2014 (9) TMI 1178 - AT - Income Tax

Rejection of books of accounts - HELD THAT - CIT(A) himself had admitted the books of account as an additional evidence and the Department is not in appeal against those orders. Once the admission of the books of account has been accepted then the CIT(A) ought to have gone with the books of account and if the books of account were not found proper or as per the accounting policies the same should have been rejected but that being not the case no reason for not admitting the books of account - the books of account ought to have been examined by the authorities below. We therefore restore this issue to the file of the A.O. to examine the correctness of the books of account with supporting evidences. Enhancement of income in principle - mismatch in the balances in the ledger account of the appellant and Late Shri Harshad S. Mehta - difference on account of opening balance - HELD THAT - The difference calculated by the A.O. is at 33, 90, 593/- leaving a megre sum of 20/-. Further we find that Late Shri Harshad S. Mehta has to receive more amount from the assessee therefore the difference cannot be treated as income of the assessee. It is not a case where the assessee is showing more amounts to be received from Late Shri Harshad S. Mehta. Further it is an undisputed fact that the difference is only in respect of opening balances and with a difference of 31072/- pertaining to the year under consideration. We therefore restore this issue to the file of the A.O. for the limited purpose of verification of reconciliation of the difference between the opening balances and the closing balances relating to brokerage and lease rent. The assessee is directed to file necessary details. Levy of interest u/s 234A and 234B is mandatory however the same is consequential in nature and hence the necessity of adjudicating this ground does not arise. Correct amount of long term capital gain - HELD THAT - After admitting this additional ground in our considered opinion it requires verification of facts. We therefore restore the issue to the file of A.O. The A.O. is directed to verify the correct amount of long term capital gain as per the details brought to his notice. The assessee is directed to furnish necessary details. The additional ground is accordingly allowed for statistical purpose. Addition on account of profit on sale of shares - HELD THAT - As gone through the order of the first appellate authority in the case of Shri Hitesh Mehta dtd 29-3-2012. We find that the entire addition has been made by the A.O. on the basis of information gathered from different sources. We find that the A.O. has merely picked up figure from the Annexure and arrived at the figure of addition without making enquiry or bringing any evidence on record. We find that on identical facts in the case of Shri Hitesh Mehta the additions were deleted. The said order was challenged before the Tribunal but this issue was not raised before the Tribunal

Summary

Issues Involved:
1. Principles of natural justice.
2. Determination of income based on final books of account.
3. Enhancement of income.
4. Disallowance of deduction on account of interest expenditure.
5. Levy of interest under sections 234A and 234B of the Income Tax Act.
6. Correct amount of long-term capital gain.
7. Addition on account of profit on sale of shares.

Issue-wise Detailed Analysis:

1. Principles of Natural Justice:
The assessee argued that the Assessing Officer (AO) did not comply with the principles of natural justice during the assessment and remand proceedings. However, this ground was not pressed by the assessee's counsel and was dismissed as not pressed.

2. Determination of Income Based on Final Books of Account:
The assessee contended that the CIT(A) should have accepted the book results. The Tribunal noted that in an earlier round of litigation, the CIT(A) admitted the books of account as additional evidence. The Tribunal found no reason for not admitting the books of account and restored the issue to the AO to examine the correctness of the books with supporting evidence. This ground was allowed for statistical purposes.

3. Enhancement of Income:
The CIT(A) considered the AO's proposal for enhancement due to a mismatch in ledger balances between the assessee and Late Shri Harshad S. Mehta. The CIT(A) found that the difference was due to the opening balance and directed the AO to enhance income only for the balance entries. The Tribunal restored the issue to the AO for verification of reconciliation of the differences. This ground was partly allowed for statistical purposes.

4. Disallowance of Deduction on Account of Interest Expenditure:
The Tribunal noted that this issue had been decided in the assessee's favor in an earlier case for A.Y. 1991-92. Following the previous Tribunal's directions, the issue was restored to the AO for re-examination. This ground was allowed for statistical purposes.

5. Levy of Interest Under Sections 234A and 234B:
The Tribunal held that the levy of interest under sections 234A and 234B is mandatory but consequential in nature. Therefore, there was no need for separate adjudication on this ground.

6. Correct Amount of Long-term Capital Gain:
The assessee raised an additional ground regarding the correct amount of long-term capital gain. The Tribunal admitted this ground and restored the issue to the AO for verification of facts and correct computation. This ground was allowed for statistical purposes.

7. Addition on Account of Profit on Sale of Shares:
The Revenue's appeal concerned the deletion of an addition made by the AO for profit on the sale of shares. The CIT(A) found that the AO did not provide any breakup or basis for the figures used. The Tribunal upheld the CIT(A)'s decision, noting that similar additions were deleted in another case involving similar facts. This ground was dismissed.

Conclusion:
The assessee's appeal was partly allowed for statistical purposes, and the Revenue's appeal was dismissed. The Tribunal directed the AO to re-examine specific issues, including the correctness of the books of account, reconciliation of ledger differences, and the correct amount of long-term capital gain.