is a case of an adventure in the nature of trade and the addition as regards profit on sale of land has been sustained.
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2025 (4) TMI 1220
Revision u/s 263 - Addition u/s 68 - as per CIT after perusal of the assessment records noticed that there are huge unsecured loans standing in the books. However, ld. AO has not called for the necessary details to verify the Identity and Creditworthiness of the unsecured loans and genuineness of the transaction
HELD THAT:- The assessee in the instant case has furnished the details of unsecured loans which mainly contains balance of unsecured loans brought forward from preceding years as well as loans taken during the year from the old parties as well as new parties and the interest charged thereon. The assessee has also furnished the confirmation letters which contain the names and addresses of the cash creditors along with their PAN Numbers. Now after receiving these details, there is no further inquiry carried out by the AO. In the assessment order also, the discussion is only with regard to the on-money transactions found during the course of search.
At this juncture, we would like to take note of case of Kale Khan Mohd. Hanif [1963 (2) TMI 33 - SUPREME COURT] where laid down the proposition with regard to examination of nature and source of cash credit u/s. 68 and held that three limbs needs to be examined, namely Identity of the cash creditor, creditworthiness of the cash creditor and genuineness of the transaction.
Now in the instant case, merely confirmation letters have been filed which can at most give the details of Identity of the cash creditor. So far as credit worthiness and genuineness of the transaction is concerned, ld. AO has to call for the details from the assessee about the financial statements including income-tax return and bank statement of the cash creditor and also the nature of transaction as to whether it is in the regular course of business and also to verify that it is a genuine transaction.
In the instant case, from perusal of the assessment order, we find that no such enquiry has been initiated by the AO. Rather it seems that the confirmation letters from the assessee have been treated as full compliance for the explanation of nature and source. It can be rather inferred that only ld. AO has called for the details of unsecured loans but his actual work of investigation and carrying out the enquiry along with issuing of notice u/s. 133(6) or 131 of the Act (if considered necessary) starts only once the information about unsecured loans has been received. But ld. AO in the instant case has not moved a bit and only accepted the details filed by the assessee as complete compliance to discharging of burden by the assessee as contemplated in section 68 of the Act. These facts have been rightly observed by the ld. PCIT and he has therefore exercised the revisionary powers vested u/s. 263 correctly.
Contentions of assessee that assessment order has been framed after taking due approval u/s. 153D of the Act and without revoking the order u/s. 153D of the Act, ld. PCIT erred in invoking section 263 - As gone through the assessment order and notice that ld. AO has nowhere dealt with the issue of unsecured loans. He has only dealt with the issues arising out of the search action and the on-money received by the assessee and therefore we are of the considered view that approval u/s. 153D of the Act has been taken only with regard to the observation of the AO about the issues arising out of the search but since there is no discussion about the unsecured loans issue nor any specific enquiry has been carried out by the AO during the course of assessment proceedings, we find that the approval order u/s. 153D has been issued without taking into consideration the issue of unsecured loans and therefore this contention of the assessee that section 263 of the Act cannot be invoked in case of assessment order passed after approval u/s. 153D of the Act has not merit considering the facts and circumstances of the case.
We accordingly confirm the finding of ld.PCIT directing the AO to examine the issue of unsecured loans in the set-aside proceedings - Appeal of the assessee is dismissed.
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2025 (4) TMI 1219
Unexplained receipts and withdrawals from the bank account - assessee had opted his income u/s 44AD - assessee has declared income under the Income Tax Declaration Scheme, 2016 - HELD THAT:- These amounts in our opinion cannot be considered as business receipts. Since the assessee in the instant case has opted his income u/s 44AD has declared income under the Income Tax Declaration Scheme, 2016 for assessment year 2013-14, therefore, we find some force in the arguments of assessee that the AO was not justified in making the addition and the Ld. CIT(A) / NFAC is not justified in sustaining the addition.
We find in the instant case when the AO is analyzing the bank account of each deposit and the withdrawal, it is not understood as to how he has made the addition of Rs. 9 lakhs received from the assessee himself.
Assessee has already declared the income under the Income Tax Declaration Scheme, 2016 for assessment year 2013-14 - the amount of Rs. 9 lakhs received by the assessee from himself from loan against FD cannot be considered as business income.
The assessee has declared his income u/s 44AD of the Act by estimating the same and this being a very old appeal relating to assessment year 2013-14, we are of the considered opinion that there is no point in restoring the issue to the file of the AO for adjudication of the issue afresh as argued by the Ld. DR since the figures are crystal clear from the bank statement filed by the assessee in the paper book.
Addition made by the Assessing Officer in our opinion is not justified. Accordingly, the order of the Ld. CIT(A) / NFAC is set aside and the AO is directed to delete the addition. Appeal filed by the assessee is allowed.
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2025 (4) TMI 1218
Rejections books of account u/s 145(3) after detecting some discrepancies in the books - addition on GP rate of 12.5% on receipts as appearing in Form 26AS - HELD THAT:- The assessee has in the regular business of contract and all along he has declared the income at GP of 10.64% and net profit of about 5% in the past. Therefore, if there are any discrepancies in the information contained in the Form 26AS, it has to be dealt properly instead of rejecting the books. Further, if there are cash payments, it has to be dealt as per law and not estimate the income. This is not the first year of operation to adopt such pattern of estimation. In our view, the findings of ld. CIT(A) to the extent of estimate the income @ 12.5% of the gross receipt is not proper and it should be based on the past performance and reasonable basis.
We observed that the assessee had declared the net profit @ 5.09% in the previous AY, therefore, it should be 5% and ld. CIT(A) has observed that the books are not complete, so he proceeded to add 2% for that purpose. If that be the case, the proper income estimation should have been at 7% of the gross receipts after reconciliation of books receipt and Form 26AS. Therefore, we are inclined to direct the AO to estimate the income of the assessee @ 7% of the reconciled gross receipt for the year under consideration. Accordingly, the ground no.1 raised by the department is dismissed and ground no 3 raised by the assessee in CO is partly allowed.
Separate addition on account of disallowance of sundry creditor on estimate basis - HELD THAT:- We observed that the tax authorities have rejected the books of account and estimated the income of the assessee. As held by the Hon’ble Allahabad High Court in Banwarilal Basheshwar [1997 (5) TMI 37 - ALLAHABAD HIGH COURT] once the books are rejected and resorted to estimate the income, no further disallowance can be made. Therefore, we do not see any reason to disturb the findings of CIT(A). In the result, ground no.2 raised by the revenue is dismissed.
