2013 (7) TMI 1082 - AT - Income Tax

Summary

Issues Involved:
1. Addition on account of unaccounted Cull sales.
2. Addition on account of unaccounted party expenses.
3. Disallowance of expenses as personal/non-business expenditure.

Summary:

1. Addition on account of unaccounted Cull sales:
The assessee, engaged in poultry business, was subjected to a search on 22-10-2008, revealing unaccounted Cull sales for A.Y. 2007-08 to 2009-10. The Assessing Officer extrapolated this unaccounted income to A.Y. 2003-04 to 2006-07, despite no evidence for these years. The CIT(A) deleted the addition, citing lack of evidence and referencing the Tribunal's judgment in Asstt. CIT Central Cir. Aurangabad Vs Ramdeo Oil Industries Pvt. Ltd. The Tribunal upheld the CIT(A)'s decision, emphasizing that additions cannot be made based on presumptions and surmises without incriminating evidence for the specific years in question.

2. Addition on account of unaccounted party expenses:
The Assessing Officer made additions for unaccounted party expenses for A.Y. 2003-04 to 2006-07 based on evidence found for F.Y. 2006-07. The CIT(A) deleted these additions, following the same reasoning as for Cull sales. The Tribunal upheld this decision, stating that evidence for one year cannot justify additions for other years without specific evidence.

3. Disallowance of expenses as personal/non-business expenditure:
The Assessing Officer disallowed 10% of various expenses, suspecting personal use. The CIT(A) reduced this disallowance to 5%, acknowledging the lack of specific evidence of personal expenditure. The Tribunal further reduced the disallowance to Rs. 15 lakhs for A.Y. 2003-04, Rs. 17 lakhs for A.Y. 2004-05, and Rs. 18 lakhs for A.Y. 2005-06, considering the company's inability to fully substantiate the business nature of all expenses.

Conclusion:
The Tribunal dismissed the Revenue's appeals and partly allowed the assessee's appeals, providing relief on the disallowance of expenses.