2013 (8) TMI 1060 - AT - Income Tax

Summary

Issues Involved:
1. Deletion of addition of Rs. 37,30,300/- treating sales as ingenuine.
2. Disallowance of expenditure amounting to Rs. 6,90,462/- u/s 40(a)(ia).
3. Disallowance of Rs. 100,005/- and Rs. 57,561/- out of car expenses/depreciation and telephone expenses.

Summary:

1. Deletion of Addition of Rs. 37,30,300/- Treating Sales as Ingenuine:
The revenue appealed against the deletion of the addition of Rs. 37,30,300/- by the CIT(A), which the Assessing Officer (AO) had treated as income from 'undisclosed sources'. The AO noted discrepancies in the sales declared by the assessee, particularly cash sales without mentioning the quantity of goods sold or the names of the parties. The CIT(A) accepted the assessee's explanation based on the opening stock and purchases made during the year. However, the Tribunal found no merit in the CIT(A)'s order, emphasizing that the onus was on the assessee to prove the sales. The Tribunal observed calculation errors in the sales bills and the absence of evidence regarding the transportation of goods. Consequently, the Tribunal reversed the CIT(A)'s decision and confirmed the addition of Rs. 37,30,300/- as income from undisclosed sources, following the precedent set by the Punjab & Haryana High Court in CIT Vs Sanjay Chhabra.

2. Disallowance of Expenditure Amounting to Rs. 6,90,462/- u/s 40(a)(ia):
The assessee filed an application under Rule 27 of the Income Tax Appellate Rules, 1963, contesting the disallowance of Rs. 6,90,462/- u/s 40(a)(ia). The Tribunal noted that the appeal filed by the revenue was against the deletion of the addition of Rs. 37,30,300/- and found no merit in the assessee's application under Rule 27, as the issues raised were different from those in the revenue's appeal. The Tribunal dismissed the application, stating that the issues were factual and could not be raised under Rule 27.

3. Disallowance of Rs. 100,005/- and Rs. 57,561/- Out of Car Expenses/Depreciation and Telephone Expenses:
The assessee also contested the disallowance of Rs. 100,005/- and Rs. 57,561/- out of car expenses/depreciation and telephone expenses under Rule 27. The Tribunal reiterated that the issues raised by the assessee were not related to the revenue's appeal and dismissed the application. The Tribunal emphasized that Rule 27 could not be used to claim fresh relief denied by the CIT(A) and that the issues were factual in nature.

Conclusion:
The Tribunal allowed the revenue's appeal, confirming the addition of Rs. 37,30,300/- as income from undisclosed sources. The assessee's application under Rule 27, contesting disallowances u/s 40(a)(ia) and out of car expenses/depreciation and telephone expenses, was dismissed.