2023 (10) TMI 308 - AT - Income Tax

Addition u/s 56(2)(vii)(b) - additional income - assessee has suo motu declared this amount post survey proceedings u/s 133A on the assessee - HED THAT - We observe that the observation of the AO that the amount represented as additional income under section 57(2)(vii)(b) is untenable. Considering the overall scenario and facts that the assessee has disclosed sum without any basis and which was just a suo motu voluntary disclosure and the ld. AO has also not found any unexplained credit or source of money or asset to back such disclosure. We are of the view that the addition under section 56(2)(vii)(b) has to be adjusted and telescoped out of this suo motu voluntary disclosure of the assessee - Therefore, we are inclined to allow the Ground No. 1 of the assessee by setting aside the order of ld. CIT(Appeals) and directing the ld. Assessing Officer to give telescopic effect out of the suo motu disclosure. Ground No. 1 is allowed. Undisclosed income being the residue amount out of the disclosure mad e - HELD THAT - Disclosure is made by the assessee without any basis in the form of undisclosed assets or undisclosed income or any unexplained credit in the books of the assessee. This addition has been made by the ld. AO on the ground that the assessee has surrendered Rs. 2,00,00,000/- in the instant assessment year vide letter dated 17.03.2014 filed after the survey operation was conducted on 11.12.2013. We are of the considered view and opinion that any disclosure made in the survey proceedings merely on the basis of statement recorded during survey is not enough to make the addition. There has to be corroborating material to make the addition. Accordingly, we are inclined to set aside the order of ld. CIT(Appeals) on this issue by allowing the ground no 2 of the appeal of the assessee.

Summary

Issues involved:
The issues in this case involve the confirmation of addition of Rs. 57,24,140 under section 56(2)(vii)(b) of the Income Tax Act, and the disallowance of Rs. 58,61,170 as undisclosed income by the Assessing Officer.

Confirmation of addition under section 56(2)(vii)(b):
The assessee voluntarily disclosed additional income of Rs. 2,00,00,000 during the assessment year without a clear basis. The Assessing Officer added Rs. 57,24,140 under section 57(2)(vii)(b), which was challenged by the assessee before the CIT(A). The Tribunal observed that the income should have been added under section 56(2)(vii)(b) instead. The Tribunal found that the addition under section 57(2)(vii)(b) was untenable as there was no discussion on the difference between purchase consideration and stamp duty valuation. As the disclosure was voluntary and not supported by undisclosed assets or income, the Tribunal allowed the appeal by adjusting Rs. 57,24,140 out of the total disclosure of Rs. 84,40,690.

Disallowance of undisclosed income:
The Assessing Officer disallowed Rs. 58,61,170 as undisclosed income based on the voluntary disclosure made by the assessee post-survey proceedings. The Tribunal held that a disclosure made during survey proceedings without corroborating material is insufficient to justify the addition of undisclosed income. Therefore, the Tribunal set aside the CIT(A)'s order on this issue and allowed the appeal of the assessee.

In conclusion, the appeal of the assessee was allowed by the Tribunal, setting aside the orders of the CIT(A) on both issues.