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2025 (4) TMI 1217
Reopening of assessment u/s 147 - assessee is a non-filer and had sold immovable property, but the capital gain derived on the same is not offered to tax - HELD THAT:- From the reasons recorded by the AO for reopening of the assessment and the facts brought on record by the AO, we find that the very basis for reopening of the assessment is that, the assessee has not filed any return of income disclosing the capital gains arising from sale of immovable property, whereas, the assessee has submitted before the AO that, he has fired his return of income on 22.12.2015 disclosing capital gains arising from sale of property.
Therefore, is undisputedly clear that, the very foundation for which the reopening is based in the reasons recorded by the AO for the reopening of the assessment collapses, therefore, in our considered view, the AO has reopened the assessment on an incorrect assumption of facts even though, the assessee has filed his return of income for the impugned assessment year.
AO went on to record reasons on the fact that, the assessee has not filed his return of income disclosing relevant capital gains. Since the very foundation of reopening of the assessment is collapsed, in our considered view, the subsequent issue of notice u/s 148 and consequent final assessment order passed by the AO u/s 144 rws 144C(13) cannot survive under Law. This legal principle is supported by the decision in the case of Vijay Harishchandra Patel [2017 (12) TMI 865 - GUJARAT HIGH COURT].
AO based his reopening on the sole premise that, assessee has not filed his return of income and disclosed relevant capital gain arising out of transfer of immovable property, whereas, the fact remains that, the assessee had already filed his return of income and disclosed the relevant capital gains arising out of transfer of property.
Therefore, there is no application of mind by the AO to the relevant material before arriving at a conclusion that, there is escapement of income as per the provisions of section 147. Therefore, reopening of the assessment in light of an “invalid reasons” recorded by the AO cannot be sustained in law and thus, we quash the notice issued by the AO u/s 148 - Decided in favour of assessee.
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2025 (4) TMI 1216
Reopening of assessment u/s 147 - As alleged approval was not taken prior to the issuance of the notice u/s 148 - Addition u/s 69A r.w.s. 115BBE - assessee has failed to disclose details of cash deposits during demonetization in its return of income
Assessee submitted that notice is barred by limitation - HELD THAT:- We find that assessment order passed by the assessing officer, should be quashed as the notice under section 148 of the Act, is barred by limitation. That is, on the basis of illegal notice, assessment order should be quashed.
We also note that procedure laid down u/s 148A of the Act is not followed by the assessing officer. The law for reopening of assessment u/s 147/148 of the I.T. Act has been amended w.e.f. 01/04/2021. Since, the notice u/s 148 of the Act, is issued on 01/04/2021, the new provisions are applicable for reopening of assessment as directed by Hon’ble Supreme Court in the case of Ashish Agarwal [2022 (5) TMI 240 - SUPREME COURT]
However, the assessment order u/s 143(3) of the Act has been passed under the old law by following the procedure as stated under the old provisions prior to amendments in the year 2021. Therefore, the AO is failed to follow the procedure as laid down under the new regime of proceedings u/s 148.
The phraseology of amended section 148 makes in unmistakable terms clear that there should be concrete information as defined in Explanation 1 to section 148 of the Act. Such information should be suggestive of income escaping assessment and such information should be objective in nature. In other words, the arguable subjectivity in the pre-amendment provision is given a go-by. For conducting assessment u/s 147 of the Act, there should be not only escapement but also the reason to believe that there is such escapement, the reason being the information itself. Hence, a plausible view could be taken that post-amendment of the provision; the escapement has to be established with concrete information.
Now coming to the assessee`s case under consideration, taking into account above provisions of the Act, we note that books of accounts of firm are duly audited and firm is maintaining regular books of accounts. The reopening is carried out on account of cash deposit in bank. It is established principle that merely because cash is deposited in bank does not lead to escapement of income. The cash deposits are duly recorded in the books of accounts and income from such deposits is duly considered at the time of filing of return of income. Therefore, reopening is conducted merely on account of reason to believe, as against escapement of income with concrete information on hand. The AO has failed to establish with concrete information that there is escapement of income.
Non complaince to procedure mandated under the amended provisions of section 148A - The notice u/s 148 of the Act has been issued after obtaining the approval from JCIT Range 1, Jamnagar. The said fact is stated in notice u/s 148 of the Act. The AO is required to follow the procedure under new law and required to follow the approval as per Section 148A(d) of the I.T. Act, 1961. Therefore, the notice has been issued without obtaining the approval as prescribed under amended provision of section 151 of the Act.
Thus we quash the reassessment order itself, and allow the appeal of the assessee.
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2025 (4) TMI 1215
Addition u/s 68 - subscription received during the year from members of Tree Plantation Scheme namely “Kuber Dhanvarsha" - HELD THAT:- We noticed that assessee has collected various deposits from small time depositors ranging from Rs. 1,250/- to Rs. 10,000/- in various denomination and the addresses were recorded also in very cryptic and in our view, it is very difficult to trace back most of the depositors and from the decision of Additional Sessions Judge, 03/Special Judge Companies Act, Dwarka Courts, New Delhi, they have clearly held that assessee has no intention to return back the funds and from the attitude and behaviour of the assessee, they are not demonstrated that they are inclined to return any deposit.
The assessee nowhere in a position to return any of the deposits with due returns. Therefore, the behavior of the assessee clearly shows that assessee will not return any of the funds to the depositors, therefore, the assessee has taken the deposits with the intention to defraud the innocent depositors and looking at the various small deposits with improper addresses it may lead to suspect that some of the deposits are assessee’s own deposits which were brought into the books.
The whole scheme is to defraud the depositors and the attitude of the assessee clearly shows that the intention is to earn the ill gotten income by fraud means. Therefore, in our view, the whole collection of deposit is nothing but income of the assessee u/s 28 of the Act not under section 68 (since the assessee has submitted the details of the depositors but not proved the genuineness. It is debatable issue.) The ill gotten money also taxable under the Act. Therefore, we are inclined to sustain the additions proposed by the tax authorities and we do not see any reason to disturb the findings of the ld. CIT (A). Appeal filed by the assessee is dismissed.
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2025 (4) TMI 1214
Disallowance of loss booked through trading in penny scrips and commission paid to the broker - As during search and survey proceedings it was established that the penny stocks in which the assessee traded and booked losses have been used for providing bogus LTCG/STCL - CIT(A) deleted addition - HELD THAT:- As the documentary evidences put forth by the assessee could not be rejected without bringing on record any substantial contrary piece of evidence. Moreover, the jurisdictional High Court decisions and as also plethora of co-ordinate benches of Mumbai tribunal support the above observations. We have no hesitation in deleting both the additions. The AO is therefore, directed to allow the business loss claimed by the assessee. Also the addition made u/s 69C w.r.t alleged commission paid being devoid of any basis is also deleted. Accordingly, ground nos. 1 to 3 are dismissed.
