2017 (6) TMI 642 - AT - Income Tax

Undisclosed jewellery - search and seizure operation u/s 132(1) - Held that - In the light of the admitted fact that the assessee s wife owned up the jewellery, the assessment of the same in the hands of the assessee was not permissible. The assessee s wife is assessed to tax by ACIT, Central Circle-1, Kolkata. There is no reason why the addition should be made in the hands of the assessee. The addition is accordingly directed to be deleted. Not allowing expenses against the suppressed receipts from rendering courier services - Held that - A perusal of the income and expenditure account for A.Y.2010-11 shows that the suppressed booking receipts has been shown in the credit side in the income and expenditure account. The income as per the income and expenditure account is a sum of ₹ 2,63,358/-. In the computation of total income for A.Y.2010-11, the AO has adopted this income as the starting point of computation of income under the head profits and gains of business. Thus the income of ₹ 2,63,357/- includes all expenses debited in the income and expenditure account. The direction of CIT(A) has to be understood as making a reference to no further expenses are to be allowed over and above what is debited in the income and expenditure account. This direction in our view is proper and appropriate because the assessee has not been able to substantiate any other expenses over and above the expenditure debited in the profit and loss account. - Decided against assessee.

Summary

Issues:
1. Delay in filing the appeal by the assessee.
2. Addition of undisclosed income in respect of jewellery.
3. Disallowance of expenses in respect of courier business.

Delay in filing the appeal:
The appeal was filed by the Assessee against the order of C.I.T.(A)-Central-I, Kolkata relating to A.Y.2010-11 with a delay of about 18 days. The Chartered Accountant of the assessee explained the delay due to professional commitments. The Tribunal, after perusing the reasons given in the affidavit, condoned the delay, considering it was due to a reasonable cause.

Addition of undisclosed income in respect of jewellery:
During a search and seizure operation, jewellery valued at &8377;9,11,895 was found in the business premises of the assessee. The AO made an addition of &8377;1,08,895 to the total income of the assessee, as the explanation for the remaining 79 gms of jewellery was deemed not proper. However, on appeal, the Tribunal held that since the jewellery belonged to the assessee's wife, who had already owned up to it, the addition in the hands of the assessee was not permissible. The addition was directed to be deleted.

Disallowance of expenses in respect of courier business:
Evidence of suppressed receipts from courier services was found during a search, and the AO estimated suppressed receipts for the entire year based on the evidence. An addition of &8377;7,16,985 was made to the total income of the assessee. However, on appeal, the CIT(A) deleted the addition, stating that no presumption could be drawn for suppressed sales for the remaining period. The CIT(A) directed the AO to restrict the assessment of undisclosed income to the receipts found in the seized material and disallowed any further expenses. The Tribunal upheld the decision, stating that the income already included all expenses debited in the income and expenditure account, and no further expenses could be allowed without substantiation.

In conclusion, the Tribunal partly allowed the appeal of the assessee, deleting the addition of undisclosed income in respect of jewellery and upholding the disallowance of further expenses in the courier business. The delay in filing the appeal was condoned, and the decisions were made based on the evidence and explanations provided during the proceedings.