2004 (8) TMI 336 - AT - Income Tax

2010 (12) TMI 1307 - AT

Issues Involved:

1. Legality of action under Section 132 and notice under Section 158BC.
2. Addition based on valuation report of property No. B-42, Panchsheel Enclave.
3. Addition based on valuation report of flats in property No. S-484, GK-II.
4. Addition on account of investment in various bank FDRs and interest.
5. Addition for exchange of property.
6. Addition based on seized documents for the assessment year 1995-96.
7. Addition of undisclosed cash credit under Section 68.
8. Addition based on seized documents for the assessment year 2000-01.
9. Addition on account of interest based on seized documents.
10. Addition of cash expenses under Section 40A(3).
11. Adjustment of returned undisclosed income against assessed undisclosed income.
12. Interest charged under Section 158BFA(1).
13. Deletion of addition based on seized documents.
14. Sustenance of addition based on seized documents.
15. Sustenance of addition of Rs. 15 lakhs based on jottings on loose paper.
16. Sustenance of addition based on seized document for the assessment year 1995-96.
17. Sustenance of addition of Rs. 16.53 lakhs on account of undisclosed cash credits.
18. Sustenance of addition of Rs. 30,000 based on seized document.
19. Sustenance of addition of Rs. 2,50,000 under Section 68.
20. Sustenance of addition of Rs. 3,45,526 on account of interest.
21. Sustenance of addition of Rs. 15,28,648 for cash expenses under Section 40A(3).
22. Adjustment of undisclosed income of Rs. 15 lakhs.
23. Charge of interest under Section 158BFA(1).

Detailed Analysis:

1. Legality of Action under Section 132 and Notice under Section 158BC:
The assessee did not press this ground, and it was dismissed as 'not pressed'.

2. Addition Based on Valuation Report of Property No. B-42, Panchsheel Enclave:
The assessee challenged the addition of Rs. 9.36 lakhs and Rs. 7.26 lakhs based on the valuation report. The Department raised disputes regarding the sale consideration of flats sold to Shri Praveen Khilnani and Shri Amarjeet Singh. The AO referred the matter to the DVO, who estimated higher values. The CIT(A) based her conclusion on the DVO's report, leading to the sustenance of the addition. The Tribunal found no justification in sustaining the addition as the actual sale consideration recorded in the books was accepted, and there was no adverse material to suggest otherwise. The addition was directed to be deleted.

3. Addition Based on Valuation Report of Flats in Property No. S-484, GK-II:
The assessee challenged the addition based on the valuation report. The AO estimated the sale consideration higher than disclosed. The CIT(A) adopted the DVO's report for the first-floor flats but rejected the AO's estimation for the ground floor flats. The Tribunal found that the addition was made without any positive material and directed the deletion of the addition.

4. Addition on Account of Investment in Various Bank FDRs and Interest:
The AO made additions based on seized documents, treating the FDRs as the assessee's investment. The CIT(A) confirmed the addition. The Tribunal found that the FDRs were owned by other individuals who confirmed their ownership. The addition was directed to be deleted.

5. Addition for Exchange of Property:
The AO treated an entry of Rs. 15 lakhs as undisclosed income based on jottings on loose paper. The Tribunal found that the AO did not corroborate the conclusion with any evidence and directed the deletion of the addition.

6. Addition Based on Seized Documents for the Assessment Year 1995-96:
The AO made an addition of Rs. 90,000 based on seized documents. The Tribunal found that the amount was part of the sale consideration already surrendered by the assessee and directed the deletion of the addition.

7. Addition of Undisclosed Cash Credit under Section 68:
The AO treated certain amounts as cash credits. The Tribunal found that the entries were recorded in the regular books, and the assessee had discharged the onus of proving the identity and genuineness of the transactions. The addition was directed to be deleted.

8. Addition Based on Seized Documents for the Assessment Year 2000-01:
The AO made an addition of Rs. 30,000 based on seized documents. The Tribunal restored the matter back to the AO for verification of facts.

9. Addition on Account of Interest Based on Seized Documents:
The AO treated the interest calculations on seized documents as undisclosed income. The Tribunal found no evidence of actual payment of interest and directed the deletion of the addition.

10. Addition of Cash Expenses under Section 40A(3):
The AO disallowed cash expenses recorded in the regular books by invoking Section 40A(3). The Tribunal found that the expenses were incurred in the regular course of business and directed the deletion of the addition.

11. Adjustment of Returned Undisclosed Income against Assessed Undisclosed Income:
The Tribunal remanded the issue back to the CIT(A) for adjudication.

12. Interest Charged under Section 158BFA(1):
The AO did not pass a specific order for charging interest under Section 158BFA(1). The Tribunal directed the deletion of the interest demand.

13. Deletion of Addition Based on Seized Documents:
The CIT(A) deleted the addition of Rs. 19 lakhs made by the AO based on seized documents. The Tribunal found no infirmity in the CIT(A)'s finding and rejected the Revenue's ground.

14. Sustenance of Addition Based on Seized Documents:
The Tribunal found that the CIT(A) was justified in rejecting the AO's estimation and directed the deletion of the addition sustained by the CIT(A).

15. Sustenance of Addition of Rs. 15 Lakhs Based on Jottings on Loose Paper:
The Tribunal found that the AO's conclusion was not corroborated with evidence and directed the deletion of the addition.

16. Sustenance of Addition Based on Seized Document for the Assessment Year 1995-96:
The Tribunal found that the amount was part of the sale consideration already surrendered by the assessee and directed the deletion of the addition.

17. Sustenance of Addition of Rs. 16.53 Lakhs on Account of Undisclosed Cash Credits:
The Tribunal found that the entries were recorded in the regular books, and the assessee had discharged the onus of proving the identity and genuineness of the transactions. The addition was directed to be deleted.

18. Sustenance of Addition of Rs. 30,000 Based on Seized Document:
The Tribunal restored the matter back to the AO for verification of facts.

19. Sustenance of Addition of Rs. 2,50,000 under Section 68:
The Tribunal found that the amount represented a return of money already received and directed the deletion of the addition.

20. Sustenance of Addition of Rs. 3,45,526 on Account of Interest:
The Tribunal found no evidence of actual payment of interest and directed the deletion of the addition.

21. Sustenance of Addition of Rs. 15,28,648 for Cash Expenses under Section 40A(3):
The Tribunal found that the expenses were incurred in the regular course of business and directed the deletion of the addition.

22. Adjustment of Undisclosed Income of Rs. 15 Lakhs:
The Tribunal remanded the issue back to the CIT(A) for adjudication.

23. Charge of Interest under Section 158BFA(1):
The Tribunal directed the deletion of the interest demand as no specific order was made by the AO.

Conclusion:
The assessee's appeal was partly allowed, and the Revenue's appeal was dismissed.

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