2012 (2) TMI 592 - AT - Income Tax

Summary

Issues Involved:
1. Delay in filing the appeal.
2. Disallowance of Rs. 1.53 lakhs out of interest.
3. Addition of Rs. 2,37,032/- as excess of assets over liabilities.
4. Addition of Rs. 69,643/-.
5. Disallowance of Rs. 15,000/- for want of vouchers towards maintenance of vehicle.
6. Disallowance of Rs. 21,618/- u/s 40A(3) of the Act.

Summary:

1. Delay in Filing the Appeal:
The appeal was delayed by 26 days due to the appellant attending to his wife suffering from cancer. The Tribunal condoned the delay, considering it a reasonable cause.

2. Disallowance of Rs. 1.53 Lakhs of Interest:
The AO disallowed Rs. 1.53 lakhs out of Rs. 1.78 lakhs interest claimed, stating that the assessee advanced interest-free loans to sister concerns while paying interest on an overdraft account. The CIT (A) upheld the disallowance, noting the diversion of funds for non-business purposes. The Tribunal remitted the issue back to the AO to verify if the loans were advanced from surplus funds or borrowings.

3. Addition of Rs. 2,37,032/- as Excess of Assets over Liabilities:
The AO added Rs. 2.37 lakhs, finding discrepancies in credit balances shown by the assessee. The CIT (A) upheld the addition, and the Tribunal found no infirmity in the CIT (A)'s decision, sustaining the addition.

4. Addition of Rs. 69,643/-:
The AO added Rs. 69,643/- as undisclosed income based on bills found during a survey. The CIT (A) confirmed the addition, and the Tribunal upheld this decision, noting the assessee failed to provide documentary proof to refute the Revenue's claim.

5. Disallowance of Rs. 15,000/- for Vehicle Maintenance:
The AO disallowed Rs. 15,000/- due to the absence of vouchers for vehicle maintenance expenses. The CIT (A) confirmed the disallowance, and the Tribunal upheld this decision, agreeing with the authorities' reasoning.

6. Disallowance of Rs. 21,618/- u/s 40A(3) of the Act:
The AO disallowed Rs. 21,618/- for cash payments exceeding Rs. 20,000/-, contravening section 40A(3). The CIT (A) confirmed the disallowance. However, the Tribunal, considering the exceptional circumstances under which the payments were made, ruled that the authorities were not justified in invoking section 40A(3) and allowed this part of the appeal.

Conclusion:
The assessee's appeal was partly allowed, with the Tribunal remitting the issue of interest disallowance back to the AO and overturning the disallowance u/s 40A(3). Other additions and disallowances were upheld.