2016 (3) TMI 92 - AT - Income Tax

Addition u/s 69A - Held that - The assessee vide letter dated 09/11/2009 claimed that the amount in question had been kept out of his personal savings of the earlier years and the same has been reflected in the books of account. From the aforesaid facts it can safely be inferred that the money in question belonged to the assessee particularly in the light of the fact that the same had not been recorded in the books of accounts at the time of search. Under these circumstances, benefit of entries made subsequently in Capital Account Statement as on 31/03/2008 cannot be extended to hold that the assessee has discharged the burden of explaining the nature and source of acquisition of money in question to the satisfaction of the authorities concerned within the meaning of section 69A of the Act. - Decided against assessee Addition to the extent of amount donated to Seth Shree Motisha Sadharmik Bhakti Kendra, Mumbai -assessee has produced copies of certificates u/s 80G - Held that - Explanation given by the assessee in respect of payment allegedly made to Jain International trade Organization and other donations in question are not supported by any documentary evidence, therefore, there is no reason to interfere with the findings of the Ld. CIT(A). In our considered opinion the appellant has failed to establish that the remaining amount of ₹ 14,801/- was either spent exclusively for the purpose of business or given as donations within the meaning of 80G and is not entitled for claim deduction thereof. The Ld.CIT has, therefore, rightly confirmed the disallowance to the extent of ₹ 14,801/-. - Decided against assessee

Summary

Issues:
1. Unexplained income found during search and seizure action.
2. Disallowance of certain expenses claimed by the appellant.

Issue 1: Unexplained income found during search and seizure action:
The appellant, engaged in bullion trading, had excess stock of gold and unexplained cash found during a search and seizure operation. The appellant offered the excess gold and cash to tax during the operation and incorporated it in the return of income. The Assessing Officer (AO) treated the unexplained cash as income under section 69A of the Income Tax Act, 1961. The appellant appealed to the Ld. CIT(A), who confirmed the addition of a portion of the unexplained cash. The appellant challenged the order, claiming the cash was part of personal savings reflected in the books. The Tribunal noted that the appellant failed to satisfactorily explain the nature and source of the excess money found, as required by section 69A. Despite subsequent entries in the Capital Account Statement, the burden of proof was not met. The Tribunal upheld the Ld. CIT(A)'s decision, dismissing the appellant's appeal.

Issue 2: Disallowance of certain expenses claimed by the appellant:
The Ld. CIT(A) directed the AO to reduce the addition related to donations supported by certificates under section 80G of the Act. However, the appellant's explanation for other expenses claimed was not substantiated by documentary evidence. The Tribunal found that the appellant failed to prove that the remaining amount of disallowed expenses was exclusively for business purposes or qualified for deductions under section 80G. Consequently, the disallowance of the remaining expenses was upheld. The Tribunal affirmed the Ld. CIT(A)'s decision on this issue and dismissed the appellant's appeal.

In conclusion, the Tribunal upheld the decisions of the Ld. CIT(A) regarding the unexplained income found during the search and seizure operation and the disallowance of certain expenses claimed by the appellant. The appeal filed by the appellant was dismissed, and the orders were pronounced on 22nd January 2016.