2012 (9) TMI 1054 - AT - Income Tax

Summary

Issues Involved:
1. Suppression of sales
2. Disallowance of motorcar expenses
3. Disallowance of telephone expenses

Summary:

1. Suppression of Sales:
The assessee challenged the decision of the CIT(A) confirming the additions related to the suppression of sales. The department conducted search and seizure operations, during which documents related to the assessee were seized, leading to assessment proceedings u/s 153C. Statements from Shri A.Jabir and Shri V.Ahamed indicated that sales invoices were raised at half the selling rate, suggesting suppression of sales. The AO estimated suppressed sales and added them to the total income, which the CIT(A) confirmed. The assessee argued that reliance on these statements was misplaced as Shri A.Jabir was not directly involved with the firm, and no material evidence of suppression was found. However, the CIT(A) and AO corroborated the suppression with other evidence, including price tags and erratic Gross Profit rates, leading to the conclusion that suppression was systematic. The Tribunal found no infirmity in the CIT(A)'s order and upheld the additions.

2. Disallowance of Motorcar Expenses:
The AO made proportionate disallowance of motorcar expenses towards personal use by the partners. The CIT(A) confirmed this disallowance, and the Tribunal upheld the decision, citing the absence of evidence to show that the expenses were not used for personal purposes.

3. Disallowance of Telephone Expenses:
Similarly, the AO disallowed a portion of telephone expenses for personal use by the partners. The CIT(A) upheld this disallowance, and the Tribunal found no infirmity in the decision, maintaining the disallowance due to lack of evidence proving exclusive business use.

Conclusion:
All the appeals of the assessee were dismissed, and the Tribunal pronounced the judgment accordingly on 07-09-2012.