2012 (8) TMI 1136 - AT - Income Tax

Summary

Issues Involved:
1. Validity of assessment proceedings u/s 153A.
2. Addition on account of bogus gifts.
3. Addition on account of short-term capital gains from share transactions.
4. Addition on account of unexplained cash found during the search.

Summary:

1. Validity of Assessment Proceedings u/s 153A:

During the hearing, the ld. Authorized Representative conceded that the issue is covered by the order of the Special Bench in the case of M/s. All Cargo Global Logistics Limited vs. DCIT. The ITAT observed that once a search is initiated, the Assessing Officer is obligated to issue a notice requiring the filing of returns for the six years preceding the search. The ground raised by the assessee regarding the validity of assessment proceedings u/s 153A was dismissed in all appeals.

2. Addition on Account of Bogus Gifts:

The AO made additions based on the discovery of gift deeds during the search, which were found to be bogus. The CIT(A) confirmed the addition, noting that the donors admitted that the gifts were managed by the donee's family members and were not genuine. The ITAT upheld the CIT(A)'s decision, stating that the assessee failed to explain the source of deposits in their bank accounts and that the gifts were used as a conduit for routing unaccounted funds into the company's books.

3. Addition on Account of Short-Term Capital Gains from Share Transactions:

During the search, the AO found that the assessee had shown short-term capital gains from the sale of shares in Agrasen Corporation Limited, which were found to be bogus. The CIT(A) confirmed the addition, stating that the transactions were only eye-wash to take benefit of set-off of carry-forward capital losses. The ITAT upheld the CIT(A)'s decision, noting that the assessee failed to establish the genuineness of the transactions by not providing distinctive numbers of shares and not producing the broker despite summons u/s 131.

4. Addition on Account of Unexplained Cash Found During the Search:

During the search, cash amounting to Rs. 30,55,430/- was found from the residential premises of the appellant, out of which Rs. 30,00,000/- was found in the bedroom of the appellant. The AO made an addition of Rs. 30,00,000/- as unexplained cash u/s 69A. The CIT(A) deleted the addition, stating that the cash belonged to M/s. Rajat Gems & Jewelleries Pvt. Ltd., and was generated from unaccounted sales. The ITAT restored the matter to the AO to compute the extra cash generated and income offered by RGJPL on account of unaccounted sales to find out the availability of extra cash. The AO was directed to decide the matter afresh.

Conclusion:

All the appeals filed by the assessee were dismissed, whereas the appeals filed by the Revenue were allowed in part as per the directions provided.