2016 (8) TMI 1218 - AT - Income Tax

Disallowance loss suffered - Held that - Explanation of the assessee is supported by the chart produced before the authorities below and supported by the details signed by the assessee and Shri Gurmukh Singh. There was thus, no reason to disbelieve the loss suffered by the assessee on the last transaction on account of the amount in question not returned by Shri Gurmukh Singh to the assessee, who has, later on, expired before passing of the assessment order. We, therefore, do not find any justification to sustain the assessee. We set aside the orders of authorities below and delete the addition.

Summary

Issues:
Challenge against addition of expenditure amounting to ?91,09,000 during assessment year 2010-11 based on a survey operation under section 133A.

Analysis:
1. The appellant did not declare the full amount surrendered during the survey, leading to questioning by the Assessing Officer regarding the undisclosed ?91,09,000 related to a land trading agreement.
2. The appellant's explanation included details of transactions with Sh. Gurmukh Singh, claiming the amount as unrealized profit and attributing the loss to a failed land deal.
3. The Assessing Officer added back the undisclosed amount as the appellant failed to produce Sh. Gurmukh Singh for verification.
4. The ld. CIT(Appeals) rejected the appellant's contentions, emphasizing the need for complete disclosure and questioning the credibility of the appellant's explanation.
5. The ld. CIT(Appeals) cited a judgment by the Punjab & Haryana High Court to support the decision, highlighting the importance of voluntary statements and the consequences of retracting such statements.
6. The ITAT Chandigarh reviewed the case, considering the evidence provided by the appellant regarding the transactions with Sh. Gurmukh Singh and the circumstances surrounding the undisclosed amount.
7. The ITAT Chandigarh found merit in the appellant's explanation, supported by detailed transaction charts and the unfortunate demise of Sh. Gurmukh Singh, leading to the deletion of the addition of ?91,09,000.
8. The ITAT Chandigarh allowed the appeal, emphasizing the importance of substantiated explanations and the need for a thorough assessment based on available evidence.

This detailed analysis of the judgment showcases the progression of the case, the arguments presented by both parties, and the ultimate decision by the ITAT Chandigarh in favor of the appellant.