2022 (12) TMI 1353 - AT - Income Tax

Revision u/s 263 by CIT - unexplained money u/s.69A - HELD THAT - We must mention here, it is unfortunate, that he has invoked the provisions of section 69A to treat the same as unexplained money when the amount has been drawn from the bank. The addition has been made because there is cash availability in the cash book. It is in the knowledge of the revenue that the petrol pump is on the highway and the amount of Rs.80,000/- has been drawn from the bank. It is only when necessity is there, money is drawn. It does not make any inference of unaccounted money. Be that as it may, insofar as the merit of the addition is not before us. However, the addition is made. The addition having been made admittedly, the AO had the duty to invoke the provisions of section 115BBE insofar as he himself has invoked the provisions of section 69A of the Act. This, admittedly is an error in the assessment order and tax slab rate of 30% as against 60% caused prejudice to the interest of the revenue and on this issue, we are of the view that the order of the Pr. CIT is liable to be upheld and we do so. Interest paid to Bajaj Finance ltd.- Assessee has been unable to produce Form 10BA before the Assessing officer or before the ld Pr. CIT. The nondeduction of TDS on the amount paid to Bajaj Finance Ltd., is clearly a violation of law which should have come to the attention of the AO. Failure on the part of the AO on this issue admittedly makes the order erroneous and prejudicial to the interest of the Revenue on that count. Consequently, in respect of issue of non-deduction of TDS in respect of payment made to Bajaj Finance ltd., we are of the view that the order of the Pr. CIT is on right footing and does not call for any interference. Administrative expenses and general charges, interest paid to HPCL on delayed payment and in respect of solar machine as also the proposal in respect of non-examination of the low net profit and the loss account of leakage in respect of diesel and petrol - As it is noticed that in the course of survey, books of account have been impounded. Assessing Officer has made addition representing the cash withdrawal from the bank account and treating the same as unexplained money shows that even cash book was before the AO. AO has in his assessment order u/s.143(3) mentioned that he has examined the case and discussed the case. True,AO has not given any details of the various examinations and discussion done in the course of assessment proceedings does not per se make the assessment order erroneous and prejudicial to the interest of the revenue on the ground as raised by the Pr. CIT in respect of other issues. This being so, we are of the view that the order of the pr. CIT is liable to be sustained to a limited extent of the non-application of provisions of section 115BBE on the addition made u/s.69A of Rs.80,000/- and on account of non-deduction of TDS on the payment made to Bajaj Finance ltd. On the other issues, the order of the pr. CIT u/s 263 stands quashed. Appeal of the assessee stands partly allowed.

Issues Involved:
1. Application of Section 115BBE on addition made under Section 69A.
2. Non-deduction of TDS on interest paid to Bajaj Finance Ltd.
3. Verification of administrative expenses and general charges.
4. Examination of interest paid to Hindustan Petroleum Corporation Ltd (HPCL) on delayed payments.
5. Examination of interest for the solar machine provided by HPCL.
6. Examination of low net profit rate and loss due to leakage in diesel and petrol.

Detailed Analysis:

1. Application of Section 115BBE on Addition Made Under Section 69A:
The assessee had drawn Rs.80,000 from the bank, which was added by the Assessing Officer (AO) as unexplained money under Section 69A. The AO failed to apply the provisions of Section 115BBE, which mandates a tax rate of 60% instead of the 30% applied. This failure was recognized as an error causing prejudice to the interest of the revenue. The Tribunal upheld the Principal Commissioner of Income Tax (Pr. CIT)'s order on this issue, emphasizing the need for correct application of Section 115BBE.

2. Non-deduction of TDS on Interest Paid to Bajaj Finance Ltd.:
The assessee paid interest to Bajaj Finance Ltd., a non-banking financial company, without deducting TDS, violating tax provisions. The assessee failed to produce Form 10BA to show compliance. The AO's oversight in disallowing this amount was deemed erroneous and prejudicial to the revenue. The Tribunal upheld the Pr. CIT's order on this issue, affirming the necessity of TDS deduction.

3. Verification of Administrative Expenses and General Charges:
The Pr. CIT noted that the AO did not examine administrative and general expenses. However, the Tribunal found that the AO had impounded and examined the books of account during the survey. The AO's assessment order mentioned examining and discussing the case, indicating that the necessary inquiries were conducted. Therefore, the Tribunal quashed the Pr. CIT's order on this issue, finding no error or prejudice to the revenue.

4. Examination of Interest Paid to HPCL on Delayed Payments:
The Pr. CIT argued that the AO failed to examine the interest paid to HPCL for delayed payments. The Tribunal noted that the AO had the books of account and had made necessary inquiries during the assessment. The Tribunal quashed the Pr. CIT's order on this issue, concluding that the AO's actions were not erroneous or prejudicial to the revenue.

5. Examination of Interest for the Solar Machine Provided by HPCL:
Similar to the previous issue, the Pr. CIT claimed the AO did not examine the interest for the solar machine provided by HPCL. The Tribunal found that the AO had conducted the necessary inquiries and discussions during the assessment. As such, the Tribunal quashed the Pr. CIT's order on this issue, finding no error or prejudice to the revenue.

6. Examination of Low Net Profit Rate and Loss Due to Leakage in Diesel and Petrol:
The Pr. CIT highlighted that the AO did not examine the low net profit rate and the loss due to leakage in diesel and petrol. The Tribunal noted that the AO had the books of account and had made necessary inquiries during the assessment. The Tribunal quashed the Pr. CIT's order on this issue, concluding that the AO's actions were not erroneous or prejudicial to the revenue.

Conclusion:
The Tribunal upheld the Pr. CIT's order regarding the application of Section 115BBE and the non-deduction of TDS on interest paid to Bajaj Finance Ltd., recognizing these as errors causing prejudice to the revenue. However, the Tribunal quashed the Pr. CIT's order on the other issues, finding that the AO had conducted the necessary inquiries and discussions during the assessment, and there was no error or prejudice to the revenue. The appeal of the assessee was partly allowed.

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