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2014 (1) TMI 839 - AT - Income TaxAdditions made on ground of presumptions - Addition of Investments made in earlier years Addition on account of expenses Held that - Both the additions made by the AO which is confirmed by the learned CIT(A) are merely on presumption and assumption basis - There is no evidence either before the AO or before the CIT(A) to hold that the assessee has paid any commission or earned any commission on account of investment made during the year or investment received during the year Thus, without any material on any information, estimation of commission income was without any basis - Again the expenses is on presumption basis, neither there was any material nor any information that the assessee is indulged in incurring bogus expenses - Merely on rejection of books of accounts, no addition can be made, if there is no basis or material Decided in favour of Assessee.
Issues involved:
- Notice under Section 153C validity - Assessment based on estimated additions of commission receipt and disallowance of expenses - Rejection of books of account - Addition based on presumption and assumption - Confirmation of additions by CIT(A) - Deletion of additions by ITAT Notice under Section 153C validity: The appeals by the assessee contested the notice issued under Section 153C, arguing that there was no material found related to the assessee to justify any additions. The assessment years in question were 2005-06, 2006-07, and 2007-08. The ITAT consolidated the cases due to common issues. Assessment based on estimated additions of commission receipt and disallowance of expenses: The AO made additions for commission receipt and disallowance of expenses for the assessment years. The additions were based on presumptions and assumptions without concrete evidence. The CIT(A) upheld the AO's actions, but the ITAT found the additions lacked a basis and deleted them. Rejection of books of account: The AO rejected the books of account under Section 145(3) due to discrepancies in the assessee's transactions. However, the ITAT emphasized that mere rejection of books without substantial evidence does not warrant additions to income. Addition based on presumption and assumption: The AO estimated commission income and disallowed expenses without concrete proof, leading to inflated income assessments. The ITAT found these additions unjustified and lacking a factual basis, resulting in their deletion. Confirmation of additions by CIT(A): The CIT(A) confirmed the AO's additions, but the ITAT disagreed, emphasizing the lack of evidence to support the additions. The ITAT held that the CIT(A) erred in upholding the additions without a valid basis. Deletion of additions by ITAT: The ITAT concluded that the additions made by the AO, upheld by the CIT(A), were unfounded and lacked material support. As a result, the ITAT deleted the additions for all the assessment years in question, thereby allowing the appeals of the assessee. In summary, the ITAT ruled in favor of the assessee, stating that the additions made by the AO and confirmed by the CIT(A) were based on presumption and lacked evidential support. The ITAT emphasized the importance of concrete material before making income additions and held that the assessments were unjustified. As a result, the ITAT deleted the additions for all the assessment years, ultimately allowing the appeals of the assessee.
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