2012 (8) TMI 672 - AT - Income Tax

Addition on unaccounted income - Held that - Considering the agreement with Shri Puratchidasan claim of the assessee is accepted on Rs. 2,50,000/- out of Rs. 5 lakhs that was the amount returned on cancellation of the agreement & that Rs. 12,000/- was the registration expenses for the agreement returned by Shri Puratchidasan. Insofar as Rs. 3 lakhs claimed as amounts returned by Shri Puratchidasan out of cash paid in 1990, CIT(Appeals) was of the opinion that fresh evidence was produced in the form of promissory notes could not be accepted as there is nothing on record to show that these promissory notes, claimed to have been issued by Shri Puratchidasan, were part of the seized records. Assessee has shown no reason as to why such promissory notes were not produced before the A.O - the CIT(Appeals) was absolutely justified for rejecting the claim of the assessee - against assessee.

Summary

Issues:
Addition of Rs. 2,38,000/- out of total sum of Rs. 5 lakhs made by the Assessing Officer.

Analysis:
The case involved an appeal by the assessee against the confirmation of an addition of Rs. 2,38,000/- out of a total sum of Rs. 5 lakhs made by the Assessing Officer. The dispute arose from transactions related to the assessee advancing sums to Shri Puratchidasan, receiving them back, and the subsequent tax treatment of these amounts. The Assessing Officer treated the entire Rs. 5 lakhs as unaccounted income of the assessee, leading to the appeal. The primary contention was regarding the nature of the transactions and the source of the funds involved.

During the search at the premises of the assessee's father, certain loose sheets indicated that the assessee had advanced sums to Shri Puratchidasan, which were later received back along with interest. The assessee claimed that these were not loans but advances, which were returned. However, the Assessing Officer found the explanations unsatisfactory, leading to the addition of Rs. 5 lakhs as undisclosed income. The CIT(Appeals) partially allowed the claim, reducing the addition to Rs. 2,38,000/- by accepting the source of Rs. 2,62,000/- based on an agreement for the sale of property.

The assessee argued before the ITAT that the remaining Rs. 3 lakhs paid to Shri Puratchidasan in 1990 was supported by promissory notes, which were part of the seized documents. The ITAT noted that while the CIT(Appeals) had accepted the source of Rs. 2,62,000/-, the claim of Rs. 3 lakhs was rejected due to lack of evidence. The ITAT found that the promissory notes were not part of the seized records or produced before the Assessing Officer, leading to the rejection of this claim. The ITAT upheld the CIT(Appeals) decision, stating that the relief granted was sufficient, and no interference was warranted.

In conclusion, the ITAT dismissed the appeal filed by the assessee, upholding the decision of the lower authorities. The judgment emphasized the importance of providing proper documentation and evidence to support claims during tax assessments, highlighting the need for transparency and compliance with tax laws. The case serves as a reminder of the significance of maintaining accurate records and substantiating transactions to avoid disputes and adverse tax implications.