Addition made in respect being the amount receivable from National Spot Exchange Limited (NSEL) written off and claimed as Bad Debt - AO observed that as per the information received by from NSEL, the NSEL exchange platform was misused and exploited by unscrupulous brokers and traders to lend huge sums of black money - HELD THAT:- The provisions of law in the matter and find no infirmity in the conclusion drawn by the CIT(A). The disallowance has been made by the AO without any basis and against the well laid down provisions of the Act and also in contraventions of the Board Circular. Similar claim of Bad debt written off has been allowed by the department on similar facts and the circumstances in other assessment years.
Therefore, there is no justification for disallowing the same in the year under consideration. Though the principles of res judicata are not attracted to income tax proceedings since each assessment year is separate in itself, there ought to be uniformity in treatment and consistency when the facts and the circumstances are identical. Order of the AO is silent on this important aspect of the deduction as there is no finding on record showing any justification for adopting divergent approach for the year under consideration. Accordingly, the AO is directed to delete the addition made. The ground of appeal no. 4 above is therefore dismissed.
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2025 (4) TMI 1213
Unexplained money u/s 69A - cash deposit made out of sale proceeds of bullion, gold and silver ornaments, and other precious metals in the bank account - HELD THAT:- Referring to conduct of business by the assessee in peculiar circumstances, reflecting upon pre-ponderance of human probabilities by keeping in juxtaposition, the logistic and operational activities relating to transactions undertaken by the assessee within a short span of 25 days immediately preceding the announcement of demonetisation to justify the deposit of cash in various bank accounts of the assessee in the period of demonetisation. The thoughtful analysis done at both the levels of AO and CIT(A), based on corroborative documentary evidences and financial data furnished by the assessee from its own books of accounts, evidently demonstrates the façade created by the assessee and has been pierced to bring out the true intent and purpose of explaining unaccounted money of the assessee.
Having perused orders of the authorities below, coupled with corroborative documentary evidences placed on record in the paper book, we do not find any reason to interfere with the conclusion drawn by the CIT(A) in respect of deposit of cash in the various bank accounts of the assessee. Accordingly, the addition made u/s. 69A is sustained. Grounds raised by the assessee in this respect are dismissed.
Disallowance of claim of bad debts written off during the year - claim of the assessee is that sales on this account has been duly reported forming part of his total sales turnover for AY 2015-16 - HELD THAT:- We find that claim of any bad debts is to be allowed in terms of section 36(1)(vii) in the year in which such bad debts have actually been written off as irrecoverable in the accounts of the assessee. In this respect, we find support from the decision of TRF Ltd. [2010 (2) TMI 211 - SUPREME COURT] Thus, we delete the addition so made by ld. Assessing Officer in this respect. Accordingly, grounds raised by the assessee in this respect are allowed.
Rejection of book of accounts u/s. 145 - While dealing with issue relating to cash deposits in various bank accounts for which the addition has been sustained, as well as keeping in view the elaborate analysis made by the authorities below, we do not find any reason to interfere with their observations and findings to draw the conclusion for rejection of books of accounts.
GP percentage of 4.76% as taken from the reported GP percentage of the assessee and was reduced by ld. CIT(A) to 0.1%, granting substantia relief - Considering nature of business reported by the assessee, we do not find any reason to interfere with the conclusion drawn by ld. CIT(A) in this respect and therefore uphold the profit estimation by applying percentage of 0.1% as done by ld. CIT(A) on the sales turnover excluding the sales relating to deposit of cash in various bank accounts during the demonetisation period.
Notional commission computed by CIT(A) on both purchases as well as sales - Once the books have been rejected and net profit estimation have been applied, we do not find any justification for the enhancement made by CIT(A) by presuming commission without any corroborative material on record. The enhancement so made by ld. CIT(A) is solely on presumption and assumption, more importantly when net profit estimation has already been sustained in the hands of the assessee. Accordingly, notional commission added in the hands of the assessee is deleted. Grounds taken by the assessee in this respect are allowed.
Applicability of provisions of section 115BBE - Alleged transaction of deposit of cash in the bank account of the assessee is during the period from 09.11.2016 to 30.12.2016. This issue of imposition of increased rate of tax from 30% to 60% by way of applying provisions of section 115BBE is addressed in the case of S.M.I.L.E Microfinance Ltd. [2024 (11) TMI 1444 - MADRAS HIGH COURT] whereby it is held that Revenue is empowered to impose 60% rate of tax on transactions from 01.04.2017 onwards and not prior to the said date and for prior transaction, Revenue is empowered to impose only 30% tax. Accordingly, ground of appeal raised by the assessee on the issue of section 115BBE is allowed.
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2025 (4) TMI 1212
Denying exemption u/s 11 - assessee has not filed details of registration obtained u/s 12AB - The registration application in Form 10A was filed on 26/03/2022, whereas as per the provisions of Section 12A(1)(ac)(i) of the Act, the assessee was supposed to apply within three months from the 1st day of April, 2024. Since the application was not made in time, the approval was given only from 05/04/2022
HELD THAT:- We find that the CBDT, vide Circular No. 16/2021 has extended the date for filing Form 10A to 31/03/2022 and as the application was filed on 26/03/2022, the same was within time as per Circular of the CBDT.
In our considered view, by not considering the extended date, the order processing the return of income had a rectifiable error which was denied u/s 154 of the Act and the NFAC also fell into the same error in not considering the Circular of the CBDT extracted elsewhere. Since the assessee has filed the application on or before the extended date as per the CBDT Circular, the AO is directed to allow the exemption for AY 2021-22 also. Appeal of the assessee is allowed.
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2025 (4) TMI 1211
Rejecting the registration u/s 12A - CIT(E) rejected the application due to "non- compliance" of the notice - Denial of principles of natural justice rejecting the application for registration u/s 12AA.
HELD THAT:- CIT(E) after considering the preliminary submission had called for an additional evidence and complying documents inter-alia, copy of MOA, purpose of collecting fees from the students, financial statement for F.Y. 2022-23 along with annexures, copies of bills, invoices etc. which the appellant meritoriously failed to make good by the due date, consequent to which, the CIT(E) without further opportunity rejected to grant 12A registration to the appellant trust.
Hon’ble Supreme Court in its landmark decision rendered in “Maneka Gandhi Vs UOI” [1978 (1) TMI 161 - SUPREME COURT] has laid down that, the rule of fair hearing is necessary before passing any order, the opportunity of being heard should be real, reasonable and effective and same should not be for namesake, it should not be a paper opportunity, the doctrine of natural justice is a facet of fair play in action and no person shall be saddled with a liability without being heard.
