2012 (8) TMI 126 - AT - Income Tax

Addition to income - on account of long term capital gains u/s 60C, interest on deposit, low house hold expenses and on account of gross profit - Held that - After calling a remand report, the CIT(A) recorded his own finding to the effect that cost of acquisition and improvement of property sold by the assessee was Rs. 20,28,091/- as per the balance sheet of the assessee for financial year 2001-02 and onwards and that assessee had also invested Rs. 11.60 lakhs in REC Bond u/s 54EC, accordingly, the taxable capital gain works out to be nil. The finding recorded by CIT(A) has not been controverted by Department by bringing any positive material on record. No infirmity in the order of CIT(A) for deleting the addition made under the head capital gains . Addition on account of notional interest income which was neither accrued to assessee nor received by the assessee - As during the year the assessee has not incurred any interest expenditure, thus, there is no justification for making any addition on account of notional interest - action of the CIT(A) for deleting the addition made on account of notional interest income is thus warranted. Trading addition on account of closing stock shown in the balance sheet - CIT(A) after verification of various bills of future purchase, sales etc., recorded a finding to the effect that in the trading account, the assessee had just debited cost of sales , therefore, there is nothing wrong in showing closing stock directly in the balance sheet - CIT(A) also found that the closing stock of Future Urad amounting to Rs. 1,53,89,619/- in the Balance Sheet and in the Trading Account cost of future purchases is debited only to the extent of future sales. Hence question of showing Closing Stock in Trading Account does not arises - against Revenue.

Summary

Issues:
Appeal against CIT(A) order for assessment year 2005-06.

Analysis:
1. The appellant challenged the CIT(A) order on the grounds of lack of cooperation by the Assessing Officer, non-speaking order, and lack of merit in decision-making process. The CIT(A) forwarded additional evidences to the Assessing Officer for comments, but the comments on the merit of disputed additions were not obtained, leading to a lack of merit in the order.
2. The CIT(A) was criticized for passing a non-speaking order, failing to provide detailed reasoning for the decision.
3. The Assessing Officer made additions due to non-submission of details by the assessee, including long-term capital gains, interest on deposit, low household expenses, and gross profit.
4. The CIT(A) deleted all additions after considering detailed submissions and supporting documents by the assessee. For example, in the case of long-term capital gains, the CIT(A) found discrepancies in the Assessing Officer's calculations and accepted the appellant's evidence, directing the deletion of the addition.
5. The issue of charging notional interest income was also resolved in favor of the assessee by the CIT(A) after thorough examination of business transactions and supporting documents, leading to the deletion of the addition.
6. Regarding the addition of gross profit, the CIT(A) found that the appellant had correctly shown the closing stock in the balance sheet, and after verification of documents and bills, the addition made by the Assessing Officer was deemed unwarranted and deleted.
7. The Tribunal upheld the CIT(A) order, noting that the findings were not contested with any positive material, leading to the dismissal of the Revenue's appeal.

This detailed analysis highlights the various issues raised in the appeal, the arguments presented by both parties, and the reasoning behind the decisions made by the CIT(A) and the Tribunal in resolving the disputes related to the assessment year 2005-06.