2013 (7) TMI 1083 - AT - Income Tax

Summary

Issues Involved:
1. Deletion of addition on account of 31st December party expenses.
2. Deletion of addition on account of cash paid for the purchase of a car.
3. Addition of unaccounted receipts.
4. Deletion of addition on account of loan taken from Mr. Dimpee and interest thereon u/s.68.

Summary:

1. Deletion of Addition on Account of 31st December Party Expenses:
The first issue raised by the Revenue relates to the order of the CIT(A) in deleting the addition of Rs. 31.50 lakhs made on account of 31st December party expenses. The Assessing Officer had made this addition based on the practice observed in previous years and certain seized documents. However, the CIT(A) directed the deletion of this addition, following his decision in A.Y. 2003-04. The Tribunal upheld the CIT(A)'s decision, noting that similar additions in previous years were deleted due to the absence of evidence. The Tribunal found no reason to interfere with the CIT(A)'s reasoned finding and dismissed the Revenue's ground.

2. Deletion of Addition on Account of Cash Paid for Purchase of Car:
The second issue raised by the Revenue pertains to the deletion of Rs. 30 lakhs added on account of cash paid for the purchase of a car. The Assessing Officer made this addition based on a seized kaccha receipt and a statement recorded u/s.132(4). The CIT(A) deleted the addition, noting that the Assessing Officer himself accepted the assessee's contention that the money generated in VHPL was used for the car purchase. The Tribunal found no infirmity in the CIT(A)'s order, stating that once the extra cash generated through the group was offered to tax, there was no need to tax the same again u/s.69C. The Tribunal dismissed the Revenue's grounds.

3. Addition of Unaccounted Receipts:
The assessee contested the addition of Rs. 2,99,45,000/- on the ground that the total unaccounted receipts were Rs. 15.99 crores and not Rs. 13 crores as declared. The Assessing Officer made the addition due to a shortfall in the declaration. The CIT(A) upheld the addition, but the Tribunal found merit in the assessee's submission that the difference between unaccounted receipts and cash expenses was less than the additional income declared. The Tribunal referred to the Delhi High Court's decision in Indeo Airways (P) Ltd., which held that once a presumption is drawn from seized documents, the Revenue cannot require the assessee to produce further evidence. The Tribunal directed the deletion of the addition and allowed the assessee's ground.

4. Deletion of Addition on Account of Loan Taken from Mr. Dimpee and Interest Thereon u/s.68:
The Revenue challenged the deletion of Rs. 146.9 lakhs added as unexplained cash credit u/s.68. The Assessing Officer made this addition based on seized documents indicating a loan from Mr. Dimpee. The CIT(A) deleted the addition, noting that the loan was taken prior to 06-07-2007 and related to A.Y. 2008-09, which the assessee had already declared as unexplained income. The Tribunal upheld the CIT(A)'s order, finding no infirmity in the deletion of the addition. The Tribunal dismissed the Revenue's ground.

Conclusion:
In the result, both the appeals filed by the Revenue were dismissed, and the appeal filed by the assessee was allowed. The judgment was pronounced in the open court on the 24th day of July 2013.