2013 (5) TMI 560 - AT - Income Tax

Income from undisclosed sources Appeal is related to two assessment years - AO made additions in income sustained by Ld. CIT(A) - Addition in income made u/s 153A of the Act - Held that - Assessee in his statement recorded u/s.132(4) has offered the amount of Rs. 4,21,000/- as his income from undisclosed sources. Further, during the course of assessment proceedings the assessee in his letter addressed to the AO has accepted for the addition to be made in his hands. Under these circumstances and in view of the detailed reasoning given by the Ld. CIT(A) grounds raised by the assessee are dismissed. Levy of interest u/s.234A, 234B and 234C Held that - Levy of interest is mandatory and consequential in nature. Thus, appeal is dismissed.

Summary

Issues:
1. Addition of Rs.4,21,000/- in A.Y. 2004-05.
2. Levy of interest u/s.234A, 234B, and 234C in A.Y. 2004-05.
3. Addition of Rs.6,00,000/- in A.Y. 2005-06.
4. Levy of interest u/s.234A, 234B, and 234C in A.Y. 2005-06.

Issue 1: Addition of Rs.4,21,000/- in A.Y. 2004-05:
The appellant, engaged in Civil Construction and Heavy Vehicle hiring, faced an addition of Rs.4,21,000/- for cash payment towards land purchase in his son's name. The Assessing Officer found no source for this payment during a search action, leading to the addition. The appellant admitted to this being undisclosed income, leading to its addition. The CIT(A) upheld this action, emphasizing the lack of evidence for the source of the cash payment. The appellant's appeal was dismissed by ITAT Pune, as the appellant had voluntarily disclosed the amount as income and consented to its addition.

Issue 2: Levy of interest u/s.234A, 234B, and 234C in A.Y. 2004-05:
The appellant challenged the levy of interest under these sections, arguing it was not justified. However, the ITAT Pune deemed the levy mandatory and consequential, dismissing the appellant's appeal against it.

Issue 3: Addition of Rs.6,00,000/- in A.Y. 2005-06:
In this case, the appellant claimed a deduction of Rs.6,00,000/- under section 57 for bad debts related to loans given. The Assessing Officer disallowed this deduction due to lack of nexus with interest income on fixed deposits. The CIT(A) upheld this decision, noting the appellant's attempt to claim the deduction to circumvent tax provisions. The ITAT Pune affirmed the CIT(A)'s decision, emphasizing that the deduction was not allowable as it was unrelated to the interest income.

Issue 4: Levy of interest u/s.234A, 234B, and 234C in A.Y. 2005-06:
Similar to A.Y. 2004-05, the appellant contested the levy of interest under these sections for A.Y. 2005-06. However, the ITAT Pune upheld the levy, considering it mandatory and consequential, leading to the dismissal of the appellant's appeal against it.

In conclusion, the ITAT Pune dismissed both appeals, upholding the additions made and the levies of interest in both A.Y. 2004-05 and A.Y. 2005-06. The judgments were based on the lack of substantiated evidence and the mandatory nature of the interest levies under the Income Tax Act.