2022 (11) TMI 474 - AT - Income Tax

Unexplained expenditure u/s 69C - assessee has wrongly added survey declaration to its closing stock for A.Y. 2012-13 - HELD THAT - AO said that since closing stock for A.Y. 2012-13 becomes opening stock for A.Y. 2013-14, there needs to be an addition for A.Y. 2013-14. CIT(A) has directed the AO to delete the addition made for A.Y. 2012-13. This order or ld.CIT(A) has attained finality as Department s appeal against this order has been dismissed by ITAT on the ground of Low Tax Effect. In these facts and circumstances, we agree with the ld.CIT(A) s order that there is no merit in the addition for A.Y. 2013- 14. Therefore, the AO is directed to delete the addition made for A.Y. 2013-14. Accordingly, grounds of appeal of Revenue are dismissed.

Summary

Issues:
1. Addition of unexplained expenditure under section 69C for A.Y. 2013-14 based on the assessment for A.Y. 2012-13.

Analysis:
The appeal by the Revenue was against the order of the Commissioner of Income Tax(Appeals)-8, Pune, for the assessment year 2013-14 under section 250 of the Income Tax Act, 1961. The Revenue contested the deletion of an addition of Rs.4,10,00,000/- on unexplained expenditure under section 69C for the A.Y. 2013-14, relying on the decision in the assessee's case for the A.Y. 2012-13.

The facts of the case revealed that a survey action under section 133A of the Income Tax Act was conducted, resulting in the discovery of incriminating documents related to unaccounted cash payments. The assessee disclosed amounts for A.Y. 2011-12 and A.Y. 2012-13, which were wrongly added to its stock. The Assessing Officer treated this disclosure as unexplained expenditure under section 69C for A.Y. 2012-13. Consequently, the closing stock for the previous year was reduced by the disclosed amount, impacting the opening stock for the subsequent year, i.e., A.Y. 2013-14.

The Assessing Officer made an addition of Rs.4,10,00,000/- under section 69 for A.Y. 2012-13, which was carried forward to A.Y. 2013-14. However, the Commissioner of Income Tax (Appeals) directed the deletion of this addition for A.Y. 2012-13, which was upheld by the ITAT. As a result, the Tribunal agreed with the Commissioner's decision that there was no merit in the addition for A.Y. 2013-14 based on the deletion for A.Y. 2012-13. Therefore, the Tribunal directed the Assessing Officer to delete the addition for A.Y. 2013-14 as well.

In conclusion, the Tribunal dismissed the Revenue's appeal, affirming the decision to delete the addition of Rs.4,10,00,000/- for the A.Y. 2013-14. The order was pronounced in open court on 2nd November 2022.