2012 (6) TMI 509 - AT - Income Tax

Professional fees receipts - CIT(A) deleted the addition made by AO AO contested that the profit and loss account does not tally the amount as revealed in TDS certificates Held that - The returns filed for the Assessment Years 2003-04 and 2005-06 are less than the professional receipts as per the TDS certificates. However, for the Assessment Years 2004-05 and 2006-07 the professional receipts admitted in the P&L A/c, accounts are more than the receipts as per TDS certificates, and the receipts during Assessment Year 2005-06 may not tally with the bills raised during the previous year because the receipt during the year include amounts for which bills were raised in the earlier previous year also as the receipts admitted by the appellant, for the Assessment Years 2004-05 and 2006-07, in their P&L A/c are more than the receipts as per TDS certificates, it cannot be concluded that the appellant has suppressed the professional receipts against revenue. Investment in Mutual Funds admittedly made out of disclosed bank account of the assessee Held that - As the assessee failed to explain the source, nature and mode of payment of such investments along with supporting papers and documents such an investment is treated as unexplained - merely because the transactions was put through Bank account, does not make it a genuine/bonafide transaction against assessee. Annulation of Order passed in pursuance of Notice issued u/s 148 Held that - As original assessment in this case has been made u/s 143(1) evident from the assessment order itself the additional ground raised by assessee dismissed.

Summary

Issues:
1. Deletion of addition of Rs.14,88,972/- on account of professional receipt.
2. Confirmation of addition of Rs.6,39,019/- for A.Yr.2005-06 and Rs.29,00,000/- for A.Yr.2006-07 in respect of investment in Mutual Funds.

Analysis:

Issue 1: Deletion of addition of Rs.14,88,972/- on account of professional receipt

The Revenue raised the issue of deletion of the addition of Rs.14,88,972/- on account of professional receipt. The Assessing Officer noted a discrepancy between the professional charges shown in the Profit and Loss account and the TDS certificates filed with the return. The CIT(A) deleted the addition, stating that the appellant regularly admitted professional receipts irrespective of the amounts received during the previous year. The Tribunal upheld the CIT(A)'s decision, noting that while discrepancies existed, there was no evidence of professional receipts suppression. Therefore, the Tribunal confirmed the CIT(A)'s decision and dismissed the Revenue's appeal.

Issue 2: Confirmation of addition of Rs.6,39,019/- and Rs.29,00,000/- for A.Yr.2005-06 and A.Yr.2006-07 in respect of investment in Mutual Funds

The assessee's appeal concerned the confirmation of additions for investments in Mutual Funds. The Assessing Officer treated the investments as unexplained under section 69 of the Income Tax Act due to lack of explanation and supporting documents. The CIT(A) upheld the additions, noting insufficient information on the sources of investments. The Tribunal, after considering various case laws, concluded that the investments made from disclosed bank accounts lacked substantiation. As the assessee failed to explain the deposits made in the bank accounts used for investments, the Tribunal confirmed the CIT(A)'s decision and dismissed the assessee's appeal on this issue.

Additionally, the assessee raised an additional ground challenging the jurisdiction of the Assessing Officer's notice under section 147. The Tribunal dismissed this ground, noting that the original assessment was made under section 143(1), rendering the additional ground unsustainable. Consequently, both the Revenue's and the assessee's appeals were dismissed.

In conclusion, the Tribunal upheld the CIT(A)'s decisions on both issues, emphasizing the importance of substantiating investments and professional receipts to avoid additions under the Income Tax Act.