2017 (5) TMI 714 - AT - Income Tax

Unexplained expenditure - addition in assessment orders under section 153A - Held that - Assessing Officer merely contended in the remand report that copies of the account submitted by the assessee do not clearly substantiate his claim. The learned counsel for the assessee prepared a chart as per the contents of the seized documents and each entry is explained through entries in the day book journal voucher and ledger account of advances (land). It therefore supports the explanation of the assessee that all the expenditure mentioned in the seized papers are duly reflected in the regular books of account of the assessee. The learned Departmental representative did not file any objection to the documents filed in the paper book were part of the record of the learned Commissioner of Income-tax (Appeals). Therefore the explanation of the assessee that all the expenditure mentioned in the seized papers are reconciled through regular books of account stands established and proved. Therefore there is no justification to make or sustain the addition against the assessee. We therefore set aside the orders of the authorities below and delete the addition - Decided in favour of assessee.

Summary

Issues involved:
1. Addition of unexplained expenditure in assessment years 2006-07 to 2011-12.

Detailed Analysis:
1. In the appeal for the assessment year 2006-07, the assessee contested the addition of ?25,72,821 as unexplained expenditure following a search and seizure operation. The Assessing Officer made the addition under section 69C of the Income-tax Act, 1961, as the assessee failed to reconcile the expenses found in seized documents with the regular books of account. The assessee argued that the expenses were reflected in the books of account. The Commissioner of Income-tax (Appeals) rejected the contention, but the assessee provided detailed explanations and evidence, including day book, journal vouchers, and land account copies, to support the claim that the expenses were legitimate business expenditures. The Tribunal found that the seized papers' entries were reconciled with the regular books of account, and the addition was unjustified. The Tribunal highlighted the insufficient time given to the assessee during assessment proceedings and ruled in favor of the assessee, deleting the addition.

2. For the assessment years 2007-08 to 2011-12, the assessee challenged various additions of unexplained expenditures. Following the decision on the 2006-07 assessment year appeal, where the addition was deleted due to reconciled expenses, the Tribunal set aside the orders for the remaining years and deleted all the additions. The Tribunal allowed the appeals for all years except partially for the assessment year 2007-08, where one ground was dismissed as not pressed, and another addition was challenged but deleted following the precedent set in the 2006-07 assessment year.

In conclusion, the Tribunal ruled in favor of the assessee, deleting the additions of unexplained expenditures for all the assessment years except partially for one year, based on the reconciled expenses and lack of justification for the additions.