2012 (8) TMI 550 - AT - Income Tax

Disallowance of traveling allowance as exempt u/s 10 (17) - also exemption u/s 10 (14) (i) being unspent amount of traveling allowance - Held that - The plea raised by the assessee is not borne out of the bare provisions of section 10 (17) which exempts only daily allowance received by a Member of the State Legislative Assembly or Member of the Parliament - alternative claim u/s 10 (14) (i) being unspent amount is also untenable as the same is relatable to allowances received in performance of the duties of an office or employment of profit which is not the case with the instant assessee - against assessee. Addition on account of unexplained cash credits - Held that - In terms of section 68 the onus is on the assessee to establish the nature and source of the credits appearing in his financial statements - CIT (A) has recorded a finding that there was no documentary evidence produced in support of the amount in question and even the explanation furnished to the effect that the sum represented advance against proposed sale of land has also been doubted, inasmuch as that even after expiry of 11 years after the proposed sale, the transaction does not appear to have fructified - against assessee.

Summary

Issues:
1. Exemption under section 10(17) of the Act for travelling allowance.
2. Unexplained cash credits and additions under section 68 of the Act.

Issue 1: Exemption under section 10(17) of the Act for travelling allowance (Assessment Year 1995-96):
The appellant claimed exemption for a sum of Rs 11,700 received as travelling allowance while being a member of the State Legislative Assembly. The claim was made under section 10(17) and alternatively under section 10(14)(i) of the Act. The Appellate Tribunal found both claims to be untenable. The Tribunal noted that section 10(17) exempts only daily allowance received by a Member of the State Legislative Assembly or Parliament, which did not apply to the appellant's case. The alternative claim under section 10(14)(i) was also rejected as it pertained to allowances received in the course of an office or employment of profit, which did not align with the appellant's situation. Consequently, the Tribunal affirmed the lower authorities' decisions, leading to the dismissal of the appeal for the assessment year 1995-96.

Issue 2: Unexplained cash credits and additions under section 68 of the Act (Assessment Year 1996-97 and 1997-98):
In the assessment year 1996-97, the appellant faced two main issues. Firstly, a sum of Rs 30,000 received as travelling allowance was dismissed following a similar decision in the preceding year's appeal. Secondly, an addition of Rs 6,80,000 was made due to unexplained cash credits related to an advance received against the sale of land. The Tribunal upheld the lower authorities' decision, emphasizing the lack of documentary evidence and doubts regarding the proposed sale transaction's genuineness.

In the same assessment year, another issue arose concerning a loan of Rs 4,00,000 received from a creditor. Despite the appellant's claims of receiving the loan through banking channels and establishing the creditor's identity, the Tribunal found the creditworthiness and genuineness of the transaction unproven. The lower authorities' decisions were upheld due to the appellant's failure to substantiate the creditor's creditworthiness adequately.

For the assessment year 1997-98, a similar issue of unexplained cash credits of Rs 5,00,000 from the same creditor was raised, mirroring the previous year's situation. Following the consistent reasoning applied in previous decisions, the Tribunal dismissed the appellant's appeal for this year as well.

In conclusion, the Tribunal dismissed all three appeals of the assessee, upholding the lower authorities' decisions on the issues of exemption under section 10(17) for travelling allowance and unexplained cash credits under section 68 of the Act across multiple assessment years. The judgments were delivered on June 25, 2012, by the Appellate Tribunal ITAT, Pune.