2007 (9) TMI 533 - AT - Income Tax

Assesibility of income from the business of M/s.S.I. is to be assessed in the hands of late Shri S.P. Goyal.

Issues Involved:
1. Assessment of income in the hands of the assessee versus late Shri S.P. Goyal.
2. Deletion of additions related to telephone expenses, capital introduction, unexplained expenditure on customs duty, unexplained investment in purchases, and unmatured transactions.
3. Protective assessment and remand proceedings.

Detailed Analysis:

1. Assessment of Income in the Hands of the Assessee versus Late Shri S.P. Goyal:
The core issue revolved around whether the income from M/s Steelex International (M/s S.I.) should be assessed in the hands of the assessee or late Shri S.P. Goyal. The assessee claimed that she was merely a puppet and the business was actually run by Shri S.P. Goyal to circumvent financial restrictions. The CIT(A) accepted this plea, noting that the main culprit was Shri S.P. Goyal and that the income should be assessed in his hands. The CIT(A) also observed that the auditors' notes and the lack of substantial assets recovered from the assessee's premises supported her claim. This finding was not challenged by the Revenue, making it final.

2. Deletion of Additions:

a. Telephone Expenses:
The AO added Rs. 15,418 and Rs. 15,959 for telephone expenses paid out of books. The CIT(A) deleted these additions, attributing the expenses to Shri S.P. Goyal. The Tribunal upheld this deletion, agreeing with the CIT(A)'s final finding.

b. Capital Introduction:
The AO added Rs. 1 lakh as unexplained investment in share capital based on the assessee's statement during the search. The CIT(A) deleted this addition, noting that the business started with a meager Rs. 1,000, which was invested by Shri S.P. Goyal. The Tribunal upheld this deletion, finding no evidence of a Rs. 1 lakh investment.

c. Unexplained Expenditure on Customs Duty:
The AO added Rs. 11,10,000 for unexplained customs duty payments. The CIT(A) deleted this addition, finding that the payment was reflected in the balance sheet and was part of business transactions. The Tribunal upheld this deletion, agreeing with the CIT(A)'s clear finding.

d. Unexplained Investment in Purchases:
The AO added Rs. 39,21,422 for purchases made outside the books. The CIT(A) deleted this addition, explaining that the figure in the seized document matched the provisional trading account when customs duty was included. The Tribunal upheld this deletion, agreeing with the CIT(A)'s clear finding.

e. Unmatured Transactions:
The AO added Rs. 2,50,000 based on cheques found during the search, assuming they were for sales outside the books. The CIT(A) deleted this addition, accepting the assessee's plea that the cheques were not encashed. The Tribunal upheld this deletion, finding no material to support the AO's presumption.

3. Protective Assessment and Remand Proceedings:
The AO made protective assessments following the CIT(A)'s direction to assess the income in the hands of late Shri S.P. Goyal. The CIT(A) deleted these additions, following the earlier order. The Tribunal confirmed this action, noting that the additions were already deleted and not remanded for fresh consideration.

Conclusion:
The Tribunal dismissed all appeals filed by the Revenue, upholding the CIT(A)'s findings that the income should be assessed in the hands of late Shri S.P. Goyal and confirming the deletions of various additions made by the AO.

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