2013 (10) TMI 12 - HC - Income Tax

Addition on account of unexplained expenditure u/s 69C of the Income Tax Act - Addition made by the Assessing Officer under Section 69C of the Act are factual Held that - - Order of the Assessing Officer is brief, devoid of details and indicates the half-hearted attempt to make the addition Assessee had used machinery of their sister concern and had not paid any money for the same. No further attempt was made by the Assessing Officer to verify the facts whether the sister concern had the requisite machinery or not and whether the electricity bills of the said sister concern justify the stand of the respondent-assessee Decided against the Revenue.

Summary

Issues:
1. Addition of Rs.82,73,328 as income from exports to a company in Dubai.
2. Addition of Rs.59.87 lacs as unexplained expenditure for manufacturing activity.

Analysis:
1. The first issue revolves around the authenticity of exports made to a company in Dubai. The Assessing Officer deemed the sales to be non-genuine due to lack of cross-examination of the involved party. However, previous similar cases where such additions were made were dismissed by the High Court, emphasizing the genuineness of the transactions. Various documentary evidence, including bank certificates and export orders, supported the legitimacy of the transactions. The High Court upheld the Tribunal's decision, stating that the findings were not perverse, leading to the first question being answered in favor of the respondent-assessee.

2. The second issue concerns the addition of Rs.59.87 lacs as unexplained expenditure for manufacturing activity. The Assessing Officer's order lacked detailed reasoning for the addition, indicating a superficial attempt. The respondent-assessee claimed to have used machinery from a sister concern without payment, which was not thoroughly investigated by the Assessing Officer. The Commissioner of Income Tax (Appeals) disagreed with the Assessing Officer, noting that the sister concern allowed the usage of facilities without charge. The Tribunal affirmed the CIT(Appeals) findings, emphasizing the lack of evidence supporting the addition. The Tribunal's decision was upheld, stating that it was not perverse, leading to the second question being answered in favor of the respondent-assessee.

In conclusion, the High Court dismissed the Revenue's appeal under Section 260A of the Income Tax Act, 1961, based on the detailed analysis and findings on both issues, affirming the Tribunal's decisions in favor of the respondent-assessee.