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2014 (4) TMI 664 - AT - Income TaxAddition u/s 68 of the Act Unexplained cash credit Held that - CIT(A) rightly held that the assessee has shown an amount of Rs. 37,06,000/- in cash - there was cash payment of Rs. 15,57,000 - CIT(A) was convinced that the assessee has failed to discharge the onus cast upon it by virtue of Sec. 68 and confirmed the addition of Rs. 21,49,000/- in the name of Shri Raouff Ansari - the assessee has never discharged the initial onus cast upon it by Section 68 of the Act CIT(A) has confirmed the addition of Rs. 2640 for want of verifiable details thus, there was no reason to interfere with the findings of the CIT(A) - Decided against Assessee. Disallowance of prior paid expenses Held that - The assessee could not prove before the CIT(A) that the liability have crystallized during the year under consideration thus, there was no reason to interfere with the findings of the CIT(A) Decided against Assessee. Disallowance of 5% of expenses on adhoc basis Held that - Considering the nature of expenses and the non co-operation by the assessee in not filing the details as the CIT(A) has already reduced the disallowances by 50% - thus, there is no no need for any interference in the order of the CIT(A) Decided against Assessee. Deletion of addition u/s 68 of the Act - Unexplained cash credit Held that - CIT(A) rightly held that the confirmations were furnished by the party and also furnished its PAN to AO - the loan was returned in subsequent year and the sum of Rs. 2,93,138/- represents provision for interest on the opening balance plus the money introduced during the year - the assessee has successfully discharged the initial onus cast upon it by virtue of Sec. 68 of the Act this, there is no need for interference in the order of the CIT(A) Decided against Revenue. Addition u/s 68 of the Act Onus to prove - Amount received from MD of the company as cash credit Held that - CIT(A) has rightly held that the assessee has shown the amount from Directors under the head unsecured loans from the Directors the provisions of Sec. 68 clearly apply on the facts of the case - the primary onus is on the assessee and this onus stands undischarged - the addition for the reasons that the assessee has not discharged the primary onus cast on it u/s 68 of the Act thus, there is no reason to interfere with the findings of the CIT(A) Decided against Assessee. Disallowance of prior paid expenses Held that - CIT(A) was convinced that the liability for octroi charges did crystallized during the year and allowed the relief to the extent of Rs. 1,57,189 - In so far as advertisement expenditure is concerned, CIT(A) observed that the liability was crystallized in the earlier year therefore cannot be allowed as expenditure during the year under consideration the CIT(A) has given a clear finding regarding the crystallization of liability in respect of advertisement expenditure thus, there is no need for interference in the order of the CIT(A) Decided against Assessee. Deletion made u/s 41(1) of the Act Held that - The AO has made the addition u/s 41(1) of the Act only because he found that the liabilities were outstanding for more than one year - CIT(A) has rightly observed that this cannot be any ground for making the addition u/s 41(1) of the Act thus, there is no reason for any interference in the order of the CIT(A) Decided against Revenue. Disallowance of professional /legal charges Held that - CIT(A) rightly held that the assessee and its associated concerns are different entities carrying on business separately - CIT(A) was convinced that the expenses are not incidental to the business of the assessee as the assessee has failed to substantiate its claim of expenses, there is no reason for any interference in the order of the CIT(A) Decided against Assessee. Penalty u/s 271(1)(c) of the Act Unexplained cash credit u/s 68 of the Act Held that - As decided in assessee s own case for the previous assessment year, the assessee has grossly failed to explain the genuineness of the transaction thus, the levy of penalty is justified and since a minimum penalty has been levied at the rate of 100% of the tax sought to be evaded, no interference is called for Decided against Assessee.
