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2015 (10) TMI 815 - AT - Income TaxUnexplained advances - CIT(A) deleted the addition - assessee has income from salary and other sources - Held that - CIT (A) has decided the case categorically and assessee has not honoured the disclosure in the return because no incriminating documents were found during the course of search. The ld. CIT (A) had given various reasons of retraction and also has considered the evidence for not honouring the statement made under section 132(4) of the IT Act. The ld. D/R had not controverted the findings given by ld. CIT (A). It is a legal proposition that statement recorded under section 132(4) has evidentiary value but is rebuttable presumption. The assessee has produced the evidence before ld. CIT (A) and he came to the conclusion that addition made by the AO was not justified. The case laws referred by the assessee also support the assessee s case. Therefore, we uphold the order of ld. CIT (A). - Decided against revenue. Charging of interest under section 234B - ignoring adjustment of amount lying in P.D. Account - Held that - The case laws referred by the assessee are squarely applicable. Therefore, interest charged under section 234B is not justified as assessee s cash was lying with the department in P.D. account. The assessee had made request to adjust the advance tax from the cash seized and lying in P.D. Account, from time to time. - Decided in favour of assessee.
Issues Involved:
1. Deletion of addition on account of unexplained advances amounting to Rs. 29,23,937/-. 2. Charging of interest under section 234B without considering the adjustment of amount lying in P.D. Account. Issue-wise Detailed Analysis: 1. Deletion of Addition on Account of Unexplained Advances Amounting to Rs. 29,23,937/-: The Revenue appealed against the deletion of an addition of Rs. 29,23,937/- by the CIT (A), Central, Jaipur. The Assessing Officer (AO) had made the addition based on the assessee's admission during search proceedings and a subsequent letter dated 10.11.2009, where the assessee declared undisclosed advances of Rs. 34,50,400/-. However, in the return, only Rs. 5,36,063/- was declared. During the search on 20.10.2009, the assessee admitted to undisclosed income advanced as loans. The AO noted that the assessee reaffirmed this in a letter dated 10.11.2009, but only disclosed Rs. 5,36,063/- in the return. The AO added Rs. 29,23,937/- to the income, citing decisions like Hotel Kiran vs. CIT and Prasan Chand Surana vs. ACIT, which emphasized the binding nature of voluntary statements under section 132(4). The CIT (A) deleted the addition, observing that the initial surrender of Rs. 2,00,00,000/- was revised to Rs. 1,10,40,000/- due to explanations provided for cash and advances. The CIT (A) noted that the surrender of Rs. 34,60,400/- lacked supporting evidence and appeared to be made under duress to round off the total surrender to Rs. 2,00,00,000/-. The CIT (A) referenced case laws like CIT vs. Ashok Kumar Soni and Pannangode Rubber Producing Co. Ltd. vs. State of Kerala, which allow retraction of statements if proven incorrect. The ITAT upheld the CIT (A)'s decision, noting that the assessee provided evidence for retraction and no incriminating documents were found during the search. The ITAT emphasized that statements under section 132(4) have evidentiary value but are rebuttable. 2. Charging of Interest Under Section 234B Without Considering the Adjustment of Amount Lying in P.D. Account: The assessee contested the charging of interest under section 234B, arguing that the cash seized and lying in the P.D. account should have been adjusted against the advance tax liability. The AO charged interest of Rs. 1,89,739/- under section 234B, which was challenged before the CIT (A). The assessee had requested the adjustment of seized cash against advance tax liability through multiple letters dated 25.02.2010, 12.03.2010, and 22.03.2010. The CIT (A) upheld the AO's decision, citing CBDT instructions that seized assets can only be adjusted against existing liabilities determined on completion of assessment. The ITAT, however, found the assessee's argument valid, referencing case laws like CIT vs. Arun Kapoor and CIT vs. Ashok Kumar, which support the adjustment of seized cash against advance tax liability. The ITAT concluded that the interest charged under section 234B was unjustified as the delay in adjustment was due to the department's inaction. Conclusion: The ITAT dismissed the Revenue's appeal regarding the deletion of the addition on account of unexplained advances and allowed the assessee's cross-objection regarding the charging of interest under section 234B. The judgment emphasized the importance of corroborative evidence for additions and the necessity of timely adjustment of seized assets against tax liabilities.
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