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2015 (2) TMI 898 - AT - Income TaxUndeclared income - CIT(A) directing AO to give credit of admitted undeclared income of ₹ 3,41,90,000/-(3,05,00,000/- 36,90,000/-) shown in the return of income filed when the assessing officer has given due credit for the same while computing the taxable income of the assessee in the assessment order - Held that - Additional income of ₹ 3,05,00,000/- was accepted by the department and while computing the total income the AO has taken the same into account. Accordingly, we do not find any justification on the part of the CIT(A) for deleting the addition of ₹ 3,05,00,000/- on the plea that same was double addition. Similarly, a sum of ₹ 36,90,000/- was directed by the CIT(A) to be deleted on the plea that it was double addition. However, there is no such double addition. Accordingly, we set aside the order of CIT(A) insofar as he has deleted the addition of ₹ 3,05,00,000/- and ₹ 36,90,000/-. - Decided in favour of revenue. Unexplained expenditure - CIT(A)deleted addition made u/s 69C - CIT(A) held that provisions of section 40A(3) cannot be applied to expenses as provisions of section 40A(3) are not applicable to block proceedings - Held that - AO has himself noted that as per the MOU, the amount of ₹ 5,94,96,000 was to be paid to the respective members of the Society (i.e., Jai Ganesh Society) at the time final selling of the plot to another party or on or before 31.01.2008 whichever is earlier. Accordingly the cash payment made to the CHS was made directly by ICONIC REALTORS but on behalf of M/s Pathik Constructions so that the transaction can be completed expeditiously. Hence, taxing M/s Pathik Construction on this account does not arise as no payment has been made by the assessee firm in cash. Therefore, provisions of section 69C or 40A(3) are not applicable in the assessee firm s case. Accordingly, we do not find any infirmity in the order of CIT(A) deleting the addition - Decided in favour of assessee. Deemed dividend u/s.2(22)(e) - whether advances received by the assessee from MIs Kalpana Struct Con Private Limited are commercial transactions - Held that - CIT(A) has held that there is no question of attracting the provisions of section 2(22)(e). The findings of CIT(A) had not been controverted by ld. DR by bringing any positive material on record. We, therefore, see no reason to interfere in the decision of CIT(A) for the A.Y.2008-09 and 2009-2010 for deleting addition made u/s.2(22)(e) of the Act. - Decided in favour of assessee.
Issues Involved
1. Credit of admitted undeclared income. 2. Addition on account of unexplained expenditure under Section 69C. 3. Applicability of Section 40A(3) to expenses. 4. Applicability of Section 2(22)(e) regarding deemed dividend. Detailed Analysis 1. Credit of Admitted Undeclared Income The Revenue challenged the CIT(A)'s direction to the Assessing Officer (AO) to give credit for admitted undeclared income of Rs. 3,41,90,000/- shown in the return of income. The AO had already given due credit for this amount while computing the taxable income. The CIT(A) observed that the AO made a double addition of Rs. 36,90,000/- and Rs. 3,05,00,000/- declared in the revised returns. However, the tribunal found no double addition, thus reversing the CIT(A)'s direction. 2. Addition on Account of Unexplained Expenditure Under Section 69C The AO added Rs. 5,94,96,000/- under Section 69C, claiming it was unexplained expenditure. The CIT(A) deleted this addition, noting that no evidence was found during the search to substantiate this expenditure. The tribunal upheld the CIT(A)'s decision, emphasizing that the seized documents did not prove the alleged cash expenditure. The tribunal also noted that the AO had not allowed credit for the cash payments while computing the undisclosed income, resulting in a double addition. 3. Applicability of Section 40A(3) to Expenses The AO invoked Section 40A(3) to disallow expenses of Rs. 5,94,96,000/-. The CIT(A) held that Section 40A(3) is not applicable to block proceedings, relying on decisions from the Delhi High Court and Allahabad High Court. The tribunal agreed with the CIT(A), noting that the AO had not made a separate addition under Section 40A(3) and that the provisions were not applicable in this case. 4. Applicability of Section 2(22)(e) Regarding Deemed Dividend The AO added Rs. 1,14,63,383/- for AY 2008-09 and Rs. 2,06,66,690/- for AY 2009-10 under Section 2(22)(e), claiming these were loans/advances from M/s Kalpana Struct Con Pvt. Ltd., in which a partner of the assessee firm had a substantial interest. The CIT(A) deleted these additions, concluding that the transactions were commercial and not loans or advances. The tribunal upheld the CIT(A)'s decision, citing that the assessee was not a shareholder in the lending company and that the transactions were business advances, not loans. Conclusion The tribunal allowed the Revenue's appeal in part for AY 2008-09, reversing the CIT(A)'s deletion of Rs. 3,05,00,000/- and Rs. 36,90,000/-. However, the tribunal upheld the CIT(A)'s deletion of the addition under Section 69C and the non-applicability of Section 40A(3). For AY 2009-10, the tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s deletion of the addition under Section 2(22)(e).
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