2012 (8) TMI 1101 - AT - Income Tax

Summary

Issues Involved:
1. Legality of the order passed by CIT(A).
2. Justification of sustaining the addition of Rs. 5,10,000.
3. Disallowance of Rs. 5,000 each under the heads of telephone and miscellaneous expenses.

Summary:

1. Legality of the order passed by CIT(A):
The assessee challenged the order dated 17.01.2011 passed by the CIT(A)-II, Agra for A.Y. 2006-07, claiming it was "bad in law and on facts." The Tribunal upheld the CIT(A)'s decision, finding no merit in the appellant's arguments.

2. Justification of sustaining the addition of Rs. 5,10,000:
A survey operation u/s 133A of the Income Tax Act, 1961, was conducted on 30.01.2008, during which the Director of the Company surrendered Rs. 5,00,000 as undisclosed income on account of commission. The assessee did not include this amount in the return of income. The CIT(A) confirmed the addition, noting that the retraction of the statement was made after four months without any cogent reasons. The Tribunal found that the surrender was based on discrepancies found in the books of accounts during the survey and was not merely due to coercion. The Tribunal cited the judgment of the Allahabad High Court in Dr. S.C. Gupta vs. CIT, 248 ITR 782 (All), emphasizing that an admission made during the survey is a significant piece of evidence unless successfully retracted with substantial proof. The Tribunal concluded that the assessee failed to discharge the burden of proving the retraction and upheld the addition of Rs. 5,00,000.

3. Disallowance of Rs. 5,000 each under the heads of telephone and miscellaneous expenses:
The A.O. disallowed Rs. 5,000 each out of telephone and miscellaneous expenses due to the personal element and non-maintenance of a logbook. The CIT(A) upheld these disallowances, reasoning that the expenses were not fully vouched and audited. The Tribunal agreed with the CIT(A), noting that the assessee failed to establish that the expenses were incurred wholly and exclusively for business purposes. Given the totality of the facts, including the income declared and the expenses claimed, the Tribunal found the disallowances reasonable and upheld the addition of Rs. 5,000 each under telephone and miscellaneous expenses.

Conclusion:
The appeal of the assessee was dismissed, and the order of the CIT(A) was confirmed in its entirety.