2012 (9) TMI 72 - HC - Income Tax

Levy of interest u/s 234B - held that - when the quantum assessment itself was remanded particularly with reference to the expenditure vis-a-vis unaccounted money, the liability to pay the interest has to await the assessment to be computed in terms of the directions of the Tribunal. Merely because the cash found at the time of search was of Rs.26 lakhs only the same would not per se justify the contention of the assessee that the seized materials could not form the basis of the assessment treating the cash payment of the transaction at Rs.84.50 lakhs - The fact that the Revenue recovered Rs.25.80 lakhs at the time of search and they had received 50% of the cash payment alone would not discredit what had been noted in the seized materials noting on the cash payment of the transaction - as the quantum assessment itself was remanded particularly with reference to the expenditure vis-a-vis unaccounted money, the liability to pay the interest has to await the assessment to be computed in terms of the directions of the Tribunal - against assessee.

Summary

Issues:
1. Interest levy under Section 234B for assessment years 1995-96 and 1996-97.
2. Addition of Rs.86,50,250 as receipt of on money transaction.
3. Addition of value of salvaged scrap material as income.

Interest Levy under Section 234B (Assessment Years 1995-96 and 1996-97):
The assessee appealed against the Income Tax Appellate Tribunal's order for the assessment years 1995-96 and 1996-97, questioning the levy of interest under Section 234B. The Tribunal remanded the assessment back to determine allowable expenditure and the interest levy under Section 234B based on the outcome. The High Court dismissed the appeal, stating that the liability to pay interest must await the assessment computation. The court held that the decision relied upon by the assessee was not relevant to the current case, emphasizing the need to await the assessment outcome before challenging the interest levy.

Addition of Rs.86,50,250 as Receipt of On Money Transaction:
The Tribunal upheld the addition of Rs.86,50,250 as an unaccounted receipt from an on-money transaction, despite the assessee's claim of misinterpretation by their Accountant. The Commissioner of Income Tax (Appeals) reduced the addition to Rs.42,86,000, but the Tribunal restored the original amount. The High Court affirmed the Tribunal's decision, noting that the seized materials clearly indicated the unaccounted cash transaction amount, rejecting the assessee's arguments against the addition.

Addition of Value of Salvaged Scrap Material as Income:
The Commissioner of Income Tax (Appeals) rejected the assessee's claim regarding the receipt from the sale of scrap material. The High Court upheld this decision, stating that no new evidence was presented to reconsider the matter. The court dismissed the appeals related to this issue, emphasizing that it was a pure question of law.

In conclusion, the High Court upheld the Tribunal's decisions on all issues, dismissing the appeals related to interest levy under Section 234B, the addition of on-money transaction receipt, and the inclusion of the value of salvaged scrap material as income.