Ostensibly, the preliminary submission of the appellant did not productively prove its eligibility and claim for grant of approval for 12AA, as a consequence the Ld. CIT(E) requisitioned additional documents by a notice dated 15.01.2024 and in the event of failure, without further opportunity to the appellant, rejected the application in violation of principle of natural justice as commanded by proviso to section 12AA(1)(b)(ii) of the Act. Thus action of the Ld. CIT(E) suffered from sufficiency of reasonable opportunity to the appellant to refute the rejection vis-à-vis to comply with the requirements sought.
Thus for the reason, without commenting on the merits of the case, we deem fit to remand the matter back to the file of Ld. CIT(E) for denovo adjudication according reasonable opportunity to refute the rejection vis-à-vis to comply with the requirements sought. Appellant is also directed to remain vigilant and make satisfactory compliance to the notice(s) of hearing issued by ld.CIT(E) and it should refrain from taking adjournments unless otherwise required for reasonable cause. Effective grounds of appeal raised by the appellant are allowed for statistical purposes.
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2025 (4) TMI 1210
Addition made u/s 56(2)(x) - variance between the Stamp Duty Value of the Property purchase and Purchase consideration - AO regarding the assessee’s half-share, calculated as 5% of the consideration - whether the assessee is entitled to the benefit of the tolerance limit of 6.56%? - HELD THAT:- We find that the amendment in question is curative in nature and is retrospectively applicable for impugned assessment year. Consequently, the assessee is eligible for the 10% tolerance limit under section 56(2)(x)(b)(B) of the Act and the impugned addition is deleted.
Furthermore, AO has adopted a view that limits the tolerance threshold to 5% of the total consideration. This view is wholly unjustified and contrary to the correct interpretation of section 56(2)(x)(b)(B) of the Act. Therefore, the addition made on this account is directed to be deleted.
Appeals filed by the assessee are allowed.
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2025 (4) TMI 1209
Exemption u/s 54 - Long Term Capital Gain arising on the sale of his old residential house - claim denied as sale consideration of the old residential house was deposited in the assessee’s bank account was neither utilized/used by him for purchase of the new residential property nor deposited by him till the end of the financial year relevant to AY 2016-17 in the “Capital Gains Account Scheme” (CGAS) as was required per the mandate of law to claim exemption of the LTCG arising on sale of the old residential house
HELD THAT:- As the assessee had within the specified time period made an investment in the aforesaid new residential property, viz. Villa No. 53 much in excess of the sale consideration of Rs. 72.54 lacs of his old residential house, therefore, we find no reason for declining of his claim of exemption under Section 54 of the Act by both the lower authorities.
Alternatively, even if the CIT(A)’s view that the assessee had made investment in construction of the new residential property i.e., Villa No. 53 (supra) is to be accepted, then also there could have been no justification in declining his claim for exemption under Section 54 of the Act. Ostensibly, the CIT(A) had declined to consider the investment that was made by the assessee in the new residential property, viz. Villa No. 53 (supra), but we are unable to concur with the same.
As decided in H.K. Kapoor [1997 (8) TMI 44 - ALLAHABAD HIGH COURT] exemption of capital gains could not be refused to the assessee simply on the ground that the construction of the new residential house had begun before the sale of the old residential property.
Second issue i.e., for availing the benefits under Section 54 of the Act, is it necessary that the sale proceeds of the old residential house must be used in the purchase or construction of the new residential house, we do not find any substance in the view taken by the AO which thereafter had impliedly been approved by the CIT(A). On a perusal of Sec. 54 of the Act, it transpires that the same contemplates appropriation of the ‘capital gain’ arising on the sale of the old residential property towards purchase or construction of the new residential property. However, nothing can be gathered therefrom that it is necessary that the sale proceeds of the old residential house must be utilized by the assessee for the purchase or construction of the new residential house. Our aforesaid view is fortified by the judgment of Moturi Lakshmi (Ms.) [2020 (9) TMI 416 - MADRAS HIGH COURT] as observed, that Section 54F of the Act nowhere envisages that the sale consideration obtained by the assessee from the original capital asset is mandatorily required to be utilized for the purchase or construction of a house property.
Thus not being able to persuade ourselves to concur with the view taken by the lower authorities, we set-aside the order of the CIT(A) and direct the A.O to allow the assessee’s claim for exemption under Sec. 54.
We are of the affirm conviction that as the assessee had based on sale of his old residential property, viz. House No. 10-3-734/3 situated at Vijaynagar Colony, Malleapally, Hyderabad had made an investment towards purchase of the new residential house property, viz. Villa No. 53 (supra), therefore, no infirmity arises from the claim of exemption that was raised by him under Section 54 - Decided in favour of assessee.
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2025 (4) TMI 1208
Bogus purchases - AO concluded that the assessee firm has indulged in inflating the purchases through bogus bills - AO has made the impugned addition by placing reliance entirely on the report given by the investigation wing - HELD THAT:- AO merely placed reliance on the report prepared by the Investigation wing. He did not find fault with any of the documents furnished by the assessee to prove the purchases. He also did not bring any material on record to prove that these purchases were bogus in nature.
Report of the investigation wing will trigger further probe and it alone cannot be the basis for making addition. Admittedly, in the instant case, the AO did not carry out any enquiry in this case.
As held in Ashok Kumar Rungta [2024 (10) TMI 766 - BOMBAY HIGH COURT] “merely on suspicion based on information received from another authority, the assessing officer ought not to have made the additions without carrying out independent enquiry and without affording due opportunity to the respondent - assessee to controvert the statements made by the sellers before the other authority”. Hence,we are of the view that the AO was not justified in disallowing the entire purchases treating them as bogus on the basis of his suspicion and surmises. Decided in favour of assessee.
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2025 (4) TMI 1207
Rejection of bad debts claimed - AO took the view the write off of loans as bad debts is a colourable device/sham transaction adopted by the assessee to create loss with the purpose of setting off the same against the Long term capital gains earned by it - HELD THAT:- The first reason cited by the assessee is that the son-in-law of the main director of the assessee company is one of the common directors in both the borrower companies referred above. We notice that the assessee has explained that the above said son-in-law is not a share holder in both the borrower companies. Hence, it cannot be said that the son-in-law had any interest in the borrower companies. Hence, in our view, this reason cannot be a ground to suspect the claim of the assessee.
