2018 (6) TMI 367 - AT - Income Tax

Validity of notice u/s 148 - validity of notice served - non striking of irrelevant columns - Held that - The intent and purpose of the notice issued was served and there is no injustice caused to the assessee - no material was placed to show that the assessee was misled in any manner for not specifically striking the irrelevant columns - therefore, we hold that the notice issued by the AO is valid and the same is upheld - Decided against the assessee. Additions u/s 69 - unexplained amounts of loans received - Held that - As AR argued that the addition cannot be made u/s 69, and further, submitted that the entire sum of ₹ 2,10,000/- was opening balance but not the sums received in the year under consideration. Since the assessee has not furnished the information and the relevant material was not placed before the AO to examine the issue, we are of the considered opinion that the issue should be remitted back to the file of the AO Additions u/s 69A - Held that - Assessee has collected the sums from the clients in the name of tax and has not deposited the same to the Government account or refunded to the respective clients, it constitutes the liability against the assessee but does not form part of income - hence we are of the considered opinion that the monies received by the assessee on behalf of the clients for payment of taxes to be treated as money belonged to the clients or belonged to the Income Tax Department and the same cannot be brought to tax as income in the hands of the assessee - thus we set aside the order of the CIT(A) and delete the addition made by the AO u/s 69A. Disallowance of depreciation - Held that - Assessee did not produce any evidence for purchase of assets and put to use for the purpose of business - thus AO made the disallowance which is confirmed by CIT(A) - hence we do not find any reason to interfere with the order of the Ld.CIT(A) and the same is upheld. Addition of cash credit - Held that - AO made the addition after issuing the show cause notice and giving number of opportunities to the assessee. It is the obligation on the part of the assessee to comply with the notices issued and present his case by furnishing the required information. Having failed to avail the opportunities given to the assessee both before the AO and the CIT(A) the assessee cannot take U turn and make a new argument at this stage. No evidence has been produced before us to establish that the said sums were not credited in the books of accounts. The law cannot help a person who is sleeping over his rights Sale agreement and the advance received for sale of agricultural land we unable to accept the covenants of the unregistered sale agreement as genuine unless it is supported by Registered Sale deed. In the absence of sale deed, evidencing the actual amount passed on to the assessee, the sale agreement cannot be considered as a valid evidence and the Ld.AR did not produce any evidence to establish the source of credits. - Decided against assessee Disallowance of expenditure - Held that - Since the AO has disallowed only 15% of the expenses and the assessee failed to produce any evidence with respect to the genuineness of expenses and we find the disallowance made by AO is justified and not inclined to disturb the order of the Ld.CIT(A). Agricultural income - Held that - As the assessee failed to furnish any evidence with regard to the land holdings with pattadar passbooks and land revenue records. The assessee also failed to produce the details of crops grown, yield, expenditure etc. Therefore, we hold that the Ld.CIT(A) is justified in confirming the addition. Investment made by the assessee in Nellimerla land - Held that - In the instant case the sale deed was registered for ₹ 50000/- and no other evidence was brought on record by the AO to establish that the excess consideration was passed on to the vendor over and above the sale consideration recorded in the sale dee. The consideration recorded in the sale deed is to be treated as final and accordingly, the addition made by the AO is unsustainable and the same is deleted.

Issues Involved:
1. Validity of Notice under Section 148.
2. Addition under Section 69 for unexplained loans.
3. Addition under Section 69A for unexplained income tax challans.
4. Addition under Section 69A for amounts collected from clients but not deposited.
5. Disallowance of depreciation.
6. Addition of cash credits.
7. Adhoc disallowance of expenditure.
8. Treatment of agricultural income.
9. Addition for investment in land at Nellimerla.
10. Typographical error in the assessment order under Section 143(3) read with Section 147.

Issue-wise Detailed Analysis:

1. Validity of Notice under Section 148:
The assessee argued that the notice issued under Section 148 was vague due to irrelevant portions not being struck off, making the assessment void ab initio. However, the tribunal held that since the assessee complied with the notice by filing the return of income and did not raise any objections at the assessment stage, the notice was valid. The tribunal cited several High Court decisions supporting the view that minor defects do not invalidate the notice if the intent and purpose are served.

2. Addition under Section 69 for Unexplained Loans:
The assessee contested the addition of ?2,10,000 made by the AO under Section 69. The tribunal noted that the assessee failed to provide evidence to prove the genuineness of the loans during the assessment and appellate proceedings. The case was remitted back to the AO to verify whether the loans were taken during the year under consideration or were opening balances from previous years.

3. Addition under Section 69A for Unexplained Income Tax Challans:
The AO added ?9,01,407 under Section 69A for alleged fake income tax challans. The CIT(A) confirmed ?79,137 for the assessment year 2007-08. The tribunal noted that the amounts were collected by the assessee but not deposited in the government account. The tribunal held that since the money belonged to clients and was not the assessee's income, the addition under Section 69A was not justified and deleted the addition.

4. Addition under Section 69A for Amounts Collected from Clients but Not Deposited:
The AO made protective additions for amounts collected from clients but not deposited. The tribunal held that the money collected for tax purposes but not deposited or refunded to clients does not constitute income for the assessee. The tribunal deleted the additions made under Section 69A for the assessment years 2007-08 to 2011-12.

5. Disallowance of Depreciation:
The AO disallowed depreciation of ?33,975 claimed by the assessee on the grounds of lack of evidence for the purchase and use of assets. The CIT(A) upheld the disallowance. The tribunal found no reason to interfere with the CIT(A)'s order as the assessee failed to provide necessary evidence.

6. Addition of Cash Credits:
For the assessment years 2008-09 to 2011-12, the AO made additions for unexplained cash credits. The assessee argued that the credits were from the sale of agricultural land. The tribunal noted that the assessee failed to provide evidence to substantiate the claims and upheld the additions made by the AO.

7. Adhoc Disallowance of Expenditure:
The AO disallowed 15% of the expenditure on an adhoc basis due to lack of details. The CIT(A) upheld the disallowance. The tribunal found the disallowance justified as the assessee failed to produce evidence for the expenditure and upheld the CIT(A)'s order.

8. Treatment of Agricultural Income:
The AO treated the agricultural income claimed by the assessee as non-agricultural income due to lack of evidence. The CIT(A) confirmed the addition. The tribunal upheld the CIT(A)'s order as the assessee failed to provide evidence of land holdings, crops grown, and related details.

9. Addition for Investment in Land at Nellimerla:
The AO added ?1,05,200 for the difference between the declared value and the actual value of land purchased. The CIT(A) confirmed the addition. The tribunal deleted the addition, citing that the sale consideration in the registered sale deed is final unless there is tangible evidence of excess consideration.

10. Typographical Error in Assessment Order under Section 143(3) read with Section 147:
The assessee argued that the assessment was invalid due to a typographical error. The tribunal held that the error was curable under Section 292B and upheld the assessment order as the notice under Section 143(2) was issued in time and sufficient opportunity was given to the assessee.

Conclusion:
The tribunal allowed the appeals of the assessee partly, providing relief on certain grounds while upholding the additions and disallowances on others. The detailed analysis addressed each issue comprehensively, ensuring that relevant legal principles and precedents were applied appropriately.

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