2012 (12) TMI 1216 - AT - Income Tax

Summary

Issues Involved:
1. Validity of proceedings initiated u/s 153A.
2. Disallowance of vehicle maintenance expenses.
3. Depreciation on vehicles.
4. Addition on account of undisclosed sales.
5. Addition on account of excess stock.

Summary:

1. Validity of Proceedings Initiated u/s 153A:
The assessee contended that the proceedings initiated u/s 153A and the order passed by the AO were without jurisdiction, unlawful, and invalid. The CIT(A) rejected these contentions, but during the hearing, the assessee did not press these grounds. Therefore, grounds No. 1 to 10, 12, and 13 were dismissed as not pressed.

2. Disallowance of Vehicle Maintenance Expenses:
In ITA No. 1313/Chd/2012, the AO made an addition for personal usage of the vehicle, disallowing 1/5th of the expenses. The CIT(A) confirmed this addition. However, the ITAT found that the original assessment had already disallowed a sum of Rs. 60,000 for personal usage, and no new material was found during the search. Therefore, the ITAT deleted the addition.

In ITA No. 1314/Chd/2012, similar facts were present, and the ITAT followed the same reasoning to delete the addition.

In ITA No. 1315/Chd/2012, the ITAT directed the AO to disallow only 1/10th of vehicle maintenance towards personal usage, as no addition was made originally, and there was no evidence of FBT paid.

In ITA No. 1316/Chd/2012, the AO disallowed depreciation on cars, allowing only 15% instead of 50%. The CIT(A) confirmed this, and the ITAT found no force in the assessee's submissions, confirming the CIT(A)'s order.

3. Depreciation on Vehicles:
The ITAT confirmed that depreciation on cars should be allowed at 15% instead of 50%, as the vehicles did not qualify as "commercial vehicles" under the relevant Income Tax Rules.

4. Addition on Account of Undisclosed Sales:
In ITA No. 1317/Chd/2012, the AO added Rs. 3,34,965 as income from undisclosed sales based on seized documents. The CIT(A) confirmed this, and the ITAT agreed, finding no correlation between unrecorded sales and the stock found during the search.

Similarly, for another set of documents, the AO added Rs. 4,58,106 as profit from undisclosed sales. The CIT(A) and ITAT confirmed this addition, again finding no correlation with the surrendered stock.

5. Addition on Account of Excess Stock:
The AO added Rs. 2,08,35,789 for unexplained investment in stock (gold) beyond the surrendered amount. The CIT(A) deleted this addition, accepting the assessee's argument that the stock was valued at market price during the search, while the trading account was at cost price. The ITAT confirmed the CIT(A)'s order, finding no difference in the physical quantity of stock and the amount surrendered.

Conclusion:
All appeals of the assessee were partly allowed, and the appeal of the revenue was dismissed. The order was pronounced in the open court on 30.9.2013.