Issues Involved:
1. Addition of Rs. 21,49,000/- as unexplained cash credit under Section 68. 2. Addition of Rs. 2,640/- as unexplained cash credit under Section 68. 3. Disallowance of Rs. 67,101/- as prior period expenses. 4. Disallowance of 5% of expenses on an ad-hoc basis. 5. Deletion of addition of Rs. 21,44,170/- as unexplained cash credit under Section 68. 6. Addition of Rs. 39,60,000/- as unexplained cash credit under Section 68. 7. Disallowance of Rs. 76,153/- as prior period expenses. 8. Deletion of addition of Rs. 10,21,687/- under Section 41(1). 9. Disallowance of professional/legal charges of Rs. 3,03,000/-. 10. Disallowance of prior period expenses of Rs. 67,451/-. 11. Penalty under Section 271(1)(c) for addition of Rs. 21,51,640/- as unexplained cash credit. Issue-wise Detailed Analysis: 1. Addition of Rs. 21,49,000/- as Unexplained Cash Credit: The assessee failed to provide sufficient evidence to prove the genuineness of the loan transaction from Shri Raouff Ansari. Despite multiple opportunities, no bank statements or confirmations were furnished. The Ld. CIT(A) confirmed the addition, and the tribunal upheld this decision, citing the assessee's failure to discharge the onus under Section 68. 2. Addition of Rs. 2,640/- as Unexplained Cash Credit: The addition was confirmed due to the lack of verifiable details from the assessee. The tribunal found no reason to interfere with the findings of the Ld. CIT(A). 3. Disallowance of Rs. 67,101/- as Prior Period Expenses: The AO disallowed the expenses due to the assessee's failure to substantiate the claim. The Ld. CIT(A) allowed only the leave travel expenses of Rs. 17,250/- and confirmed the remaining disallowance. The tribunal upheld this decision, noting the assessee's inability to prove the liability crystallized during the relevant year. 4. Disallowance of 5% of Expenses on an Ad-hoc Basis: The AO initially disallowed 10% of certain expenses due to insufficient details, which the Ld. CIT(A) reduced to 5%. The tribunal upheld the Ld. CIT(A)'s decision, considering the nature of the expenses and the assessee's non-cooperation. 5. Deletion of Addition of Rs. 21,44,170/- as Unexplained Cash Credit: The Ld. CIT(A) deleted the addition after the party, M/s. Mudra Exports, appeared before the AO and provided confirmations and PAN details. The tribunal found that the assessee had successfully discharged the onus under Section 68 and upheld the deletion. 6. Addition of Rs. 39,60,000/- as Unexplained Cash Credit: The AO added the unexplained portion of the loan credits. The Ld. CIT(A) confirmed this addition, noting the assessee's failure to discharge the primary onus under Section 68. The tribunal upheld this decision. 7. Disallowance of Rs. 76,153/- as Prior Period Expenses: The AO disallowed the expenses due to lack of substantiation. The Ld. CIT(A) allowed the octroi charges but disallowed the advertisement expenses. The tribunal upheld the Ld. CIT(A)'s decision, noting the liability for advertisement expenses crystallized in an earlier year. 8. Deletion of Addition of Rs. 10,21,687/- under Section 41(1): The AO added the amount due to the liabilities being outstanding for more than a year. The Ld. CIT(A) deleted the addition, stating that mere outstanding liabilities do not constitute remission or cessation under Section 41(1). The tribunal upheld this decision. 9. Disallowance of Professional/Legal Charges of Rs. 3,03,000/-: The AO disallowed the charges related to litigation involving an associated concern. The Ld. CIT(A) confirmed this disallowance, and the tribunal upheld the decision, noting the expenses were not incidental to the assessee's business. 10. Disallowance of Prior Period Expenses of Rs. 67,451/-: The AO disallowed the expenses as they pertained to earlier periods. The Ld. CIT(A) confirmed this disallowance, and the tribunal upheld the decision, noting the liability crystallized in earlier years. 11. Penalty under Section 271(1)(c) for Addition of Rs. 21,51,640/-: The penalty was levied due to the assessee's failure to explain the genuineness of the transactions. The tribunal confirmed the penalty, noting the addition under Section 68 was upheld and the minimum penalty was justified. Conclusion: All appeals filed by the assessee and the Revenue were dismissed. The tribunal upheld the decisions of the lower authorities, confirming the additions, disallowances, and penalties based on the assessee's failure to provide sufficient evidence and discharge the onus under relevant sections of the Income Tax Act. The judgment emphasizes the importance of substantiating claims with verifiable details and the consequences of non-compliance.
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