2015 (5) TMI 1177 - AT - Income Tax

Addition on account of declaration made u/s. 132(4) - HELD THAT - We direct the AO to determine the total income of the assessee either on the basis of estimation or on the basis of declaration made by the assessee. We delete the addition made by AO and confirmed by FAA - decided in favour of the assessee. Addition on account of unexplained credit - HELD THAT - AO had mentioned that the assessee had mentioned about explanation regarding 3.44 lacs on 30. 11. 2006. Once he had received the letter it was his duty to consider all annextures of the letters. The assessee, before the FAA specifically mentioned the relevant documents were not considered. In these circumstances we are of the opinion that, in the interest of justice, matter should be restored back to FAA for fresh adjudication.He is directed to afford a reasonable opportunity to the assessee and to consider all the documents to be furnished by the assessee with regard to the disputed amount of 3.44 lacs. Levy of interest u/s. 234A 234B and 234C - HELD THAT - Levy of interest is consequential in nature ground decided against the assessee and direct the AO re-compute the interest liability after reducing tax liability at source and decide the issue as per provisions of law.

Summary

Issues:
1. Condonation of delay in filing appeal
2. Addition of Rs. 3.90 lakhs on account of declaration made under section 132(4) of the Act
3. Confirmation of addition of Rs. 3,44,500/- on account of unexplained credit
4. Charging of interest under sections 234A, 234B, and 234C of the Act

Detailed Analysis:

1. Condonation of Delay:
The assessee sought condonation of a 20-day delay in filing the appeal, attributing it to the delay in releasing the appeal fee by the custodian. The application was supported by an affidavit. The Tribunal, considering similar precedents, condoned the delay.

2. Addition of Rs. 3.90 Lakhs:
The Assessing Officer made an addition based on a declaration made under section 132(4) of the Act. The appellant argued that the declaration was an estimate and the books were incomplete. However, the AO made the addition due to undisclosed income and benami transactions. The First Appellate Authority upheld the addition. The Tribunal, following a similar case precedent, deleted the addition as it was based on an estimate and not additional income.

3. Unexplained Credit of Rs. 3,44,500/-:
The AO added this amount to the total income as the assessee failed to explain the difference between the accounts. The FAA upheld the addition, stating lack of evidence. The Tribunal found that the assessee had submitted relevant documents which were not considered by the AO. The matter was remanded back to the FAA for fresh adjudication.

4. Charging of Interest:
The Tribunal directed the AO to recompute the interest liability after reducing the tax liability at source, following a previous decision on a similar issue. The interest levy was considered mandatory, and the AO was instructed to decide the issue as per the provisions of law.

In conclusion, the appeal filed by the assessee was partly allowed, with decisions made on each issue presented before the Tribunal.