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2015 (10) TMI 12 - AT - Income TaxUnaccounted share transactions of the assessee company - CIT(A) deleted the addition - Held that - The A.O. had verified the accounts maintained in the name of M/s. Sandeep Stocks Pvt. Ltd. and came to the conclusion that there was no variation in the entries/transactions carried out through this account. Therefore, at the time of filing of return, the assessee company has not disclosed any additional income on account of surrender made during the course of survey. The ld. CIT (A) had thoroughly examined this issue and held that addition made by the AO was not justified simply on the basis of surrender made during the course of survey. As such no incriminating documents were found during the course of survey on which assessee can disclose additional income. Therefore, we find no infirmity with the order of ld. CIT (A). Accordingly we confirm the order of ld. CIT (A). - Decided against revenue.
Issues:
1. Addition of undisclosed income based on director's admission. 2. Justification of addition of Rs. 80,00,000 to the income of the assessee. 3. Verification of transactions and surrender made during survey proceedings. 4. Appeal against the order of the Assessing Officer. Issue 1: Addition of undisclosed income based on director's admission The appeal by revenue challenged the deletion of the addition of Rs. 80,00,000 made by the Assessing Officer (AO) based on the admission of the directors of the assessee company regarding unaccounted share transactions. The AO observed that the undisclosed income admitted during the survey proceedings was not disclosed in the return of income for the relevant assessment year. The AO issued a show cause notice, and the assessee's explanation was considered an afterthought to retract from the admitted income. The AO relied on legal precedents to justify the addition. Issue 2: Justification of addition of Rs. 80,00,000 to the income of the assessee The Commissioner of Income Tax (Appeals) deleted the addition after thorough examination of the facts. The CIT (A) noted that the surrender made during the survey was the sole basis for the addition, but there was no substantive evidence to support it. The CIT (A) highlighted that the transactions were conducted by a separate legal entity, M/s. Sandeep Stock Pvt. Ltd., and all transactions were through its bank accounts. The CIT (A) concluded that there was no justification for the addition based solely on the director's statements without corroborative evidence. Issue 3: Verification of transactions and surrender made during survey proceedings During the appellate proceedings, the assessee submitted crucial facts and relevant evidence to support its case. The AO, in a remand report, verified the ledger accounts of M/s. Sandeep Stock Pvt. Ltd. and confirmed that the transactions were in line with the entries in the assessee company's accounts. It was established that the transactions were conducted through the assessee company as a member broker for M/s. Sandeep Stock Pvt. Ltd. The AO admitted the verification results, confirming the legitimacy of the transactions. Issue 4: Appeal against the order of the Assessing Officer The Revenue appealed against the CIT (A)'s decision, but the Tribunal upheld the CIT (A)'s order. The Tribunal noted that there were no incriminating documents found during the survey to justify additional income disclosure by the assessee. The Tribunal confirmed the CIT (A)'s decision, stating that the addition made by the AO was not justified solely based on the surrender made during the survey. The Tribunal dismissed the Revenue's appeal, affirming the CIT (A)'s order. This detailed analysis covers the issues involved in the legal judgment, providing a comprehensive overview of the arguments, decisions, and reasoning presented throughout the case.
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