AO not permitted to make additions in respect of already concluded assessments, where no adverse materials found during search

Mumbai ITAT held In the case of Shri Uday C Tamhankar that the submission of assessee that the assessment years up to 2006-07 falls in the category of concluded assessments, i.e., assessments of those years were not pending on the date of initiation of search is a valid submission. Hence, in our view, the assessing officer could not have made these additions for AY 2004-05 to 2006-07 in the absence of any incriminating materials. Additions made by the AO, after accepting the additional disclosure of Rs.20.00 lakhs, would result in double assessment, since it is stated that the assessee has not capitalised the above said amount in his books of accounts.

The assessee has duly disclosed the income voluntarily offered by him in the returns of income filed in response to the notices issued u/s 153A of the Act. During the course of penalty proceedings also, the assessee has offered the explanation to that effect and the said explanation was not found to be false. The revenue has noticed/seized all the materials available with the assessee and no incriminating material supporting the additional disclosure was found. Under these set of facts, we are of the view the tax authorities are not justified in presuming that the additional disclosure voluntarily made by the assessee shall constitute concealed income warranting penalty u/s 271(1)(c) of the Act.

Facts of the Case

The assessee is a dentist and carries on his profession from different places and also through different hospital names. He was subjected to search and seizure operations on 17-01-2008. On the very same day, some of his concerns were also surveyed u/s 133A of the Act. During the course of search operations, cash balance of Rs.1,13,57,110/- was found as against the book balance of Rs.9,10,548/-. In the statement recorded from him u/s 132(4) of the Act, he admitted the excess cash balance of Rs.1,04,68,512/- as his unaccounted income. The assessee agreed to offer a sum of Rs.1,25,00,000/- (including excess cash balance) as his income. The AO completed the assessment after making some additions on account of disallowance of expenses on account of car & telephone expenses, addition u/s 69C and relating to estimated professional income. The AO also initiated penalty proceedings u/s 271(1) (c) for concealment of income and u/s 271AAA for additional offer of income by the assessee.

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