2016 (5) TMI 584 - AT - Income Tax

Unexplained expenditure u/s 69C - it was found that the assessee along with many other persons have given donation to the education society for admission to the courses conducted by the group - Held that - Additions in this case only on the basis of entries in a diary without any corroborative evidence cannot be held to be justified. It is pertinent to mention here that in this case the statement of the assessee was recorded by the Assessing Officer and specific questions were put regarding the diary entry/capitation fee. However, the assessee has specifically denied regarding making of any cash payment to the institute and the Assessing Officer has failed to bring any evidence on the file to show that the statement made by the assessee before him was wrong. In view of this, the additions made by the lower authorities in this case do not seem to be justified and the same are accordingly ordered to be deleted. - Decided in favour of assessee

Summary

Issues:
- Appeal against CIT(A) order dated February 14, 2011, relevant to assessment year 2001-02.
- Addition of income and levying tax under sections 144, 147, 234A, and 234B.
- Payment of capitation fees from father's non-resident account.
- Reopening of case under section 147 based on search action under section 132.
- Confirmation of addition by CIT(A) and appeal before ITAT Mumbai.
- Comparison with judgments of co-ordinate Benches regarding similar cases.

Analysis:
1. The appeal was filed against the CIT(A) order for the assessment year 2001-02. The assessee contested the addition of income and the levying of tax under sections 144, 147, 234A, and 234B. The grounds of appeal highlighted errors in the actions of the Income-tax Officer and emphasized the alleged disregard of facts and circumstances, especially regarding the payment of capitation fees from the father's non-resident account. The appellant argued that the CIT(A) failed to consider crucial aspects and urged for the deletion of the added income and tax.

2. The case originated from a search action under section 132 on M/s. D. Y. Patil group, revealing donations made by various individuals for admission to courses. The assessee's son was listed as a student, with a donation of Rs. 18,00,000 attributed to the admission. The Assessing Officer reopened the case under section 147, as the assessee failed to explain the source of this payment. Despite the appellant's denial of making any capitation payment, the AO assessed the amount as unexplained expenditure under section 69, leading to the appeal before the CIT(A).

3. The CIT(A) upheld the AO's decision, prompting the appeal to the ITAT Mumbai. During the ITAT proceedings, the assessee's representative clarified that the payment was made by the husband from his NRI account through proper banking channels, disputing the capitation fee allegation. Citing judgments from co-ordinate Benches, the representative argued that additions based solely on diary entries without corroborative evidence were unjustified. The ITAT concurred, emphasizing the lack of substantial proof and the inconsistency in the AO's evidence, leading to the deletion of the additions.

4. The ITAT's decision favored the assessee, allowing the appeal and overturning the additions made by the lower authorities. The judgment highlighted the importance of substantiated evidence and the necessity to justify additions based on concrete proof rather than mere diary entries. The ITAT's ruling on this matter aligned with previous decisions from co-ordinate Benches, emphasizing consistency and fairness in tax assessments based on factual substantiation.

5. In conclusion, the ITAT Mumbai ruled in favor of the assessee, emphasizing the need for concrete evidence to support income additions and tax levies. The judgment underscored the importance of fair and substantiated tax assessments, aligning with precedents set by co-ordinate Benches in similar cases.