2009 (2) TMI 515 - AT - Income Tax

Summary

Issues Involved:
1. Reduction of trading addition by CIT(A).
2. Benefit of telescoping out of confirmed trading addition.
3. Addition of income received as discounts.
4. Addition on account of investment in immovable property.
5. Invocation of provisions of section 40A(ia) for interest payment without deduction of TDS.

Summary:

Issue 1: Reduction of Trading Addition by CIT(A)

The revenue contested the reduction of trading addition from Rs. 12,47,315 to Rs. 5,36,905 by CIT(A) without any reason. The Assessing Officer (AO) had made the addition based on past trading history and pointed out defects such as lack of log books, truck-wise receipts, and partly vouched expenses. The CIT(A) confirmed the application of section 145(3) but allowed partial relief. The Tribunal found that the AO did not point out specific defects in the receipts and expenditure and thus, the invocation of section 145(3) was unjustified. The addition sustained by CIT(A) was directed to be deleted. Ground No. 1 of the revenue was dismissed, and Ground No. 1 of CO of the assessee was allowed.

Issue 2: Benefit of Telescoping Out of Confirmed Trading Addition

Since the trading addition was deleted, Ground No. 2 of the revenue did not survive and was deleted.

Issue 3: Addition of Income Received as Discounts

The assessee declared discount income of Rs. 82,377 on vehicle purchases/repairs, arguing it was part of Business Income. The CIT(A) confirmed the AO's action of treating it as income over and above business income. The Tribunal held that the discount received was indeed Business Income already accounted for, and no separate addition was required. Thus, Ground No. 2 of the CO of the assessee was allowed.

Issue 4: Addition on Account of Investment in Immovable Property

The assessee contested an addition of Rs. 8,21,500 based on the Departmental Valuation Officer's (DVO) assessment, arguing no extra amount was paid over the declared consideration. The Tribunal noted that the addition under section 69B requires evidence of payment over the declared amount, which was not provided by the revenue. The Tribunal cited the judgment in K.P. Varghese v. ITO and other cases, emphasizing the need for corroborative evidence. The addition sustained by CIT(A) was directed to be deleted. Thus, Ground No. 3 of the CO of the assessee was allowed.

Issue 5: Invocation of Provisions of Section 40A(ia) for Interest Payment Without Deduction of TDS

The assessee raised an additional ground regarding the invocation of section 40A(ia) for interest payment of Rs. 45,000 without TDS deduction. The Tribunal did not admit this ground as it was not agitated before CIT(A). Thus, Ground No. 4 of the CO of the assessee was dismissed.

Conclusion:

In the result, the appeal of the revenue was dismissed, and the CO of the assessee was partly allowed.