2013 (5) TMI 303 - AT - Income Tax

Validity of Survey u/s 133A - survey of factory on a weekly holiday - additions - Held that - CIT(A) categorically held that the survey operations u/s 133A of the Act were not under the provision of section 132(4) of the Act and the assessment has not been made u/s 153A of the Act concluding that all the facts and circumstances of bringing to tax part sustenance of the additions made by the AO emanate from the books of the assessee only. The assessee appellant himself was not able to explain the nature of such income so computed when part of it was explained as correct was admitted by the CIT(A). Thus the part sustenance of the income was worthy of income to be brought to tax in the hands of the assessee as the assessee had returned income of Rs.22,91,690/- u/s 139(1) when the survey took place on 4th March, 2008 and was part of income to be returned. Therefore, the contention of the assessee that the major relief having been granted on the very inadmissible expenses should be completely deleted, has no legs to stand on. No infirmity in the order of the CIT(A). Undisclosed cash transactions on Hulavati account - CIT(A) granted relief of Rs.39,00,207/- - Held that - It was the computation of income on the basis of the said dumb documents whether had found place in the returned income has not been clarified either by the AO or the assessee appellant before us requires no further deliberation. The said income therefore stands as returned but for erroneous calculation computed correctly is upheld as part deleted and sustained by the CIT(A) is confirmed. Unexplained investments - CIT(A) deleted the addition - Held that - CIT(A) after deliberation and arithmetical computation the stock valuation whether lengthwise or breadth wise granted relief of Rs.1.26 crores does not require any further deliberation as no further controverting material has been brought on record by the rival parties hereto. Disallowance u/s 40A(3) - Held that - CIT(A) has categorically given a finding that the cash payments do not relate to the impugned assessment year. Granting relief of Rs.31,000/- against which no controverting material has been brought out on record by the revenue. Therefore, the order of CIT(A) does not require any further deliberation.

Issues:
1. Legality of survey conducted under section 133A on a weekly holiday
2. Sustainment of additions to undisclosed income based on loose/rough notings found during survey
3. Justification of addition on Hulayti Account based on loose sheets
4. Deletion of additions on account of unexplained investment and cash payments under section 40A(3)

Analysis:

Issue 1: Legality of Survey
The appeals by the assessee and the Revenue arose from the order of the ld. CIT(A)-XXIV, Kolkata dated 30.11.2011 for Assessment Year 2008-09. The Revenue was in appeal on the deletion of additions made by the AO, while the assessee was in appeal on the sustenance of the additions. The assessee contended that the survey conducted under section 133A on a weekly holiday was illegal. However, the tribunal held that the assessee had sufficient time to explain the documents during the assessment proceedings, and the CIT(A) appreciated the effort made by the AO to bring undisclosed incomes to tax. The tribunal concluded that the survey operations were not conducted under specific provisions of the Act, and the additions made were based on facts from the books of the assessee.

Issue 2: Sustainment of Additions
Regarding the additions to undisclosed income based on loose/rough notings found during the survey, the tribunal noted that the assessee failed to explain the nature of the income computed by the AO. The CIT(A) granted relief on part of the income but sustained the rest, considering it as income to be brought to tax. The tribunal found no infirmity in the CIT(A)'s order and dismissed the appeals by both parties against the part relief granted/sustained.

Issue 3: Addition on Hulayti Account
The addition on the Hulayti Account based on loose sheets was also contested. The tribunal observed that no new material was brought on record to challenge the computation of income, and the CIT(A) granted relief after considering the facts. The tribunal upheld the part deletion and sustenance of the addition on the Hulayti Account, dismissing the grounds raised by the parties.

Issue 4: Deletion of Additions
The tribunal addressed the deletion of additions on account of unexplained investment and cash payments under section 40A(3) of the Act. The CIT(A) provided detailed findings and computations to grant relief on these grounds. The tribunal upheld the CIT(A)'s decision on these issues, confirming the relief granted and dismissing the grounds raised by the parties.

In conclusion, the tribunal dismissed the appeals of both the Revenue and the assessee, upholding the decisions made by the CIT(A) regarding the various additions and deletions in the assessment for the Assessment Year 2008-09.

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