2013 (9) TMI 1302 - AT - Income Tax

2018 (4) TMI 1970 - AT

Issues Involved:

1. Addition of Rs. 71,304/- due to difference in cash credit account.
2. Adjustment of transportation expenses and entry tax on closing stock.
3. Disallowance u/s 40(a)(ia) for non-deduction/deposit of TDS on advertisement charges.
4. Disallowance u/s 40A(3) for cash payments exceeding Rs. 20,000/-.
5. Disallowance of traveling expenses related to earlier years.
6. Disallowance of interest on advances to sister concern.
7. Addition u/s 69 for undisclosed investment in construction.
8. Addition u/s 68 for unexplained deposit.
9. Addition u/s 28(iv) for unclaimed credit balances.
10. Addition due to difference in accounts of Mahindra & Mahindra Limited and Hero Honda Limited.

Summary:

1. Addition of Rs. 71,304/- due to difference in cash credit account:
The Assessing Officer (AO) added Rs. 71,304/- to the returned income due to a discrepancy in the cash credit account. The Commissioner of Income Tax (Appeals) [CIT(A)] deleted the addition, noting that the credit was a refund from the Department of Excise already offered for taxation in the assessment year 2008-09. The Tribunal upheld the deletion, finding no reason to interfere with the CIT(A)'s order.

2. Adjustment of transportation expenses and entry tax on closing stock:
The AO enhanced the value of the closing stock by Rs. 1,09,964/- for not adjusting transportation expenses and entry tax. The CIT(A) deleted the addition, observing that the assessee consistently followed an accounting system that did not require such adjustments. The Tribunal upheld the CIT(A)'s order, agreeing that any change would distort the profit shown by the assessee.

3. Disallowance u/s 40(a)(ia) for non-deduction/deposit of TDS on advertisement charges:
The AO disallowed Rs. 60,574/- for non-deduction/deposit of TDS on advertisement charges. The CIT(A) restricted the disallowance to Rs. 28,714/-, noting that TDS was deducted and deposited late for some payments but not deducted for Rs. 28,714/-. The Tribunal upheld the CIT(A)'s order.

4. Disallowance u/s 40A(3) for cash payments exceeding Rs. 20,000/-:
The AO disallowed Rs. 68,556/- for cash payments exceeding Rs. 20,000/-. The CIT(A) confirmed the disallowance, finding no evidence that the payments were covered under Rule 6DD(j). The Tribunal upheld the CIT(A)'s order.

5. Disallowance of traveling expenses related to earlier years:
The AO disallowed Rs. 1,05,800/- for traveling expenses related to earlier years. The CIT(A) deleted the addition, accepting that the expenses were crystallized during the year under consideration. The Tribunal upheld the CIT(A)'s order.

6. Disallowance of interest on advances to sister concern:
The AO disallowed proportionate interest on advances to the sister concern. The CIT(A) confirmed the disallowance. The Tribunal restored the matter to the AO to reconsider the business expediency of the advances, following the Supreme Court's decision in S.A. Builders.

7. Addition u/s 69 for undisclosed investment in construction:
The AO added Rs. 21,55,814/- as undisclosed investment in construction. The CIT(A) confirmed the addition. The Tribunal found that the assessee maintained detailed accounts and no defects were pointed out by the AO. The Tribunal directed the AO to delete the addition.

8. Addition u/s 68 for unexplained deposit:
The AO added Rs. 2,00,000/- as unexplained deposit. The CIT(A) confirmed the addition. The Tribunal restored the issue to the AO for reconsideration, noting that additional evidence was not properly considered.

9. Addition u/s 28(iv) for unclaimed credit balances:
The AO added Rs. 10,13,579/- for unclaimed credit balances. The CIT(A) deleted the addition, finding no cessation of liabilities. The Tribunal upheld the CIT(A)'s order.

10. Addition due to difference in accounts of Mahindra & Mahindra Limited and Hero Honda Limited:
The AO added Rs. 4,46,649/- due to differences in accounts. The CIT(A) deleted the addition, noting that the difference was assessed in the hands of the wrong entity. The Tribunal upheld the CIT(A)'s order.

Conclusion:
The Tribunal allowed the appeal and cross-objection in part, upholding most of the CIT

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