2017 (7) TMI 1003 - AT - Income Tax

Addition on account of unexplained cash deposits in bank account on account of excise duty - Held that - The assessee has explained the source of deposit of entire license fee of ₹ 3,30,16,69,936/- deposited by the AOP, which included the deposit of ₹ 79,50,000/-, and thus the deposit of amount of ₹ 79,50,000/-, claimed by the Assessing Officer towards the excise duty, stand explained. In our opinion, the order of the Ld. CIT-A on the issue in dispute is comprehensive and well reasoned and no interference Unexplained investment in purchase of car - Held that - In view of no explanation of source of investment by the assessee, the Assessing Officer held the investment as unexplained. During first appellate proceedings, the assessee explained the same as ₹ 5.00 lakhs from own resources and balance ₹ 15 lakh out of loan taken from HDFC bank. During remand proceeding, the Assessing Officer verified these facts. In view of the verification by the Assessing Officer, the Ld. CIT-A accepted the explanation of the assessee and deleted the addition. In our opinion, the action of the Ld. CIT-A, in deleting the addition is well reasoned and justified as the source of investment stands duly explained and which is also verified by the Assessing Officer. Receipt of payment from various parties - reconciliation of the TDS with incomes/receipts declared in the return of income - N.P. determination - Held that - Assessee has explained payments corresponding to TCS reflected in the form No. 26- AS related to the assessee. In the additional evidences, the assessee furnished copy of ledger accounts of all the relevant parties appearing in the books of accounts of the AOP showing the purchases made from those parties and the payments from bank account of the AOP to those parties. Once the payment to those parties has been verified from the books of the AOP, in our opinion no addition could have been made in the case of assessee. In these circumstances, the finding of the Ld. CITA on the issue in dispute is comprehensive and well reasoned and we do not find any error in the same

Summary

Issues Involved:
1. Deletion of additions by the CIT(A) on various accounts.
2. Admission of additional evidence by the CIT(A) in contravention of Rule 46A of Income Tax Rules, 1962.
3. Allegation of the impugned order being perverse both in facts and law.

Issue-wise Detailed Analysis:

1. Deletion of Additions by the CIT(A):

a. Unexplained Cash Deposits:
The Assessing Officer (AO) added ?53,93,467/- as unexplained cash deposits in the assessee's bank accounts due to non-compliance with notices. The CIT(A) accepted additional evidence showing these deposits were business receipts reflected in the books of accounts. The AO, in the remand report, did not dispute this explanation. The Tribunal upheld the CIT(A)’s deletion of this addition, noting the AO verified the source and found no adverse comments.

b. Payment of Excise Duty:
The AO added ?80,00,000/- for excise duty payments, which the assessee explained as part of ?79,50,000/- paid by an Association of Persons (AOP), M/s Punjab Trading Associates, and duly accounted for in the AOP’s books. The CIT(A) deleted the addition after verifying the deposit from the AOP’s records. The Tribunal confirmed this deletion, agreeing the source of the deposit was adequately explained and verified.

c. Unexplained Investment in Car:
The AO added ?20,00,000/- for the purchase of a car, which the assessee explained as ?5,00,000/- from own resources and ?15,00,000/- from an HDFC bank loan. The AO verified these claims during remand proceedings. The CIT(A) deleted the addition, and the Tribunal upheld this decision, finding the source of investment satisfactorily explained and verified.

d. Business Income:
The AO added ?28,32,259/- by estimating 10% net profit on ?2,83,22,590/- shown as receipts in Form 26AS. The assessee clarified these were payments made to liquor suppliers, not receipts, and were recorded in the AOP’s books. The CIT(A) accepted this explanation and deleted the addition. The Tribunal upheld this deletion, noting the payments were verified from the AOP’s records, and no income should be attributed to the assessee.

2. Admission of Additional Evidence:
The Revenue contended that the CIT(A) admitted additional evidence in contravention of Rule 46A. Rule 46A allows additional evidence if the AO refused to admit it, the assessee was prevented by sufficient cause, or the AO did not provide sufficient opportunity. The CIT(A) forwarded the evidence to the AO, who provided a remand report. The Tribunal found the CIT(A) complied with Rule 46A by allowing the AO to examine and comment on the evidence. Thus, the Tribunal dismissed this ground of appeal.

3. Allegation of the Impugned Order Being Perverse:
The Revenue claimed the CIT(A)’s order was perverse in facts and law. However, the Tribunal found no merit in this claim, as the CIT(A)’s decisions were based on verified evidence and remand reports. The Tribunal upheld the CIT(A)’s order, finding it well-reasoned and justified.

Conclusion:
The Tribunal dismissed the Revenue’s appeal, confirming the CIT(A)’s deletions of additions and compliance with Rule 46A. The Tribunal found no error or perversity in the CIT(A)’s order. The decision was pronounced in the open court on 30th March 2017.