Case Number: ITA 1124/DEL/2021
Appellant: Manish Yadav, Noida
Respondent: DCIT, Central Circle, Ghaziabad
Assessment Year: 2018-19
Date of Order: 2022-10-10
Order Type: Final Tribunal Order
Pronounced On: 2022-10-10
Case Conclusion: IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘G’, NEW DELHI BEFORE SH. ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER
The appellant, Manish Yadav, filed an appeal against the order passed by the Deputy Commissioner of Income Tax (DCIT), Central Circle, Ghaziabad, concerning the assessment year 2018-19. The primary issue in this appeal is the addition made by the Assessing Officer (AO) under Section 69 of the Income Tax Act, alleging unexplained investment in property.
A search and seizure operation under Section 132 of the Income Tax Act was conducted on 10th November 2017 at the premises of Shri Rajeshwar Singh Yadav and other related cases. During the search, certain documents and materials were found and seized, which led to the issuance of a notice under Section 153C of the Act to Manish Yadav on 26th September 2019. In response, the appellant filed a return of income electronically on 12th October 2019, declaring an income of Nil. Subsequently, the case was taken up for scrutiny assessment.
The AO framed the assessment under Section 143(3) read with Section 153C of the Act, determining the total income of the assessee at Rs. 3,68,83,990/-. This assessment included several additions, such as unexplained investment in property, share application money received, and commission disallowance. The appellant challenged these additions before the Commissioner of Income Tax (Appeals) [CIT(A)], who dismissed the appeal. Aggrieved, the appellant approached the Income Tax Appellate Tribunal (ITAT).
The appellant raised the following key issues:
The appellant contended that the assessment framed under Section 153C was unjustified, beyond jurisdiction, and bad in law. They argued that the proceedings initiated under Section 153C were invalid as no incriminating material or evidence was found during the search that pertained to the appellant. The appellant also disputed the addition under Section 69B, arguing that the valuation by the DVO was merely an estimate and not conclusive evidence of unexplained investment.
Regarding the share application money, the appellant submitted that they had provided all necessary documents to establish the identity, creditworthiness, and genuineness of the transactions. They argued that the AO’s reliance on the statement of a third party without allowing cross-examination was against the principles of natural justice.
The respondent, represented by the CIT-DR, opposed the appellant’s contentions and supported the orders of the lower authorities. They argued that the incriminating documents found during the search justified the proceedings under Section 153C. The respondent also defended the additions made by the AO, stating that the appellant had failed to provide satisfactory explanations and evidence to substantiate their claims.
The Tribunal, after considering the submissions of both parties and examining the material on record, addressed the issues as follows:
The Tribunal upheld the validity of the assessment under Section 153C, noting that the documents found during the search had a bearing on the appellant’s income and justified the AO’s action. The Tribunal referenced the jurisdictional High Court’s ruling in similar cases, affirming the AO’s power to assess returns based on the material found during searches.
On the issue of unexplained investment in property, the Tribunal directed the AO to adopt the state PWD rates for estimating the fair market value of the property instead of CPWD rates. The Tribunal also granted a rebate of 10% for self-supervision charges, thereby partially allowing the appellant’s claim.
Regarding the addition of share application money, the Tribunal found merit in the appellant’s arguments. It held that the AO had erred in making the addition based on the third-party statement without providing an opportunity for cross-examination. The Tribunal directed the AO to delete the addition, citing lack of substantial evidence to disprove the appellant’s claim.
With the deletion of the addition related to share application money, the Tribunal also deleted the disallowance of commission expenditure, concluding that the basis for the disallowance no longer existed.
In conclusion, the Tribunal partly allowed the appeal, directing the AO to make necessary adjustments as per its findings. The Tribunal’s decision emphasized the need for substantial evidence and adherence to principles of natural justice in tax assessments.
The case of Manish Yadav vs. DCIT highlights the complexities involved in tax assessments and the importance of thorough documentation and legal compliance. The Tribunal’s ruling provides valuable insights into the interpretation and application of various provisions of the Income Tax Act.
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