2018 (6) TMI 1855 - AT - Income Tax

Addition on estimation for foreign tour expenses - addition made during course of search u/s 132 - as submitted additions have been made on mere estimation and guess work without any incriminating material found during the course of search. HELD THAT - AR has reiterated the contentions raised before the ld CIT (A) and submitted that the assessee s drawings during the year are sufficient enough to explain the source of such expenditure. In support, our reference was drawn to the assessee s capital account for the financial year ended 31st March, 2015 which shows total drawings of Rs. 11,13,115/-. As similar additions made in the hands of Dr Balvir Singh Tomar have been recently deleted by this Bench in 2018 (4) TMI 1988 - ITAT JAIPUR - In absence of anything contrary on record, it would be reasonable to hold that the foreign tour expenses of Rs 2,68,450 are met out of such drawings of Rs 11,13,115. In the result, following our decisions in case of Dr Balvir Singh Tomar, the addition made by the AO is hereby deleted and ground of the assessee s appeal is allowed.

Summary

Issues:
1. Addition of foreign tour expenses based on estimation without incriminating material.
2. Dispute regarding the source of foreign tour expenses.
3. Challenge to the addition made by the Assessing Officer.
4. Comparison with a similar case where additions were deleted.

Analysis:
1. The appeal was against the order of the ld. CIT(A) for Assessment Year 2015-16, challenging the addition of Rs. 2,68,450 as foreign tour expenses without any incriminating material found during the search under section 132 of the IT Act. The AO determined the expenses based on seized documents and post-search investigation, leading to a total of Rs. 7,71,800. The NIMS University paid a portion, and the balance was considered undisclosed expenses. The assessee disputed this addition, arguing that the expenses were covered by personal drawings made during the year.

2. The Assessing Officer found no proof linking the foreign tour expenses to the assessee's drawings and brought half of the unexplained expenditure to tax. The ld. CIT(A) upheld this decision, referencing the Settlement Commission's stance on the matter. The assessee contended that the expenses were covered by disclosed drawings totaling Rs. 11,13,115 during the year. The argument was that the joint family arrangement and substantial disclosed drawings were sufficient to cover the expenses.

3. During the appeal, the ld. AR reiterated the arguments, emphasizing that the additions were based on estimation without incriminating material. The contention was that the drawings disclosed by the assessee adequately explained the source of the expenses. Reference was made to a similar case where additions were deleted by the Tribunal, supporting the claim that the expenses were covered by the disclosed drawings. Consequently, the Tribunal deleted the addition of Rs. 2,68,450, following the decision in the case of Dr. Balvir Singh Tomar.

4. The Tribunal, after considering the arguments and the available material, concluded that the foreign tour expenses were adequately covered by the disclosed drawings of Rs. 11,13,115, similar to the decision in a related case. Therefore, the addition made by the Assessing Officer was deleted, and the ground of the assessee's appeal was allowed. The appeal filed by the assessee was ultimately allowed, and the order was pronounced in open court on 25/06/2018.