Facts of the Case

A search under Section 132 was conducted on 13.11.2014 in the Sigma Group, which included the assessee, Dipaliben M. Shah. The assessee, daughter of the main group person, derived income from salary, business and other sources. Pursuant to the search, assessments were completed under Section 153A read with Section 143(3) for Assessment Years 2009-10, 2010-11, 2012-13 and 2015-16 making various additions based on seized material.

The Commissioner of Income Tax (Appeals)-12, Ahmedabad, vide separate orders dated 12.05.2023, confirmed major additions. Aggrieved, the assessee filed four appeals before the Tribunal.

Issues Involved

Whether additions under Section 153A could be sustained where amounts were already offered before the Settlement Commission, whether student fees received could be taxed under Section 56(2)(vi), whether unexplained investment in property was correctly quantified on proportionate basis, and the fate of appeals for later assessment years not pressed by the assessee.

Petitioner’s Arguments

For Assessment Years 2012-13 and 2015-16, the assessee expressly stated that the appeals were not pressed.

For Assessment Year 2009-10, it was argued that additions were made without incriminating material belonging to the assessee, that student fees had already been disclosed and offered to tax before the Settlement Commission by the group, and that unexplained investment in property was wrongly computed.

For Assessment Year 2010-11, it was submitted that major investments and property purchases had already been disclosed before the Settlement Commission and therefore could not be subjected to further addition.

Respondent’s Arguments

The Revenue relied upon the orders of the lower authorities and also placed reliance on the decision of the coordinate bench in ACIT vs. Benefit Tradelink Pvt. Ltd. on the issue of incriminating material in Section 153A proceedings.

Court Order / Findings

For Assessment Years 2012-13 and 2015-16, the Tribunal dismissed the appeals as not pressed.

For Assessment Year 2009-10, the Tribunal held that the issue of addition without incriminating material stood against the assessee in view of binding precedent. However, with respect to student fees of ₹1,24,000 and ₹1,25,000, the Tribunal held that Section 56(2)(vi) was not applicable since the amounts represented student admissions fees already offered before the Settlement Commission, and deleted the addition.

On unexplained investment in property at Bakrol, the Tribunal recomputed the assessee’s proportionate contribution and restricted the addition from ₹2,84,322 to ₹1,42,000.

For Assessment Year 2010-11, additions relating to purchase of land at Hanumanpura and investment in residential property were deleted as the same had already been offered before the Settlement Commission. However, small additions towards unsecured loan and unexplained investment were sustained as offered by the assessee, and computational addition towards business profit was confirmed.

Important Clarification

The Tribunal clarified that amounts already disclosed and taxed before the Settlement Commission cannot be subjected to double taxation in Section 153A proceedings. It was also clarified that unexplained investments must be restricted strictly to the assessee’s proportionate contribution.

Final Outcome

Appeals for Assessment Years 2012-13 and 2015-16 were dismissed as not pressed.
Appeals for Assessment Years 2009-10 and 2010-11 were partly allowed, with substantial relief granted by deleting additions already offered before the Settlement Commission and restricting unexplained investment on proportionate basis.

 

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