2012 (3) TMI 598 - AT - Income Tax

2017 (12) TMI 1355 - HC

Issues Involved:

1. Addition of Rs. 24 lakhs towards commission income on an estimate basis for AY 2006-07.
2. Addition of Rs. 11 lakhs as unexplained cash credit from Aboobaker Poothayil for AY 2006-07.
3. Addition of Rs. 3 lakhs received from Joseph Albert towards rent deposit for AY 2006-07.
4. Addition of Rs. 16,19,079 as unexplained investment in the building based on the valuation report for AY 2006-07.
5. Disallowance of Rs. 2,25,000 out of the agricultural income disclosed by the assessee for AY 2006-07.
6. Estimation of commission income to the extent of Rs. 56 lakhs for AY 2007-08.
7. Disallowance of four credits totaling Rs. 60 lakhs for AY 2007-08.
8. Addition of Rs. 10 lakhs as unexplained cash credit from M.M. Abdul Kareem for AY 2007-08.
9. Addition of Rs. 20 lakhs in respect of credit appearing in the name of M.K. Hamsa for AY 2007-08.
10. Addition of Rs. 10 lakhs as unexplained cash credit from Aboobaker Poothayil for AY 2007-08.

Summary:

1. Addition of Rs. 24 lakhs towards commission income on an estimate basis for AY 2006-07:

The tribunal found that the estimation of commission income for the entire year was unjustified as the business was seasonal, conducted from December to April. The commission was recalculated at Rs. 1,000 per lakh, resulting in an estimated income of Rs. 6,17,917 for the period of 50 days. The tribunal directed the assessing officer to take the income from commission business at Rs. 6,17,917 for AY 2006-07.

2. Addition of Rs. 11 lakhs as unexplained cash credit from Aboobaker Poothayil for AY 2006-07:

The tribunal found that the assessee had satisfactorily explained the source of the Rs. 11 lakhs credit, which was a loan against a fixed deposit. The identity, creditworthiness, and genuineness of the transaction were established. The addition of Rs. 11 lakhs was deleted.

3. Addition of Rs. 3 lakhs received from Joseph Albert towards rent deposit for AY 2006-07:

The tribunal found that the amount received was a security deposit for lease and not income. The rent agreement and the inclusion of rent in the return of income supported this. The addition of Rs. 3 lakhs was deleted.

4. Addition of Rs. 16,19,079 as unexplained investment in the building based on the valuation report for AY 2006-07:

The tribunal held that without rejecting the books of account, the reference to the valuation officer was misconceived. Following the judgment of the Apex court in Sargam Cinema vs Commissioner of Income-tax, the addition based on the valuation report was deleted.

5. Disallowance of Rs. 2,25,000 out of the agricultural income disclosed by the assessee for AY 2006-07:

The tribunal found that the estimation of agricultural income at Rs. 75,000 was very low. Considering the fertile land in Kerala, the tribunal estimated the income at Rs. 2 lakhs from 5 acres of land, modifying the disallowance to Rs. 1 lakh.

6. Estimation of commission income to the extent of Rs. 56 lakhs for AY 2007-08:

The tribunal found that the business was seasonal and estimated the turnover for five months at Rs. 18,53,75,100. The commission was calculated at Rs. 1,000 per lakh, resulting in an estimated income of Rs. 18,53,751. The assessing officer was directed to take the commission income at Rs. 18,53,751 for AY 2007-08.

7. Disallowance of four credits totaling Rs. 60 lakhs for AY 2007-08:

For the credit of Rs. 20 lakhs from Afsal P.Y., the tribunal found that the source was satisfactorily explained. The addition was deleted. The credit of Rs. 10 lakhs from M.M. Abdul Kareem was set aside for further examination regarding the withdrawal from the NRO overdraft account. The credit of Rs. 20 lakhs from M.K. Hamsa was found to be satisfactorily explained, and the addition was deleted. The credit of Rs. 10 lakhs from Aboobaker Poothayil was also satisfactorily explained, and the addition was deleted.

8. Addition of Rs. 10 lakhs as unexplained cash credit from M.M. Abdul Kareem for AY 2007-08:

The tribunal set aside the issue for further examination regarding the withdrawal from the NRO overdraft account.

9. Addition of Rs. 20 lakhs in respect of credit appearing in the name of M.K. Hamsa for AY 2007-08:

The tribunal found that the credit was satisfactorily explained, and the addition was deleted.

10. Addition of Rs. 10 lakhs as unexplained cash credit from Aboobaker Poothayil for AY 2007-08:

The tribunal found that the credit was satisfactorily explained, and the addition was deleted.

Conclusion:

Both appeals of the assessee were partly allowed. The tribunal modified the orders of the lower authorities and directed the assessing officer to make the necessary adjustments as per the findings.

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