2013 (12) TMI 1485 - AT - Income Tax

Undisclosed capital introduction and unaccounted profit of the business - unaccounted deposits made in Indian Bank, Bankura - undisclosed receipt as well as undisclosed income of the assessee - CIT(A) deleted the addition - Held that - Perusal of the seized material in BDM/18, when compared to the audited balancesheet, as also the reconciliation of the balance-sheet show that in the audited balance-sheet, there is no land and building whereas in the seized BDM/18, there is an item of land and building. Admittedly, if there is a land and building, such an asset cannot be hidden. Further, even the search did not unearth any such land and building. Further perusal of the reconciliation shows that the cash and bank balance show an amount of ₹ 1,18,774/-, as per the seized BDM/18 and as per the audited balance-sheet is ₹ 15,88,517.60. Here, the Revenue has not been able to identify any bank account, which is having a balance of ₹ 1,13,774.43 as shown in BDM/18. Further, the sundry debtors show an amount of ₹ 13,119/- as per BDM/18 whereas as per the audited balance-sheet, the figure is ₹ 11,36,148/-, which is a higher figure in the audited balance-sheet. On the liabilities side, the sundry creditors shown, as per BDM/18, is ₹ 1,95,965.43 whereas as per the audited balance-sheet, the figure is ₹ 35,84,244.42, which is again a higher figure and this includes an amount of ₹ 28,48,604/- in respect of Dutta Automobiles, which are on the basis of contemporaneous document and evidence. There is also a loan from Union Bank, which is shown in the audited balance-sheet at ₹ 4,01,437/- but does not find place in BDM/18. All these figures, which have been extracted and explained earlier, clearly show that BDM/18 is clearly not a true and fair document for the purpose of making an addition much less a presumption of undisclosed income. CIT(A) on the issue is on the right footing and does not call for any interference. - Decided in favour of assessee.

Summary

Issues:
1. Undisclosed capital introduction and unaccounted profit of the business
2. Unaccounted deposits made in Indian Bank
3. Undisclosed receipt and income of the assessee
4. Validity of block assessment under section 158BD of the Income Tax Act, 1961

Analysis:
1. The Revenue appealed against the order of the Ld. CIT(A) concerning the addition of undisclosed capital introduction and unaccounted profit. The Revenue argued that the CIT(A) erred in deleting the addition without appreciating the actual facts of the case. However, during the hearing, it was found that the seized document BDM/18, which formed the basis of the addition, was unreliable. Discrepancies between the audited balance-sheet and the seized document, such as differences in assets and liabilities, indicated that the seized document was not a true representation of the financial position. The CIT(A) rightly deleted the addition based on these discrepancies, and the Tribunal upheld this decision.

2. Another issue raised by the Revenue was the unaccounted deposits made in Indian Bank. The Revenue contended that the CIT(A) erred in deleting this addition. However, it was argued during the hearing that the seized document used to make this addition was not reliable, as it contained discrepancies in the figures compared to the audited balance-sheet. The Tribunal found that the CIT(A) correctly deleted this addition due to the inconsistencies in the seized document, which were not substantiated by verifiable evidence.

3. The Revenue also challenged the deletion of an addition made on account of undisclosed receipt and income of the assessee. The Revenue argued that the CIT(A) erred in deleting this addition. However, during the proceedings, it was demonstrated that the seized document forming the basis of this addition was unreliable and did not accurately reflect the financial position of the assessee. Discrepancies in the figures between the audited balance-sheet and the seized document led the Tribunal to agree with the CIT(A)'s decision to delete the addition.

4. The assessee raised a cross-objection regarding the validity of the block assessment under section 158BD of the Income Tax Act, 1961. However, during the hearing, the assessee chose not to press the cross-objection, and it was dismissed accordingly. The Tribunal did not delve further into this issue due to the assessee's decision not to pursue it.

In conclusion, the Tribunal dismissed the Revenue's appeal and the cross-objection filed by the Assessee. The Tribunal upheld the CIT(A)'s decision to delete the additions made by the Revenue, as the seized documents on which the additions were based were found to be unreliable and did not accurately represent the financial position of the assessee.