Next reason cited by the AO is related to assignment agreements found during the course of survey operations - AO has also referred to an opinion given by a legal consultant, wherein he has expressed the view that the transfer of shares has taken place on 1.4.2015 and hence the capital gains will be taxable in AY 2016-17. It so happened that the agreement for sale of shares was entered in March, 2015, but the actual transfer took place on 1.4.2015. Hence, the assessee obtained a legal opinion. We notice that the AO has linked the Assignment agreements with the legal opinion given by the legal consultant and accordingly took the view that the writing off of bad debts was purposely shifted to AY 2016-17 in order to set off the same against the capital gains. However, we notice that the AO has rejected explanations given by the assessee without examining it at all, i.e., the AO could have conducted enquiry with the Assignees in order to find out the veracity of the explanations given by the assessee, which is not justified. Accordingly, we are of the view that the AO has come to such a conclusion only on presumptions and surmises.
In our view, the above said observations of the AO are not required to be considered, since the claim of bad debts is allowed u/s 36(1)(vii) of the Act, wherein the requirement is that the debt should be written off as bad in the books of accounts and further the conditions prescribed in sec.36(2) should be fulfilled, i.e., there was no necessity for the assessee to establish that the debt has really become bad.
Thus, we are of the view that the various reasoning given by the AO in support of his view that the writing off bad debts was a colourable device or sham transaction are based upon sound reasoning, but based upon on surmises and conjectures. Further, the AO has arrived at such a conclusion without conducting enquiry of any type or bringing any material on record to support his view. We noticed that the various reasoning given by the AO will not be relevant for allowing deduction u/s 36(1)(vii) of the Act. We have also seen that the assessee is eligible to claim deduction of bad debts u/s 36(1)(vii) of the Act and also fulfilled the conditions prescribed u/s 36(2) of the Act.
Accordingly, we hold that the bad debts claimed by the assessee cannot be rejected. Accordingly, we set aside the order passed by the Ld CIT(A) on this issue and direct the AO to delete the disallowance of bad debts claimed by the assessee. Appeal filed by the assessee is allowed.
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2025 (4) TMI 1206
Reopening of assessment u/s 147 - approval of the authority specified under section 151 accorded or not? - scope of New Regime - HELD THAT:- From the observations made by the Hon’ble Apex Court in Rajeev Bansal’s case [2024 (10) TMI 264 - SUPREME COURT (LB)] it transpires that though prior approval u/s 148A(b) and 148(d) was waived in terms of decision in the case of Ashish Agarwal case, for issuance of notice u/s 148A(a) and 148 on or after 1-04-2021, prior approval was required to be obtained from the appropriate authority specified u/s 151 of the New Regime.
As per report from the AO, the assessee was issued notice under section 148 of the Act after obtaining sanction under section 151 from the JCIT, Range-4, Jaipur; that subsequently, an opportunity of being heard as per provisions of section 148A(b) of the Income Tax Act, 1961 was provided to the assessee with prior approval from the competent authority vide DIN and Notice dated 25.5.2022.
In said report, the Assessing Officer has further reported that the competent authority for approving the proposal order u/s 148A(d) was Pr.CIT-2, Jaipur. In this way, the Assessing Officer has admitted the case of the assessee that for the relevant Assessment Year 2016-17, Pr. CIT-2 Jaipur was the competent authority for the purposes of sanction under section 151 of the Act.
Copy of approval for passing order under section 148A(d), dated 22/25.7.2022, as per directions of Hon’ble Apex Court would reveal that said order was passed with the approval of the Principal Commissioner of Income tax-2, Jaipur. This fact also finds mention in Order under section 148A(d) of the Act issued on 27.7.2022.
Thus, we hold that the notice under section 148 of the Act is invalid in the eye of law. Decided in favour of assessee.
Reopening of assessment on bogus share transaction - company-YICL had weak financial statement; that the movement of the share price was not correlated and not supported by its financial statement, which revealed that the prices were rigged and manipulated by way pre arranged or artificial transaction to book bogus LTCS, and that the LTCG claimed by the assessee from the said scrip was only in order to evade taxation, on the basis of accommodation entries made by the above said company - HELD THAT:- AO had already called upon the assessee from time to time to furnish information, documents and details in respect of said transactions with YICL, before passing the previous assessment order dated 11-12-2018.
It is well settled that where during assessment proceedings, the assessee company furnished entire material related to purchase and sale of shares and capital gains/ loss made therein and the AO having considered the details, took a conclusive view, reassessment proceedings which are initiated u/s 147 by way of reconsideration of the material already available at the time of original assessment proceedings, would amount to change of opinion.
Thus, we find that NFAC vide impugned order was fully justified in allowing Ground No.7 raised by the assessee in the appeal challenging assessment order while concluding that reopening in subsequent reassessment u/s 147 read with Section 144B of the Act was not valid. Decided against revenue.
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2025 (4) TMI 1205
Assessment order passed u/s 153A - incriminating material discovered in the course of search or not? - HELD THAT:- As observed that there does not appear to be any reference to any incriminating material found in the course of search of the assessee per se. The alleged incriminating material referred are primarily in the nature of statement of third person prior or subsequent to search/survey proceedings. Guided by the principles laid down by the Abhisar Buildwell (P.) Ltd. [2023 (4) TMI 1056 - SUPREME COURT] Anand Kumar Jain (HUF) [2021 (3) TMI 8 - DELHI HIGH COURT] and Vikram Dhirani [2024 (8) TMI 1503 - DELHI HIGH COURT] we find force in the legal plea placed on behalf of the assessee. Hence, in the absence of any incriminating material in an unabated assessment, additions/ disallowances made by the AO in all captioned appeals requires to be quashed.
Propriety of approval u/s 153D to the respective draft assessment orders placed before him by the AO - The approving authority has granted a mere 'technical approval' by his own express admission in departure to a substantive approval expected in law. Curiously, the Addl.CIT has recorded that he has granted approval on the basis of submission of the AO that proper opportunity has been provided to the Assessee; all the issues have been examined by him i.e. the AO and relevant copies of seized documents have been verified by him i.e. the AO before passing the draft order. The Addl. CIT thus effectively claimed that he has not pursued the relevant underlying material and proceeded on dotted line. Such an act cannot be regarded as effective discharge of duty of supervisory nature.
Manifestly, the Addl. CIT, without any consideration of factual and legal position in proposed additions and without the availability of incriminating material collected in search etc. has buckled under statutory compulsion and proceeded to grant a symbolic approval to meet the statutory requirement. This approach of the Addl. CIT has ipso facto rendered the impugned approval to be a mere ritual or an empty formality to meet the statutory requirement and is thus incapable of being sustainable in law.
The cryptic conclusion drawn by the CIT(A) is bereft of any plausible reasons whatsoever and thus cannot be reckoned to be a judicial finding on the point. The observations so made are not tenable in law.
