2019 (8) TMI 836 - AT - Income Tax

Addition u/s 68 - search u/s 132(1) - contradictory stand taken by the assessee - amount received on the occasion of marriage of his brother-in-law s daughter or as commission income - HELD THAT - the CIT(A) has categorically stated that it is very clear that the figure is relating to marriage . Having accepted that the amount represented surplus collections by way of shagun, etc. on the occasion of marriage, we fail to understand how the same can be treated to be in the nature of income of the assessee. The amounts collected by way of gifts on the occasion of marriage do not partake the character of income. Contention of the Revenue that the addition was warranted on account of the inconsistent stand of the assessee claiming the amount to represent the receipts on the occasion of marriage and subsequently claiming it to be his commission income, does not in our view alter or make any difference to our findings above. The reason being that firstly ,before us, the assessee has accepted that the amount represented the collections from marriage, which is corroborated by the contents of the notings also, therefore, his other stand taken subsequently is irrelevant. Also merely because the assessee is inconsistent in his explanation does not ifso facto and on its own alone lead to the conclusion that a particular noting represents the income of the assessee. There has to be some material on record, more importantly, in the absence of any explanation by the assessee, to form the basis of making the addition. We, therefore, do not find any merit in the arguments of the Revenue. Addition u/s 69 made on the basis of certain figures mentioned on Annexure A-4 - house hold expenses - HELD THAT - The assessee has attributed the notings in document A-4 to be representing household expenses while the Revenue has treated them as investment. We find that the only reason for the Revenue for treating the same as investment is the statement given by the assessee as reproduced above. But as noted above, the statement does not say that the notings in other diaries represents only the investment made by the assessee. The assessee has stated that they also represents household expenses. Therefore, this interpretation of the Revenue is based on incorrect appreciation of the facts; Moreover even if the said figures are said to represent the investment made by the assessee, the statement itself clearly brings out the source of the investment as being made from the savings of ₹ 20 lacs after the marriage of Chitra. This sum of ₹ 20 lacs, we have held in ground No.1 2 above to be not in the nature of the income of the assessee. Further the source having stood explained, we see no reason for making the addition of the same on the ground of unexplained investment made by the assessee -Vaddition made on account of notings in document A-4 deserves to be deleted. Addition made on notings made in Annexure A-6 - admission of additional evidence in the form of two affidavits of the daughter of the assessee and of the son-in-law of the assessee stating on oath that the bills found during the course of search and forming part of Annexure A-6 denied - HELD THAT - We are of the view that the assessee has made out a case that he was denied opportunity to file the evidences before the AO.As rightly pointed out by the Ld.Counsel for the assessee the Income tax returns of the daughter and son in law of the assessee were part of record of the Department itself and did not constitute additional evidence at all. The affidavits of the two persons admitting on oath that the bills mentioned in the document found belonged to them was in affirmation of the consistent contention of the assessee in this regard and it has been duly demonstrated that the non filing of the same before the AO was for the reason that adequate opportunity was not given since the two did not stay with the assessee and time for procuring the same was required which was not afforded by the AO who passed the order within 15 days of filing of reply by the assessee explaining the contents of the impugned document. We, therefore, admit the same for adjudication and restore the issue back to the AO to verify the evidences, now filed and decide the issue afresh after considering

Summary

Issues Involved:
1. Addition of ?20,00,000 under Section 68 based on a diary entry.
2. Addition of ?71,600 under Section 68 based on notings in another document.
3. Addition of ?20,65,692 under Section 69C based on household expense bills.
4. Admission of additional evidence.
5. Double addition of ?8,05,677.
6. Charging of interest under Sections 234A, 234B, and 234C.

Issue-Wise Detailed Analysis:

1. Addition of ?20,00,000 under Section 68 Based on Diary Entry:
The assessee challenged the addition of ?20,00,000 made by the AO based on a diary entry, which was upheld by the CIT(A). The diary, referred to as Annexure A-5, contained an entry "2000 profit balance after marriage Chitra." The AO interpreted this as ?20,00,000 saved after the marriage of Chitra, based on the assessee's statement during the search. The assessee later claimed this amount represented commission income. The CIT(A) upheld the addition, citing the Delhi High Court's precedent that notings on loose papers could be relied upon for making additions. However, the Tribunal found that the amount represented surplus collections from the marriage of Chitra, which do not constitute income. Therefore, the Tribunal directed the deletion of the ?20,00,000 addition.

2. Addition of ?71,600 under Section 68 Based on Document Notings:
The assessee contested the addition of ?71,600 based on notings in Annexure A-4. The AO multiplied the noted figures by 100, interpreting them as investments rather than household expenses. The CIT(A) upheld this addition. The Tribunal reviewed the assessee's statement and found that the AO's interpretation was based on incorrect appreciation of facts. The Tribunal noted that the statement did not exclusively attribute the notings to investments and that the source of the investments (?20,00,000 from Chitra's marriage savings) had already been explained. Thus, the Tribunal directed the deletion of the ?71,600 addition.

3. Addition of ?20,65,692 under Section 69C Based on Household Expense Bills:
The AO added ?20,65,692 as unexplained expenditure based on bills found during the search (Annexure A-6). The assessee claimed these bills belonged to his daughter and son-in-law. The CIT(A) refused to admit additional evidence (affidavits and income tax returns) and upheld the addition. The Tribunal found that the income tax returns were part of the department's records and not additional evidence. The affidavits were consistent with the assessee's claims. The Tribunal admitted the evidence and remanded the issue back to the AO for verification and fresh adjudication.

4. Admission of Additional Evidence:
The Tribunal admitted the additional evidence (affidavits and income tax returns) provided by the assessee, which were previously not considered by the CIT(A). The Tribunal noted that the income tax returns were already part of the department's records and the affidavits were consistent with the assessee's claims. The issue was remanded back to the AO for verification.

5. Double Addition of ?8,05,677:
The assessee claimed a double addition of ?8,05,677 due to the same entries appearing in different documents. The Tribunal remanded this issue back to the AO for verification along with the other issues related to the household expense bills.

6. Charging of Interest under Sections 234A, 234B, and 234C:
The Tribunal noted that the charging of interest under Sections 234A, 234B, and 234C is consequential and does not require separate adjudication.

Conclusion:
The Tribunal allowed the appeal partly, directing the deletion of the ?20,00,000 and ?71,600 additions, admitting additional evidence, and remanding the issue of ?20,65,692 and the double addition of ?8,05,677 back to the AO for fresh adjudication. The issues related to the charging of interest and general grounds were dismissed as not pressed or consequential.