2023 (9) TMI 1533 - AT - Income Tax

Unexplained cash transaction recorded during the survey operation - HELD THAT - As we note that the assessee has surrendered in the assessment year 2012-13 and a sum in the assessment year 2013-14 which the CIT(A) has taken into consideration that while making the offer as additional income by the assessee, entries in Annexure-D of the impounded material has also been considered and after taking into consideration the additional income offered by the assessee which was on the basis of peak level of Hulyati book, which fact has not been disputed by the AO in the remand report, thus, the addition which is covered by the additional income offered by the assessee has been rightly deleted by the CIT(A), by relying upon the various decisions mentioned in his order, which in our opinion does not need any interference on our part. Therefore, we affirm the finding of the Ld. CIT(A) on the issue in dispute and dismiss the ground no. 1 raised by the Revenue. Addition of additional income offered by the assessee which was on the basis of peak amount calculated and after taking into consideration the entire documents seized during the survey which is covered by the additional income offered by the assessee, the addition made by the AO has been rightly deleted by the Ld. CIT(A), by relying upon the various decisions mentioned in his order, which does not need any interference on our part. Hence, we affirm the finding of the Ld. CIT(A) on the issue in dispute and dismiss the ground raised by the Revenue. Disallowance u/s. 40A(3) - As we note that the provisions of section 40(a)(ia) and section 40A(3) is applicable only if the assessee has claimed the cash payment as expense, however, in the instant case the assessee has not claimed the payment as expenses and this submission has not been disputed by the AO in the remand report. Hence, by relying upon the decision of the CIT vs. Alfa Toyo Ltd. 2008 (2) TMI 885 - PUNJAB AND HARYANA HIGH COURT , of the Hon ble Punjab and Haryana High Court by the Ld. CIT(A), wherein it has been held that the provision of section 40A(3) does not apply to repayment of loan in cash because the loan repayment is of capital nature. Hence, the addition was not justified and therefore, has been rightly deleted by the Ld. CIT(A), which does not need any interference on our part. Hence, we affirm the finding of the Ld. CIT(A) on the issue in dispute and dismiss the ground no. 3 raised by the Revenue. Addition unexplained cash credit / undisclosed receipts - Assessee has considered the entries in cash delivery which is part of Hulyati book while working out the amount surrendered as income and this fact has not been disputed by the AO in the remand report. Hence, the addition made by the AO is not tenable and thus has been rightly deleted by the CIT(A), by relying upon the various decisions mentioned in his order, which does not need any interference on our part. Hence, we affirm the finding of the Ld. CIT(A) on the issue in dispute and dismiss the ground no. 4 raised by the Revenue.

Summary

Issues:
1. Addition of unexplained cash transactions during survey operation.
2. Addition of unexplained cash receipts during survey operation.
3. Disallowance under sections 40A(3) and 40(a)(i).
4. Addition of unexplained cash credit/undisclosed receipts.

Analysis:
1. The Revenue appealed against the Ld. CIT(A)'s order deleting various additions made during assessment year 2012-13. The AO impounded documents during a survey operation, finding discrepancies in the impounded material. The Assessee explained the entries in the impounded documents, offering additional income. The Ld. CIT(A) deleted the additions after considering the Assessee's explanations and peak investment calculations. The Tribunal affirmed the deletion of the Rs. 1,37,35,000/- addition, as it was covered by the Assessee's additional income offer based on peak level calculations, not disputed by the AO.

2. Regarding the Rs. 3,33,76,791/- addition, the Ld. CIT(A) deleted it after considering the Assessee's additional income offer based on peak amount calculations and all seized documents. The Tribunal upheld this deletion, as the Ld. CIT(A) had made a reasoned decision based on the remand report and Assessee's submissions.

3. The Rs. 1,25,85,510/- disallowance under sections 40A(3) and 40(a)(i) was deleted by the Ld. CIT(A) as the Assessee did not claim the payment as an expense. The Tribunal affirmed this deletion, citing a High Court decision that section 40A(3) does not apply to loan repayments. The AO did not dispute this in the remand report.

4. The Rs. 1,54,36,879/- addition for unexplained cash credit was deleted by the Ld. CIT(A) after considering the entries in the cash delivery part of the Hulyati book. The Tribunal upheld this deletion, as the AO did not dispute the Assessee's explanation in the remand report. The Ld. CIT(A) made a well-reasoned decision based on the facts and circumstances of the case.

Conclusion:
The Tribunal dismissed the Revenue's appeal, upholding the Ld. CIT(A)'s order deleting the additions. The Tribunal found that the Ld. CIT(A) had thoroughly analyzed the issues and made reasoned decisions based on the evidence and submissions presented. The Tribunal affirmed the deletions of the additions, as they were supported by the Assessee's explanations and calculations, not disputed by the AO.