2016 (1) TMI 576 - AT - Income Tax

Addition u/s 69A - excess cash found during the Survey operations - whether the said excess cash was duly explained by late Shri Ramautar Prasad Verma and his son by filing proper cash-flow statements? - Held that - Plea of the asessee is duly substantiated by the cash flow statement of Shri Arun Kumar Verma, assessee s son and personal cash book of the assessee. The fact that such an explanation was not given at the time of survey cannot be the basis for rejecting the claim of the assessee. Accordingly direct the AO to delete the addition made in this regard. - Decided against revenue Unexplained jewellery found during Survey - Held that - One plea of the assessee that the difference being very minor should be ignored. Another plea of the assessee was that there would be human erred in taking the weight from the weighing machine. These are general explanation and cannot be the basis on which addition can be deleted. It is also do not find the item-wise tally of the stock as per physical verification at the time of survey on the stock as per the stock register of the assessee. It is therefore not possible to come to a conclusion that the difference is only due to incorrect weighing of the items of jewellery. Therefore, confirm the order of CIT(A) in this regard. - Decided against assessee Addition made out of payments of Commission - Held that - The evidence on record in the form of bills raised by Shri Ashok Kr. Gupta and Shri Sunil Verma are placed at pages 22 to 27 of the assessee s paper book. The bills merely refer to commission on sales and making charges for a particular period. The evidences filed by the assesse cannot be accepted by the AO as it is and therefore AO thought it fit to summon the persons to whom the commission was paid. The AO could not succeed to procure the persons of the recipients of the commission. The assessee also did not make any efforts to produce these person before the AO for examination. In such circumstances disallowance of commission was rightly made by the revenue authorities - Decided against assessee Disallowance towards Travelling and Conveyance expenses and repairs and maintenance expenses - Held that - The AO made the impugned disallowances on the ground that the same were supported by self made vouchers. Disallowance in question was a paltry sum compared to the expenditure claimed by the assessee. It is of the view that the disallowance is reasonable and does not call for any interference. - Decided against assessee

Summary

Issues:
1. Addition of excess cash found during survey operations.
2. Addition of unexplained jewellery found during survey.
3. Addition of payments of commission.
4. Disallowance of Travelling and Conveyance expenses.
5. Disallowance of Repairs & Maintenance expenses.

Issue 1: Addition of Excess Cash Found During Survey Operations:
- The assessee explained the excess cash found during the survey operation, stating that a portion belonged to his son and another part was brought from home.
- The explanation was supported by cash flow statements and personal cash book.
- The Tribunal found the explanation reasonable and directed the Assessing Officer (AO) to delete the addition made.
- The delay in providing the explanation at the time of survey was not considered a valid reason to reject the claim.

Issue 2: Addition of Unexplained Jewellery Found During Survey:
- Discrepancy in gold stock was found during the survey.
- The assessee explained the difference as due to unrecorded stock from a supplier and incorrect weighing.
- The AO and CIT(A) did not accept the explanations provided by the assessee.
- The Tribunal upheld the decision of CIT(A) as the explanations were considered general and insufficient to delete the addition made.

Issue 3: Addition of Payments of Commission:
- Payments of commission were made to two parties, but the recipients could not be located.
- The assessee provided bills with PAN numbers and TDS deductions as proof of genuineness.
- The Tribunal held that the assessee failed to prove the nature of services rendered for the commission paid, leading to the disallowance of the commission payments.
- The reliance on a High Court decision was not considered sufficient to support the claim.

Issue 4: Disallowance of Travelling and Conveyance Expenses:
- Disallowance of Travelling and Conveyance expenses was made due to self-made vouchers.
- The Tribunal upheld the disallowance, considering the amount insignificant compared to the total claimed expenses.

Issue 5: Disallowance of Repairs & Maintenance Expenses:
- Disallowance of Repairs & Maintenance expenses was also based on self-made vouchers.
- The Tribunal found the disallowance reasonable given the overall claimed expenses.
- Both disallowances were upheld, and the appeal was partly allowed.

In conclusion, the Tribunal ruled in favor of the assessee regarding the excess cash found during survey operations but upheld the additions related to unexplained jewellery, commission payments, and disallowed expenses. The decision was based on the adequacy of explanations provided and the supporting evidence.