2010 (8) TMI 1004 - AT - Income Tax

Summary

Issues Involved:
1. Addition of Rs. 1,60,512/- in respect of purchases from M/s Anirita Trade Links (wife's concern).
2. Disallowance of supervision fees of Rs. 2.18 lakhs paid to Mr. Shriharsh L Joshi (brother of the assessee).
3. Addition of Rs. 2,80,476 u/s 41(1) of the Income Tax Act, 1961.

Summary:

1. Addition of Rs. 1,60,512/- in respect of purchases from M/s Anirita Trade Links (wife's concern):
The assessee failed to provide documentary evidence to substantiate the purchases from M/s Anirita Trade Links (ATL), a concern owned by his wife. The concern had not filed returns since AY 2001-02 and lacked books of accounts for the relevant years. The CIT(A) deleted the addition of Rs. 1,61,054/- out of Rs. 3,21,556/- but confirmed the addition of Rs. 1,60,502/-. The Tribunal upheld the CIT(A)'s decision, noting the absence of valid purchase or sale bills and the failure of the assessee to discharge the onus of proof.

2. Disallowance of supervision fees of Rs. 2.18 lakhs paid to Mr. Shriharsh L Joshi (brother of the assessee):
The assessee initially claimed the payment under site provision charges, later changed to supervisory charges. The CIT(A) confirmed the disallowance due to lack of substantiation of services rendered. However, the Tribunal reversed this decision, accepting the sample bills and quotations provided as evidence of services rendered by Mr. S.L. Joshi, and allowed the claim of the assessee.

3. Addition of Rs. 2,80,476 u/s 41(1) of the Income Tax Act, 1961:
The CIT(A) confirmed the addition of Rs. 2,80,476/- out of a total discrepancy of Rs. 4,21,038/-, citing the failure of the assessee to reconcile the amounts. The Tribunal, however, found that the liabilities do not cease merely by efflux of time and noted that the amounts were written off as income in AY 2006-07. Consequently, the Tribunal reversed the CIT(A)'s decision on this issue and allowed the assessee's appeal, dismissing the revenue's grounds.

Conclusion:
The appeal of the revenue was dismissed, and the appeal of the assessee was partly allowed. The order was pronounced in the open Court on 13th August 2010.