2012 (11) TMI 545 - AT - Income Tax

Unaccounted investment in property - search and seizure - Held that - The consideration payable for the property was Rs.36 lacs cash over and above the consideration payable by cheque. The Assessee does not dispute this fact. The Assessee claims that the sum of Rs.36 lacs paid by cash was returned back by the seller to the Assessee. This plea of the Assessee has not been substantiated. The further plea of the Assessee was that the Assessee declared substantial income on account of unexplained investments cannot be accepted as the unexplained investment is in AY 03-04. The declaration of income in the subsequent AY can be explained as out of the amount declared in AY 03-04. In the case of the Assessee there has been no declaration of undisclosed income for AY 02-03, therefore the addition in AY 03-04 has to be made. No grounds to interfere with order of CIT(A) - against assessee. Undisclosed Investment in financial business - Held that - Assessee pleaded that the disclosure made in the returns of income would be sufficient and no separate addition was called for is not acceptable as the disclosure made of Rs.23,77,949/- was specific and did not cover the undisclosed income evidenced by the seized document which is the basis of this addition. Therefore, we confirm the order of CIT(A) and dismiss ground raised by the Assessee - against assessee. Undisclosed Agriculture income - Held that - The search had taken place on 28.12.2007. Even prior to the search, the order u/s.143(3) for AY 04-05 has been passed in which, out of Agricultural income declared by the Assessee a sum of Rs.1,04,190/- was treated as Income from other sources. Thus the very same addition cannot be made in assessment u/s.153A and doing so would amount to taxing the same income twice. Therefore direct that the addition so made be deleted - in favour of assessee. Difference in Chit Commission received - Held that - Assessee who could not substantiate as to how a sum of Rs.69,000 was expenditure incurred in relation to chit commission income therefore confirm the order of CIT(A) and dismiss ground raised by the Assessee - against assessee. Excess cash found as undisclosed income - Held that - CIT(A) was justified in rejecting the claim of the Assessee with regard to cash found at the time of search, as it was too general and vague. While working out the actual cash the AO has duly taken even expenditure not recorded in the books which would have been met in cash. Thus the action of the AO is very reasonable and the CIT(A) was right in confirming his action - against assessee.

Issues Involved:
1. Unexplained investments in house property.
2. Unexplained investments in financial business.
3. Treatment of agricultural income as normal income.
4. Difference in chit commission received.
5. Excess cash found during the search.

Issue-wise Detailed Analysis:

1. Unexplained Investments in House Property:
- Assessment Year (AY) 2003-04: The Assessee contested the addition of Rs.36,00,000 as unexplained investments in house property. The CIT(A) confirmed the addition, noting that the Assessee had admitted to paying Rs.36 lacs in cash over the cheque amount. The Assessee's claim that the cash was returned by the seller (a contractor) was unsubstantiated. The Tribunal upheld the CIT(A)'s decision, emphasizing that the unexplained investment was correctly added for AY 2003-04.

2. Unexplained Investments in Financial Business:
- AY 2003-04: The Assessee challenged the addition of Rs.4,90,700 as unexplained investment in financial business based on seized documents. The CIT(A) and the Tribunal found the Assessee's explanations insufficient and upheld the addition.
- AY 2005-06: The Assessee contested the addition of Rs.14,20,700 on similar grounds as AY 2003-04. The Tribunal dismissed the appeal, reiterating its earlier reasoning.
- AY 2006-07: The Assessee disputed the addition of Rs.6,01,000. The Tribunal upheld the addition, consistent with its findings for previous years.

3. Treatment of Agricultural Income as Normal Income:
- AY 2004-05: The Assessee's agricultural income of Rs.3,47,000 was partly treated as income from undisclosed sources. The CIT(A) reduced the addition to Rs.10,475, considering previous assessments. The Tribunal directed the deletion of the addition, preventing double taxation.
- AY 2005-06: The Assessee's appeal on this issue was dismissed, as the Tribunal found the explanations unsubstantiated.

4. Difference in Chit Commission Received:
- AY 2006-07: The Assessee's chit commission income was adjusted from Rs.3,84,000 to Rs.1,69,000 by the CIT(A). The Tribunal upheld the addition of Rs.69,000, finding no evidence of related expenses.
- AY 2007-08: The Assessee's chit commission income was adjusted from Rs.2,33,720 to Rs.1,20,000. The Tribunal upheld the addition of Rs.1,13,720, citing lack of substantiation.
- AY 2008-09: The Assessee's chit commission income was adjusted from Rs.12,27,000 to Rs.5,95,990 by the CIT(A). The Tribunal upheld the addition, finding the Assessee's explanations unsubstantiated.

5. Excess Cash Found During the Search:
- AY 2008-09: The Assessee contested the addition of Rs.4,48,291 as excess cash found. The CIT(A) and the Tribunal upheld the addition, noting discrepancies in the Assessee's cash balance explanations.

Summary of Judgments:
- The Tribunal dismissed the Assessee's appeals for AYs 2003-04, 2005-06, 2006-07, 2007-08, and 2008-09, upholding the additions made by the AO and confirmed by the CIT(A).
- The Tribunal partly allowed the appeal for AY 2004-05, directing the deletion of the addition related to agricultural income to prevent double taxation.

Conclusion:
The Tribunal's decisions emphasized the need for substantiated claims and proper documentation by the Assessee. The appeals were largely dismissed due to insufficient evidence and unsubstantiated explanations provided by the Assessee.

← Previous Next →