2017 (9) TMI 1704 - HC - Income Tax

Unexplained investment in house property - statement recorded u/s 132(4) of the assessee surrendering 1 crore on this point - ITAT deleted the addition - Held that - Taking into account the observations made by the tribunal where after calculation and taking into account true facts and evidence on record the finding has been arrived by the tribunal on the basis of rationality and reading out the documents under its true spirit. In the circumstances the finding arrived at by the tribunal cannot be disturbed and being the final fact finding authority the view taken by the tribunal is just and proper. - Decided in favour of the assessee and against the department.

Summary

Issues Involved:
1. Whether the ITAT order is perverse in deleting the entire addition of ?1,11,00,000 on account of unexplained investment in house property.
2. Whether the ITAT order is perverse in deleting the addition on account of disallowance of interest of ?2,81,685.
3. Whether the ITAT order is perverse in deleting the addition of ?14.64 crores on account of undisclosed cash advances.
4. Whether the ITAT order is perverse in deleting the addition of ?61,49,219 made on account of unexplained gold jewellery and silver.
5. Whether the ITAT is correct in law in deleting the disallowance of loss of ?9,06,470 claimed under the head income from other sources.

Detailed Analysis:

1. Unexplained Investment in House Property:
The appellant challenged the ITAT's decision to delete the addition of ?1,11,00,000 on account of unexplained investment in house property. The court noted that the ITAT had considered the statement recorded under Section 132(4) of the IT Act, where the assessee had surrendered ?1 crore. The tribunal found the computation of construction cost by the AO to be unsubstantiated and based on incorrect assumptions, leading to the deletion of the addition.

2. Disallowance of Interest:
The ITAT's deletion of the disallowance of interest of ?2,81,685 was also contested. The tribunal observed that the assessee had claimed the deduction in the profit and loss account of his business concern. The ITAT found that the interest claimed was legitimate and related to the business, thus allowing the deduction.

3. Undisclosed Cash Advances:
The ITAT's deletion of the addition of ?14.64 crores on account of undisclosed cash advances was another point of contention. The tribunal noted that the addition was based on assumptions and presumptions without corroborative material. The ITAT found that the specific seized documents quoted in the assessment and appellate order were not rebutted under Section 292C of the IT Act by the assessee. The tribunal concluded that the additions were not justified and deleted them.

4. Unexplained Gold Jewellery and Silver:
The addition of ?61,49,219 on account of unexplained gold jewellery and silver was also deleted by the ITAT. The tribunal observed discrepancies in the weight of the jewellery taken during the search and the valuation sheets. The ITAT found that the net weight considered for arriving at the impugned addition was, in fact, a gross weight. The tribunal also considered the CBDT instruction dated 11-05-1994, which provides credit for jewellery held by family members. The ITAT concluded that the jewellery was explained and deleted the addition.

5. Disallowance of Loss under Income from Other Sources:
The ITAT deleted the disallowance of loss of ?9,06,470 claimed under the head income from other sources. The tribunal found that the assessee was engaged in finance brokerage activities, and the interest claimed under the head income from other sources was of a similar nature. The ITAT allowed the deduction, treating it as a business expenditure.

Conclusion:
The court upheld the ITAT's findings, noting that the tribunal had arrived at its conclusions based on rationality and a thorough examination of the evidence on record. The court found no reason to disturb the ITAT's findings, which were considered just and proper. Consequently, the appeals were dismissed, and the issues were answered in favor of the assessee and against the department.