2015 (12) TMI 1522 - AT - Income Tax

Addition being 1% of the total wages and salary - Held that - We find that the assessee had offered the additional income on account of discrepancy in record in respect of certain payments made to certain parties on account of wages and labour charges. The AO has also made the disallowance finding discrepancies in the salary register. Hence in our view telescopic benefit is required to be given to the assessee in respect of the income offered on this account. Since the assessee has already declared additional income of Rs. 5, 67, 047/- in this respect hence in our view no further disallowance of Rs. 1, 79, 732/- was warranted in this case. In view of the above addition made on this issue is hereby ordered to be deleted. Interest under section 234B - Held that - We find that as per sub section (3) of section 234 of the Act as it stood and applicable for the assessment year under consideration the assessee is liable to pay the interest for the period commencing on the day following the date of determination of total income under sub section (1) of section 143 or under section 143(3) as the case may be and ending on the date of reassessment or re-computation under section 147 or section 153A. On the amount by which the tax on the total income determined on the basis of the reassessment or re-computation exceeds the tax on the total income determined under sub section (1) of section 143 or on the basis of regular assessment under section 143(3) of the Act. The Hon ble Karnataka Bombay High Court in Vijay Kumar Saboo HUF & Others. Vs. ACIT (2011 (7) TMI 135 - KARNATAKA HIGH COURT ) has also analyzed the above provision and has held that where in a case the income is determined consequence to the filing of the return under section 143(1) or 143(3) and the income is increased in consequence of the reassessment proceedings either under section 147 or under section 153A of the Act the interest will be leviable as per the provisions of sub section (3) of section 234B of the Act. In view of the above the AO is directed to calculate and compute the interest accordingly. Addition u/s 68 on unexplained bank deposits - Held that - The assessee has explained the source of entire deposits of more than Rs. 7 lakhs we do not find any justification on the part of the lower authorities in disbelieving the source of above deposits of meager amount of Rs. 18, 200/-. - Decided in favour of assessee

Summary

Issues:
1. Validity of assessment order under section 153C of the Act for A.Y. 2009-10.
2. Confirmation of addition of &8377; 1,82,324/- being 1% of total wages and salary for A.Y. 2009-10.
3. Calculation of interest under section 234B of the Act for A.Y. 2009-10.
4. Confirmation of addition of &8377; 18,200/- under section 68 of the Act for A.Y. 2010-11.
5. Addition of &8377; 1,87,676/- being 1% of total wages and salary for A.Y. 2010-11.

Issue 1: Validity of assessment order under section 153C of the Act for A.Y. 2009-10:
The assessee challenged the validity of the assessment order passed under section 153C of the Act. The Ld. A.R. of the assessee did not press this ground, leading to its dismissal. The CIT(A) restricted the disallowance of 1% of the expenditure incurred on wages and labor charges to &8377; 1,82,324/- based on the totality of facts and circumstances. The ITAT found discrepancies in the salary register but granted telescopic benefit to the assessee for the income offered due to discrepancies, leading to the deletion of the addition.

Issue 2: Calculation of interest under section 234B of the Act for A.Y. 2009-10:
The assessee claimed that interest under section 234B should be computed from the date of the original assessment order passed under section 143(1) of the Act. The ITAT analyzed the relevant provisions and held that interest is payable from the date following the determination of total income under section 143(1) until the finalization of the original assessment. The ITAT directed the AO to calculate and compute the interest accordingly, partially allowing the appeal.

Issue 3: Confirmation of addition of &8377; 18,200/- under section 68 of the Act for A.Y. 2010-11:
The AO made an addition of &8377; 7,41,484/- under section 68 of the Act for unexplained bank deposits, which was later reduced to &8377; 18,200/- by the CIT(A) after verification. The ITAT, considering the explanations provided by the assessee for the deposits, deleted the addition of &8377; 18,200/-, as the source of all deposits was adequately explained.

Issue 4: Addition of &8377; 1,87,676/- being 1% of total wages and salary for A.Y. 2010-11:
The ITAT upheld the addition of &8377; 1,87,676/- being 1% of the total wages and salary for A.Y. 2010-11, as the assessee did not offer any additional income in this respect. The disallowance confirmed by the CIT(A) was deemed justified, resulting in the partial allowance of the appeal for A.Y. 2010-11.

In conclusion, the ITAT partially allowed both appeals of the assessee, addressing various issues related to assessment orders, additions, interest calculations, and explanations for deposits, based on detailed analysis and legal provisions.