2012 (8) TMI 1197 - AT - Income Tax

Summary

Issues Involved:
1. Addition under the head Long Term Capital Gain u/s 50C.
2. Addition on account of deemed dividend u/s 2(22)(e).
3. Addition of Rs. 2,00,000 as speed money and other expenses.
4. Deletion of addition of Rs. 33,60,000 based on statement recorded during survey u/s 133A.

Summary:

Issue 1: Addition under the head Long Term Capital Gain u/s 50C
The assessee contested the addition made by the AO under the head Long Term Capital Gain, where the AO adopted the value determined by the Stamp Valuation Officer (Rs. 27,82,118) instead of the sale consideration shown by the assessee (Rs. 25,70,000). The Tribunal upheld the AO's action, stating that the assessee did not dispute the value determined by the Stamp Valuation Authority during the assessment proceedings. Thus, the Tribunal confirmed the addition made by the AO and upheld the order of the CIT(A).

Issue 2: Addition on account of deemed dividend u/s 2(22)(e)
The AO added Rs. 5 lakhs as deemed dividend, considering the loan taken by the assessee from M/s. Global (India) Hospitality Services Pvt Ltd. The Tribunal found that the amount was part of regular business transactions and not a loan or advance. Therefore, the provisions of section 2(22)(e) were not applicable. The Tribunal deleted the addition of Rs. 5 lakhs made by the authorities below.

Issue 3: Addition of Rs. 2,00,000 as speed money and other expenses
The AO added Rs. 3 lakhs to the total income based on the statement recorded during the survey, where the assessee had offered Rs. 3 lakhs as unexplained expenses. The CIT(A) confirmed the addition of Rs. 2 lakhs as speed money. The Tribunal, in the absence of any details provided by the assessee, upheld the order of the CIT(A) and confirmed the addition of Rs. 2 lakhs.

Issue 4: Deletion of addition of Rs. 33,60,000 based on statement recorded during survey u/s 133A
The AO made an addition of Rs. 35 lakhs based on the statement recorded during the survey, which the CIT(A) reduced to Rs. 1,40,000, applying a net profit rate of 4% on unaccounted sales. The Tribunal agreed with the CIT(A) that the entire unaccounted sales could not be treated as undisclosed income and upheld the application of the net profit rate. The Tribunal confirmed the deletion of Rs. 33,60,000 for both assessment years 2006-07 and 2007-08.

Conclusion:
The appeal filed by the assessee for assessment year 2006-07 was allowed in part, while the appeals filed by the department for assessment years 2006-07 and 2007-08 were dismissed.