2018 (5) TMI 1151 - AT - Income Tax

Addition made on estimate basis as bogus expenditure - assessment u/s 153A - expenses incurred for transportation charges - Held that - AO required the assessee to produce the supporting documents for the expenses incurred for transportation charges. The assessee produced ledger copy. Therefore, the Assessing Officer disallowed 10% of the total expenses, which was confirmed by the CIT(A). D.R. could not point out any material which was unearthed because of the search. Thus, it is observed that the addition made on estimate basis was not based on any search material. - Decided in favour of assessee.

Summary

Issues:
Appeals against CIT(A) orders for assessment years 2007-08 to 2010-2011 challenging addition of estimated bogus transportation expenditure.

Analysis:
The sole issue in the appeals was the addition made on estimate basis for transportation charges. The Assessing Officer disallowed a portion of the expenses as the supporting documents were not produced timely. The CIT(A) upheld the disallowance stating lack of verifiable details. The appellant argued that returns were filed timely and assessments were made without reference to search material. Citing legal precedent, the appellant contended that without incriminating material, no additions could be made post-assessment. The Department supported the lower authorities' decisions.

The Tribunal noted that assessments were abated due to the search, allowing additions only based on incriminating material. As no such material was found, the addition on estimate basis lacked legal basis. Relying on established legal principles and precedents, the Tribunal deleted the additions for all assessment years. Consequently, the appeals were allowed, overturning the CIT(A) orders.

The Tribunal emphasized the necessity of incriminating material to support additions post-search, highlighting the legal requirement for such substantiation. The decision was based on the absence of any material unearthed during the search, rendering the estimate-based additions invalid. By adhering to legal principles and precedents, the Tribunal ruled in favor of the appellant, emphasizing the importance of legal compliance and evidentiary support in tax assessments.