We are unhesitatingly disposed to hold that the integrity and propriety of impugned assessments under captioned appeals based on such combined approval memo u/s 153D in question cannot be countenanced in law. Assessee appeal allowed.
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2025 (4) TMI 1204
Withdrawal of the exercised option u/s 115BAC - assessee had decided to opt for the new regime of taxation u/s 115BAC of the Act as applicable for assessment year 2022-23 and accordingly had filed Form No.10-IE but assessee filed his return of income under the old regime of taxation - HELD THAT:- It is an admitted fact that although the assessee had originally exercised the option for taxation u/s 115BAC by filing the Form No.10-IE on 18.07.2022, however, the assessee has filed the return of income on 20.07.2022 declaring total income under the old regime of taxation.
It is also an admitted fact that the return was processed on 07.08.2023 which is much after the date of filing of the return. It is not a case that the assessee has filed Form 10-IE and also filed the return under the new tax regime and thereafter filed a revised return withdrawing the option which according to us is not permissible in the said previous year and the assessee can change the option only in the next year.
However, in the instant case, the assessee after filing the Form 10-IE has opted for the old regime of taxation in the return filed. Therefore, we are of the opinion that the assessee cannot be forced to adopt for the new regime. We, therefore, find merit in the arguments of assessee that the Ld. Addl./JCIT(A) was not justified in upholding the action of the CPC in processing the return of income determining the total income under the new regime of taxation. Accordingly, the order of the Ld. Addl./JCIT(A) is set aside and the grounds raised by the assessee are allowed.
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2025 (4) TMI 1203
Special Audit - Direction of AO to get the accounts audited u/s 142(2A) at the fag end of the assessment proceedings - HELD THAT:- We find that the assessee vide its reply dated 24/12/2019 though agreed that the examination of money trail is a complex investigation, however submitted that there are no complexities in its accounts which will require Special Audit. The assessee further submitted that it has provided various details to the Department during the ongoing assessment proceedings and has been fully co- operating with the Department.
Accordingly, vide its reply the assessee prayed that no Special Auditor should be appointed. We find that after taking note of the assessee's submission, AO passed the necessary directions on 27/12/2019 for audit of the accounts of the assessee u/s 142(2A).
From the careful perusal of the aforesaid documents, forming part of the paper book, we find no merits in the submission of the assessee that the direction to get the accounts audited u/s 142(2A) is mere tactics to extend the period of limitation and we find the same to be necessary due to multiplicity of transactions and complexities involved in assessee's accounts. Accordingly, ground no.2 raised in assessee's appeal is dismissed.
Addition u/s 68 - cash deposits and credit transactions - HELD THAT:- As undoubtedly there may have been discrepancies in maintaining KYC documentation, account opening form, and violation of society bye-laws, however, the same does not substantiate any addition in the hands of the assessee under the Act, and for the same the remedial action needs to be taken in some other statute/regulations. Accordingly, in absence of any material to show that the cash deposited in the accounts of the members, maintained with the assessee society, belongs to the assessee, we do not find any basis in sustaining any addition in the hands of the assessee u/s 68. Accordingly, the addition made u/s 68 and also the commission income estimated by learned CIT(A) are directed to be deleted.
Disallowance of provision for standard assets - HELD THAT:- As undisputed that the assessee is a co-operative credit society and is a registered Multi-State Co-operative Urban Credit Society established under the Multi-State Co-operative Societies Act, 2002 and is involved in the facility of providing credits and other banking facilities to its members. Therefore, assessee does not fall within the meaning of any category of assessee considered u/s 36(1)(viia). Accordingly, we find no infirmity in the findings of the CIT(A) in upholding the disallowance of provision for standard assets. As a result, ground raised in assessee's appeal is dismissed.
Disallowance of prior period expenses - HELD THAT:- We find that it is a settled proposition that expenditure shall be allowable in the year of crystallisation of its liability, even though the said expenditure was related to an earlier period. The said expenditure is treated as current year's expenditure in the year of crystallisation and accordingly allowable as deduction in that year.
In the present case, we find that the details of prior period expenses have not been examined in order to find out the year of crystallization of the liability. Accordingly, we deem it appropriate to restore this issue to the file of the jurisdictional AO for de novo adjudication and to determine the allowability of expenses by applying principles as discussed above. With the above directions, ground raised in assessee's appeal is allowed for statistical purposes.
Disallowance u/s 40A(3) - assessee has paid rental expenses to the parties, in excess of the prescribed limit - HELD THAT:- There cannot be any dispute regarding the identity of payee, i.e. the landlord members. Further, it is also not disputed that the payment was made on account of rent as per the rent agreement. There is also no allegation that the assessee has not deducted applicable TDS while crediting the rental payment to the account of the landlord members. Considering the fact that the activities of the assessee are akin to banking activities; and the landlords have opened savings/current accounts with the assessee, we are of the considered view that the rent payments so credited to the accounts of the landlords do not violate the objective of introducing section 40A(3) - Therefore, the disallowance of rental payment u/s 40A(3) of the Act is directed to be deleted.
Disallowance of deduction u/s 80P - HELD THAT:- In the present case, it is evident from the record that the lower authorities also alleged that the assessee has earned income from providing services to non-members, i.e. by issue of "at par cheques" in lieu of cash. However, it is pertinent to note that the demand draft or at par cheques are also issued at the instructions of the member and the amount is debited/credited from/to the member's account. Therefore, it was a transaction which was carried out at the behest of the member in the accounts of the member maintained with the assessee society. Thus, we are of the view that the same cannot be treated as providing services to non-members.
We find that the assessee has exclusively made the transactions in the accounts of its members, i.e. ordinary members and nominal members, and the issuance of "at par cheques" in lieu of cash was also at the behest of the members of the society. Hence the assessee society, herein, is eligible for deduction u/s 80P.
Disallowance of provision for gratuity - HELD THAT:- As in the present case, there is no material available on record to show that the provision was made by the assessee for payment of a sum by way of contribution towards "approved gratuity fund". Therefore, section 40A(7)(b) of the Act is not applicable and under section 40A(7)(a) of the Act no deduction is allowable in respect of any provision made by the assessee for payment of gratuity. Further, under section 43B of the Act, the sum payable by the assessee as an employer by way of contribution to gratuity fund is allowable upon actual payment, therefore, even under section 43B of the Act the provision is not allowable. However, we direct that the gratuity payment be allowed in the year of payment. As a result, ground raised in assessee's appeal is dismissed.
