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2020 (9) TMI 21 - AT - Income TaxAddition u/s.69B - cash credit - no telescopic benefit out of amount surrendered during survey - addition to Building Account - Depreciation on hotel building - HELD THAT - The impounded paper obtained during the course of survey proceedings, it is clear that some of the expenditure which are not related to the impugned assessment year and this objection was also taken before the CIT(A) but the CIT(A) has not properly dealt this matter while deciding the appeal of the assessee. This matter should go back to the file of AO for further verification regarding the addition made on the hotel building. The AO is also directed to give telescoping from the surrendered if the assessee has paid taxes on the entire surrendered amount. If it is found otherwise, then the AO is directed to consider the amount on which the assessee has paid taxes thereon. AO is also directed to grant depreciation if the assessee is eligible as per the Income Tax Act on the hotel building and if the depreciation was not claimed while calculating the taxable income of the assessee.
Issues Involved:
1. Addition of ?5,00,000 as cash credit in the name of Sh. Suresh Kumar. 2. Addition of ?6,00,000 as cash credit in the name of Sh. Rakesh Kumar. 3. Addition of ?3,45,156 to the Building Account. 4. Non-consideration of surrendered amount of ?35 lakhs during the survey. 5. Disallowance of depreciation on the Hotel Building valued at ?76,02,895. Detailed Analysis: 1. Addition of ?5,00,000 as Cash Credit in the Name of Sh. Suresh Kumar: The assessee contested the addition of ?5,00,000 as cash credit, arguing for the telescopic benefit from the surrendered amount of ?35 lakhs during the survey. The Tribunal noted that the assessee had cooperated during the survey and surrendered the amount. However, the Assessing Officer (AO) did not allow the telescopic benefit. The Tribunal directed the AO to verify the facts and allow the telescoping if the taxes on the surrendered amount were paid. 2. Addition of ?6,00,000 as Cash Credit in the Name of Sh. Rakesh Kumar: Similar to the first issue, the assessee disputed the addition of ?6,00,000 as cash credit. The Tribunal observed that the AO had not considered the surrendered amount for telescoping. The Tribunal instructed the AO to verify the payment of taxes on the surrendered amount and provide the telescopic benefit accordingly. 3. Addition of ?3,45,156 to the Building Account: The assessee argued that the addition to the Building Account should be adjusted against the surrendered amount of ?35 lakhs. The Tribunal noted that some of the expenditures related to the construction of the hotel building were not pertinent to the impugned assessment year. The Tribunal directed the AO to further verify the relevant expenses and consider the telescoping from the surrendered amount if taxes were paid. 4. Non-Consideration of Surrendered Amount of ?35 Lakhs During the Survey: The assessee claimed that the surrendered amount of ?35 lakhs during the survey was not considered for any benefits. The Tribunal acknowledged that the assessee had surrendered the amount and paid taxes subject to certain conditions. The Tribunal directed the AO to verify the payment of taxes on the surrendered amount and provide the necessary telescopic benefits. 5. Disallowance of Depreciation on the Hotel Building Valued at ?76,02,895: The assessee contended that the CIT(A) did not allow depreciation on the hotel building. The Tribunal instructed the AO to grant depreciation if the assessee was eligible as per the Income Tax Act and if the depreciation was not claimed while calculating the taxable income. Procedural Issue: The Tribunal addressed the delay in pronouncing the order due to the COVID-19 lockdown, citing Rule 34(5) of the Income Tax Appellate Tribunal Rules, 1962, and the exceptional circumstances. The Tribunal referenced the Hon'ble Supreme Court and Bombay High Court's directions regarding the extension of limitations due to the lockdown. Conclusion: The appeal of the assessee was allowed for statistical purposes, with directions to the AO for further verification and consideration of the telescopic benefits and depreciation claims. The Tribunal emphasized providing a reasonable opportunity for the assessee to be heard and to cooperate with the AO for the early disposal of the case.
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