2024 (5) TMI 814 - AT - Income Tax

Addition u/s 68/69A r.w.s. 115BBE - HELD THAT - CIT(A) has given a finding that the assessee did not file any documentary evidence regarding cash deposits which is a subject matter of the impugned addition. However, it is the contention of the assessee that the assessee had provided documentary evidence to the Assessing Authority. This fact is required to be verified at the end of AO if the claim of the assessee is found to be correct, the AO would delete the impugned addition. Hence, this issue is restored to the file of AO for decision afresh. Ground No.3 raised by the assessee is accordingly, allowed for statistical purposes. Disallowance of deduction claimed under Chapter VI-A - deduction u/s 80C - AO rejected the claim on the basis that the assessee failed to furnish any supporting evidences - as contended by the assessee that the amount was deposited in PPF Account and hence, he was entitled for deduction u/s 80C - HELD THAT - Having considering the submissions of the assessee, this contention needs verification at the end of AO and the AO would verify the correctness of the claim of the assessee that the amount was deposited in PPF Account if it was found that amount was deposited in the PPF Account of the assessee during the Financial year, the AO would delete the addition. Adhoc disallowance of business expenditure - HELD THAT - There is no dispute that the impugned addition is based on adhoc disallowance of the expenditure. It is seen from the assessment order that the AO had made adhoc disallowance @ 25% on the basis that no explanation was offered by the assessee. As find that there is no basis of adopting 25% expenditure being not related to the business of the assessee. Since, the impugned addition is based upon merely, surmises and without giving clear finding, the impugned addition is hereby deleted. Ground No.5 raised by the assessee is accordingly, allowed.

Summary

Issues involved:
The issues involved in the judgment are the fairness of the assessment process, additions made under sections 68/69A and 115BBE, disallowance of deduction claimed under Chapter VI-A of the Income-tax Act, and ad-hoc disallowance of business expenditure.

Fairness of Assessment Process:
The appellant raised concerns regarding the fair and meaningful opportunity of being heard during the assessment proceedings. The appellant argued that the order passed by the Ld. Commissioner of Income Tax was bad in law due to lack of fair hearing. However, the tribunal dismissed this ground stating it was general in nature and required no separate adjudication.

Addition under Sections 68/69A and 115BBE:
The appellant contested the addition of INR 3,42,000 under sections 68/69A read with section 115BBE of the Income-tax Act, 1961. The appellant claimed that the Assessing Officer and Ld.CIT(A) did not consider the submissions and evidence provided regarding the source of the cash deposit. The tribunal found that the appellant had provided documentary evidence to the Assessing Authority, and hence, restored this issue to the file of the Assessing Officer for a fresh decision. Ground No.3 raised by the appellant was allowed for statistical purposes.

Disallowance of Deduction under Chapter VI-A:
The appellant challenged the disallowance of the deduction claimed under Chapter VI-A of the Income-tax Act. The tribunal noted that the appellant failed to furnish supporting evidence for the deduction claimed. However, the appellant contended that the amount was deposited in a Public Provident Fund (PPF) Account, making them eligible for deduction under section 80C of the Act. The tribunal directed the Assessing Officer to verify the correctness of the claim and delete the addition if the claim was found to be valid.

Ad-hoc Disallowance of Business Expenditure:
The appellant disputed the ad-hoc disallowance of business expenditure amounting to INR 37,851. The tribunal observed that the Assessing Officer made an ad-hoc disallowance without specifying which expenditure was unrelated to the business. As there was no clear finding provided, the tribunal deleted the impugned addition, stating that it was based on mere surmises. Ground No.5 raised by the appellant was allowed accordingly.

In conclusion, the tribunal partly allowed the appeal of the appellant for statistical purposes, addressing the issues related to fairness in assessment, additions under sections 68/69A and 115BBE, disallowance of deduction under Chapter VI-A, and ad-hoc disallowance of business expenditure.