Addition u/s 68 - amount receivable from banks where appellant-society has maintained their bank accounts - HELD THAT:- It is not understandable as to how the assessee has credited "Reserve account". It is also not clear as to whether the assessee has claimed any deduction of the amount so illegally embezzled from the bank account. If that be the case, the recovery of part or whole of the amount would be taxable. On the contrary, if the assessee has not claimed any such deduction, then the recovery of part of whole of the amount is not taxable. However, we notice that the assessee has not clearly explained the nature of journal entries passed by it in the books of account, whether it has claimed any deduction of such embezzled amount etc. In the absence of any such details, we are also unable to express any concrete view on this matter.
Accordingly as noted in the foregoing paragraph, we deem it appropriate to restore this issue to the file of the jurisdictional AO for de novo adjudication, as per law and in terms of legal principles explained above, after examination of the details filed by the assessee. The assessee shall be at liberty to furnish further documents in support of its claim. The AO is also directed to call for any other information for complete adjudication of this issue.
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2025 (4) TMI 1202
Addition u/s 68 - unexplained capital and unexplained cash creditors - assessee failed to prove the identity and capacity of the depositors and the genuineness of the transaction with conclusive evidences - CIT(A) deleted addition - HELD THAT:- All the evidences were confronted to the AO who, CIT(A) noted, did not dispute the veracity or the authenticity of the evidence, and therefore on a holistic consideration of the issue, CIT(A) deleted the addition made u/s 68. We have noted that the facts and circumstances relating to the impugned addition are identical to that in AY 2004-05 in the case of the assessee.
DR has been unable to point out any distinction in facts or even on law on this aspect before us. We, therefore, concur with the assessee that the issue stands squarely covered by the order of the ITAT in the case of the assessee for AY 2004-05, following which we hold that the additions made u/s 68 pertaining to unexplained capital and pertaining to unexplained cash credits have been rightly deleted by the ld. CIT(A) after appreciating all evidences filed by the assessee.
Addition made of unexplained investment in jewellery of 496 gms found at the residence of the assessee which was attributed as belonging to the maid servants of the assessee and the jewellery attributed as belonging to the family over and above that allowed by the AO - CIT(A) deleted addition - HELD THAT:- CIT(A) has found the explanation to be plausible. We do not find any infirmity in this finding of the ld. CIT(A). We agree with the CIT(A) that it is not unusual for the ladies of the house to be generally aware of the status of the jewellery and being in the habit of safe keeping the jewellery of others and the men being generally unaware in respect of these matters. Also pertinent is the fact noted by the CIT(A) that the spouse of the assessee identified all the items of the jewellery belonging to the maid servants even at the time of search, which was indicated from the relevant panchnama. In view of the same, we see no reason to interfere in the order of the ld. CIT(A) treating the jewellery of 496 gms, valued at Rs.2.57 lakhs, as duly explained. The order of the ld. CIT(A) deleting the addition, therefore, of Rs.2.57 lakhs is confirmed.
As for the deletion of part of addition of jewellery found in the locker amounting to Rs.2,52,824/-attributing it as belonging to the family in line with the Board’s guidelines and judicial decisions in this regard considering the status, community, customs of the assessee/family.
DR was unable to controvert the applicability of Board’s guidelines and judicial decisions to the jewellery found in the locker to the tune of 574.3 gms. The order of CIT(A), therefore, deleting the addition of unexplained jewellery found in the locker to the tune of Rs.2,52,824/- is, therefore, confirmed. Ground of Appeal No.3 of the Revenue is accordingly dismissed.
Disallowance of interest for non business use of borrowed funds without considering the fact that borrowed funds were used for non business purposes - CIT(A) deleted addition - HELD THAT:- The relevant portion of the order was pointed out to us wherein the ITAT had noted the fact of sufficiency of own funds for making the impugned advance and the proposition of law settled in this regard that no disallowance is called for where sufficient own interest free funds are available for making interest free advances, as laid down in the case of CIT Vs. Reliance Industries Ltd [2019 (1) TMI 757 - SUPREME COURT] DR was unable to distinguish the decision of the ITAT in AY 2004-05 – both the facts and on law. In view of the same, we concur with the ld. Counsel for the assessee that the issue stands squarely covered by the order of the ITAT in the assessee’s own case for AY 2004-05, following which we hold that the disallowance made by the AO of interest expenses amounting to Rs.4,48,988/- has been rightly deleted by the CIT(A) after appreciating all evidences filed by the assessee.
Undisclosed income from construction business of Sahjanand complex - proper profit on work in progress was not disclosed by the assessee particularly when the stock register for consumption of the material was not maintained - CIT(A) held that the AO was not justified in rejecting the audited books of accounts of the assessee since he had failed to point out specific deficiencies which were fatal in deducing the profits correctly - HELD THAT:- We find that the ITAT noted the basis with the ld. CIT(A) for finding anomaly in the books of accounts of the assessee to be entirely baseless and confirmed the order of the ld. CIT(A) noting that not a single anomaly was noted by the AO in the financial figures reported. DR was unable to distinguish the decision of the ITAT in AY 2004-05 both the facts and on law and, therefore, the issue raised in Ground No. 5 by the Revenue stands covered by the order of the ITAT in AY 2004-05, following which we uphold the order of the ld. CIT(A) deleting the addition made by the Assessing Officer on account of undisclosed income from construction business of Sahjanand complex.
Suppression of receipts - HELD THAT:- Before the CIT(A), the assessee, however, demonstrated that the amounts were received from the members over a period of three years and even filed confirmation from some members with regard to the same. The ld. CIT(A) has gone through all these details and given a finding of fact that the assessee has in fact recorded more receipts as compared to that noted in the documents seized during survey. DR was unable to refute the factual finding of the CIT(A). We have no hesitation, therefore, in agreeing with the ld. CIT(A) that the Assessing Officer’s findings of suppressed sales by the assessee to the tune of Rs.2.08 crores was based on incomplete appreciation of facts. The order of the ld. CIT(A) deleting the addition made is, therefore, upheld.
Unexplained investment in purchase of land - entries recorded on seized document as well as the statement of Shri Vikas A. Shah who was one of the parties to the impugned transaction - CIT(A) deleted addition - CIT(A) deleted the addition noting that the Assessing Officer has made these additions based on statement of Shri Vikas Shah and documents found from him which were never confronted to the assessee - HELD THAT:- DR has been unable to point out any distinction in facts or even on law on this aspect before us. We, therefore, concur with the assessee that the issue stands squarely covered by the order of the ITAT in the case of the assessee for AY 2004-05, following which we hold that the addition made by the Assessing Officer on account of unexplained investment in purchase of land from Shri Vikas Shah has been rightly deleted by the ld. CIT(A) after appreciating all evidences/submissions filed by the assessee. Ground No.7 raised by the Revenue is, therefore, found to be devoid of any merit and is accordingly dismissed.
