2017 (2) TMI 216 - AT - Income Tax

Disallowance of 1/4th expenses, being repairs and maintenances of car on account of personal use - Held that - The assessee itself had added back 1/4th of depreciation on car for personal use. Therefore, 1/4th of other expenses, relating to the car, has been rightly disallowed by the Assessing Officer and confirmed by the CIT(A). Therefore, see no reason to interfere with the order of the CIT(A). Hence, ground is dismissed. Disallowance being 1/4th of travelling and sundry expenses, which are not supported by proper vouchers - Held that - This disallowance is an agreed disallowance by Chartered Accountant of the assessee and his signature is taken on the order sheet of the Assessing Officer to the above effect. Therefore, ground is without any substance and the same is dismissed. Addition as unexplained investment - contention of the assessee is that the finding of the Assessing Officer that it has withdrawn from the current account is wrong and in fact, it was withdrawn from the firm - Held that - It is seen from the cash flow statement that the assessee had wrongly credited the net profit of ₹ 52,318/- to the cash flow statement. The net profit from the business is credited to assessee s current account in the books of account of the business and has not been withdrawn from there. Therefore, this amount of ₹ 52,318/-, shown in the cash flow, is rightly brought to tax as unexplained expenses. Hence, ground is also rejected. Addition as unexplained expense - Held that - In the cash flow statement, the assessee had credited an amount of ₹ 48,000/- being lorry income; but the amount of TDS i.e. 5,254/ was not excluded. This amount credited in the cash flow statement fall short of the amount of TDS and the same has been rightly treated as unexplained expense by the Assessing Officer which was confirmed by the CIT(A). Addition being unexplained investment - Held that - On perusal of the order sheet of the Assessing Officer, noticed that this addition has been made on an agreed basis and therefore, questioning this addition at this stage without filing necessary affidavit, is devoid of merits. Therefore, the addition is upheld. Hence, ground is also rejected.

Summary

Issues:
1. Validity of reassessment based on jurisdiction.
2. Merits of various additions/disallowances challenged by the assessee.

Validity of Reassessment Based on Jurisdiction:
The appeal was against the CIT(A)'s order dated 9.2.2010 for the assessment year 2002-03. The reassessment was challenged by the assessee before the first appellate authority on grounds of jurisdiction and various additions/disallowances. The CIT(A) dismissed the appeal. The assessee then appealed to the Tribunal. The Tribunal initially decided the jurisdiction issue in favor of the assessee based on a judgment of the jurisdictional High Court. However, the revenue filed a Miscellaneous Petition stating that the High Court reviewed the judgment and decided in favor of the revenue. The Tribunal, considering the High Court's review, recalled its earlier order and scheduled a new hearing. The assessee argued that the reassessment was invalid due to the timing of notice u/s 143(2). The Tribunal rejected the contention based on the latest High Court judgment, leading to the dismissal of grounds raised regarding the validity of the assessment.

Merits of Various Additions/Disallowances:
The Tribunal addressed grounds 9 to 13 related to additions/disallowances made on merits. The assessee challenged these on various grounds, including disallowance of expenses, unexplained investments, and TDS amounts. The Tribunal analyzed each ground separately. It upheld the disallowance of 1/4th expenses related to car maintenance, as agreed by the Chartered Accountant. The disallowance of traveling and sundry expenses was also confirmed as per the agreement. The addition of unexplained investment and unexplained expenses, as per the cash flow statement, was upheld based on the evidence provided by the Assessing Officer. The Tribunal found that challenging these additions without sufficient evidence was devoid of merit. Thus, all the grounds raised by the assessee on merits were rejected, leading to the dismissal of the appeal.

In conclusion, the Tribunal dismissed the appeal filed by the assessee based on the jurisdictional issue and the merits of various additions/disallowances challenged. The detailed analysis of each ground and the application of relevant legal principles resulted in the decision to uphold the CIT(A)'s order.