2018 (12) TMI 1253 - AT - Income Tax

Addition on account of share capital introduced in one of the company of the assessee i.e. M/s. Umkal Healthcare Pvt. Ltd.- Held that - CIT (A) failed to understand that the assessee has voluntarily surrendered the amount during the course of search and survey carried out at various premises. He stated that the surrender was made under section 132(4). The disclosure is also not bald. It was backed by the evidences and items of income as well as the amount of investments by the assessee. Hence it cannot be brushed aside lightly. In view of this we reverse the finding of the learned commissioner appeals restore the finding of the learned Assessing officer and confirm the addition of 29.50 lakhs made in the hands - on the assessee on substantive basis on account of the disclosure made during the course of such. Accordingly ground number one and two of the appeal of the learned Assessing officer are allowed. Addition on account of cash paid - Held that - Modification in disclosure from assessee to depreciation claim in case of companies it also holds good for this grounds of appeal. Further during the course of search when the above paper when confronted to assessee he voluntarily admitted vide question number 18 of the statement recorded under section 132 (4) of the act that the above sum was paid by assessee for purchase of one property at Gurgaon. For the reasons given by us in confirming the addition in ground number one and two of the appeal of revenue we also reverse the finding of the learned commissioner appeals and confirm the addition of 1293832/ on account of cash paid. Addition based on seized documents during the course of search - Held that - We are not in a position to uphold the above finding for the simple reason that assessee himself has confessed that h he is inflating cost of assets therefore CIT (A) could not have held so. Further document found during the course of search are correct and belonging to the assessee is the presumption available to the revenue in accordance with the provisions of section 132(4A) and section 292C of the income tax act. However presumption is rebuttable but assessee has not produced any evidence to rebut that presumption - it is not the claim of the assessee that no such transaction has taken place. He merely pleaded that it is a dumb documents. Therefore such addition could not have been deleted. Accordingly we reverse the finding of the CIT (A) and confirm the addition of 30 lakhs in the hands of the assessee. Ground no 4 and 5 of the appeal are allowed.

Summary

Issues Involved:

1. Deletion of addition on account of investment in Umkal Healthcare Pvt Ltd.
2. Deletion of addition on account of undisclosed payment to Ms. Shiv Kumari.
3. Deletion of addition on account of undisclosed payment to Sh. Ram Durani.
4. Deletion of addition on account of undisclosed payment to Sh. Ram Dulari.
5. Restriction of addition on personal usage of telephone, car, and traveling expenses.
6. Deletion of addition on conveyance expenses.
7. Deletion of addition on account of a cryptic and unreasoned order by CIT(A).

Detailed Analysis:

1. Deletion of Addition on Account of Investment in Umkal Healthcare Pvt Ltd:

The appeal contested the deletion of ?29.5 lakhs added by the AO on the basis of a voluntary surrender statement by the assessee, which was later retracted. The assessee argued that the funds were introduced from cash received back from inflated construction costs. The AO disbelieved this explanation, citing a lack of evidence and the delayed retraction. The Tribunal found that the retraction was not bona fide and unsupported by evidence. The CIT(A)'s acceptance of the assessee's explanation without verification was deemed perverse. The Tribunal restored the AO's addition of ?29.5 lakhs on substantive grounds.

2. Deletion of Addition on Account of Undisclosed Payment to Ms. Shiv Kumari:

The AO added ?12,93,832 based on seized documents showing undisclosed payments. The CIT(A) deleted this addition, considering it part of the inflated construction costs already adjusted in the depreciation claim. The Tribunal found that the assessee failed to explain the seized documents and confirmed the addition, reversing the CIT(A)'s decision.

3. Deletion of Addition on Account of Undisclosed Payment to Sh. Ram Durani:

The AO added ?30 lakhs based on seized documents indicating a payment for land purchase. The CIT(A) deleted the addition, citing a lack of cogent evidence of undisclosed income. The Tribunal disagreed, noting the presumption of correctness of seized documents under sections 132(4A) and 292C. The Tribunal confirmed the addition, reversing the CIT(A)'s decision.

4. Deletion of Addition on Account of Undisclosed Payment to Sh. Ram Dulari:

Similar to the previous issue, the AO added ?30 lakhs based on seized documents. The CIT(A) deleted the addition, but the Tribunal found the documents credible and the presumption of correctness unchallenged. The Tribunal confirmed the addition, reversing the CIT(A)'s decision.

5. Restriction of Addition on Personal Usage of Telephone, Car, and Traveling Expenses:

The AO disallowed 20% of expenses for personal use, which the CIT(A) restricted to 10%. The Tribunal found no infirmity in the CIT(A)'s decision and dismissed the ground.

6. Deletion of Addition on Conveyance Expenses:

The AO disallowed 1/5th of conveyance and telephone expenses. The CIT(A) deleted the addition. The Tribunal upheld the CIT(A)'s decision, finding no error.

7. Deletion of Addition on Account of a Cryptic and Unreasoned Order by CIT(A):

The AO argued that the CIT(A)'s order was cryptic and unreasoned. The Tribunal found that the CIT(A) had provided sufficient reasoning for the deletions and dismissed this ground.

Conclusion:

The Tribunal partly allowed the revenue's appeal, confirming the additions related to undisclosed investments and payments while upholding the CIT(A)'s decisions on personal and conveyance expenses. The Tribunal emphasized the lack of evidence supporting the assessee's retraction and the presumption of correctness of seized documents. The order was pronounced on 22/10/2018.