Unexplained investment - HELD THAT:- We concur with the ld. Counsel for the assessee that the issue stands squarely covered by the order of the ITAT in the assessee’s own case for AY 2004-05, following which we uphold the order of the ld. CIT(A) restricting the addition of Rs.17,23,126/- to Rs.14,90,312/- and Rs.8,44,032/- to Rs.5,61,655/- in respect of unexplained investment in Swaminarayan Residence and Hotel Nilkanth respectively. Accordingly, ground raised by the Revenue is dismissed.
Addition made on the basis of a seized document considering the entries on the document as well as the findings of the AO - CIT(A) deleted addition - HELD THAT:- DR has been unable to controvert the fact noted by the ld. CIT(A) that the confirmation filed by Jasubhai who acknowledged the document as pertaining to him for work carried out in his flat by his society and having nothing to do with the assessee, was not refuted by the AO in the remand report. In view of the same, we see no reason to interfere in the order of the ld. CIT(A) deleting the addition made to the income of the assessee as there was nothing in the document attributing it to the assessee in any way and this fact was even confirmed by the party whose name found mentioned in the document, i.e. Mr. Jesubhai Barot. AO having not refuted the contents of the confirmation filed by Mr. Jesubhai, we are of the view that his challenge the deletion of addition made by the ld. CIT(A) is not sustainable. Ground of appeal No.9 raised by the Revenue is, therefore, dismissed.
Anticipation of receipts in future - CIT(A) deleted addition - HELD THAT:- With regard to amounts so found recorded in the books of the assessee, the Revenue, we find, has no case with the Assessing Officer having accepted the fact that the same were duly recorded in the books of assessee by way of banking entries. With respect to the amount of Rs.25 lakhs, it is not disputed that there was no description or narration of any sort against this figure while against the rest of the figures, there were name mentioned of different enterprises of the assessee and name of persons to whom the amounts were attributed. Therefore, the contention of the assessee was that this was a dumb figure accepted by the CIT(A), we hold, is correct and his explanation thereof that the figure may have been noted in anticipation of receipts in future appears to be plausible. The order of the ld. CIT(A), therefore, deleting the entire addition on account of notings is upheld.
Suppressed of receipts of hotel business - HELD THAT:- Document revealed data only for two months pertaining to the impugned year i.e. April and May 2004, and even for the sake of argument,though it has been found to be incorrect by the ld. CIT(A), the figures noted in the seized document are taken to be correct, the Assessing Officer cannot resort to extrapolation of this data for the entire year in the absence of any material found during search pertaining to the rest of the months of the year. The addition, in any case, could have been made only with respect to the data found for the months in the document, i.e. April and May 2004, the exercise of extrapolation of this data by the AO for the rest of the year, in any case, is not tenable. In view of same, we uphold the order of the ld. CIT(A).
Depreciation @ 25% on electrical installation and fittings installed in hotel buildings, while the authorities below had held the applicable rate of depreciation on the same to be 15% - HELD THAT:- DR was unable to distinguish the said decision before us. In view of the same, we agree with the ld. Counsel for the assessee that the disallowance of depreciation on electrical installations and fittings in hotel buildings of the assessee by applying rate of 15% as against 25% applied by the assessee treating it as plant and machinery was contrary to law. The issue, we agree with assessee, is squarely covered in favour of the assessee by the Express Resorts & Hotels Ltd. [2014 (12) TMI 1256 - GUJARAT HIGH COURT] Disallowance made of depreciation is directed to be deleted.
Addition made noting that the reference made to the DVO for valuation of the property was not in accordance with the law having been made without rejecting the books of accounts of the assessee - HELD THAT:- DR was unable to point out any distinction either on facts or on law on the issue before us. In view of the same, we agree with the assessee that the issue of addition made on account of unexplained investment in Swaminarayan Farm Residence and Hotel Neelkanth, stands covered in favour of the assessee by the decision of the ITAT in the case of the assessee itself in the immediately preceding year i.e. AY 2004-05. The addition, therefore, is directed to be deleted.
Unexplained investment in jewellery found from the locker and residence - HELD THAT:- The explanation of the assessee with regard to this jewellery which was found in the locker of the assessee was that it was purchased from one Mahendra & Co., sourced out of withdrawals reflected in the books of accounts. The Assessing Officer, on inquiry made in this regard, found that the said person was not in existence on the date of the supposed sale. CIT(A), based on this finding of the AO which remained uncontroverted, confirmed the addition to the extent of Rs.5.99 lakhs. The assessee was unable to convince us in any manner about the genuineness of the alleged purchases made of the jewellery from Mahendra & Co. He was unable to controvert the findings of the inquiry of the Assessing Officer that the said party was not in existence when the sale of the jewellery purportedly was made. In view of the same, we see no reason to interfere in the order of the ld. CIT(A) confirming the addition of unexplained investment in jewellery.
Undisclosed investment in valuables - HELD THAT:- There were many items which were categorically found not disclosed in the books of the assessee. The fact situation, therefore, calls for addition to be made on account of unexplained investment in these assets and the CIT(A) has been fair enough in scaling down the valuation of the assets made by the AO, and further giving the benefit of telescoping against the same. Assessee was unable to point out any perversity in the valuation attributed by the CIT(A) to these items at Rs.30 lakhs. The decision relied by the ld. Counsel for the assessee before us in the case of Balbir Singh Sekhon [2011 (9) TMI 1144 - ITAT CHANDIGARH] we find, is of no assistance since the findings of the ITAT of the said case was to the effect that where no reasons have been assigned to valuation of household expenses at higher amount, the addition is not sustainable. In the present case, however, there are valid reasons for making addition on account of unexplained investment. The articles found at the residence of the assessee being far more than that recorded in the books of the assessee. Therefore, in view of the above, the addition confirmed by the ld. CIT(A) as undisclosed investment in valuables is, therefore, upheld.
Sales proceeds of the godown sales not disclosed in the books of account - No infirmity in the order of the ld. CIT(A) holding that a nexus of the data contained in the document seized with the assessee was clearly established and, as rightly pointed out by the ld. CIT(A), in the absence of any credible explanation given by the assessee for the said document there is no other recourse left but to confirm the addition made on account of the difference in the receipts as per the seized document and that reflected in the books of the assessee on account of sale of godowns.
Non granting benefit of telescoping and not granting set off of alleged unaccounted income against alleged unexplained investment in various assets found during the course of search proceedings - Assessing Officer is directed to grant the benefit of telescoping of the unaccounted income of the assessee against unaccounted investment in various assets as possible on facts and in law.
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