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2015 (5) TMI 711 - AT - Income TaxAddition made on account of the cash embezzlements - Protective assessment - CIT(A) deleted the addition - Held that:- We find that there is no dispute that the addition has been made in this case purely on ‘protective basis’. On the facts of this case, it is also an incorrect assumption that in the event of embezzlement having actually taken place in Vam Airtex, the corresponding income must belong to this assessee. Even if one is to reach a conclusion that embezzlement has taken place in Vam Airtex, the assessee is not the only person needle of suspicion points to. It is a matter of record that allegations have been raised against Sunil Shah, one of the directors of Vam Airtex, and the Assessing Officer himself has taken note of these allegations. When the matter is sub judice and there are allegations and counter allegations by the assessee against the Vam Airtex as also against its directors and vice versa, it is premature to assume that this assessee could be the only beneficiary of the criminal activity of embezzlement. We have also noted that the Assessing Officer has not rejected the assessee’s explanation that he was operating the bank account concerned as a benamidar of Sunil Shah, a director of Vam Artex, but yet held taxability of income in the hands of the assessee that the assessee could not having been doing so without a consideration. As a corollary to the approach so adopted by the Assessing Officer, at best hawala commission could have been brought to tax in the hands of the assessee and not the entire amount of bank on account of alleged bogus purchases. However, the Assessing Officer has added entire bank credit as income of the assesse, which, by no stretch of logic, could be added to the income of the assessee on the basis of findings so far. There is thus an inherent contradiction in the approach of the Assessing Officer. In any case, there is nothing more than an allegation of embezzlement by the assessee and such allegations, by itself, cannot be legally sustainable foundation for the addition being made in the hands of the assessee. - Decided in favour of assesse.
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