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2020 (8) TMI 753 - AT - Income TaxAddition of unexplained bank deposits - protective addition on the ground that he has confirmed the substantive addition made in the hands of K. Mahesh Kumar - HELD THAT - With regard to surrender of ₹ 4 crores made in the hands of the assessee, the letter dated 28.3.2011 written by Shri K. Mahesh Kumar makes it clear that the above said surrender was made, inter alia, to cover up shortcomings, if any till the assessment year 2011-12. We also notice that the surrender of ₹ 4 crores is less than the disallowance of ₹ 3.36 crores made by the A.O. and hence the said disallowance may be telescoped against the amount surrendered by the assessee. This is without prejudice to the quantum of disallowance made by the AO. In this view of the matter, we are of the view that there is no necessity to make separate disallowance of ₹ 3.36 crores out of the expenses. Accordingly, we set aside the order passed by Ld. CIT(A) on this issue and direct the A.O. to delete the disallowance. Appeal filed by the revenue relating to deletion of protective addition relating to unexplained bank deposits - We find merit in the said submissions of Ld. A.R. Since the Ld. CIT(A) has deleted the protective addition on the ground that he has confirmed the substantive addition made in the hands of K. Mahesh Kumar and since the said issue has been restored back to his file by the Tribunal in the case of K. Mahesh Kumar, the present issue also needs to be set aside to his file for examining it afresh along with the appeals of Shri K Mahesh Kumar. Accordingly, we restore this issue to file of Ld. CIT(A).
Issues:
1. Disallowance of expenses for assessment year 2010-11. 2. Addition of unexplained bank deposits for assessment year 2010-11. 3. Deletion of protective addition of unexplained bank deposits for assessment year 2011-12. 4. Validity of assessment on a non-existing assessee for assessment year 2011-12. Issue 1: Disallowance of Expenses for AY 2010-11: - The assessee offered income of ?4.22 crores based on an estimated turnover of ?21.05 crores due to missing books of accounts. - The AO disallowed 20% of expenses amounting to ?3.36 crores as details were not furnished by the assessee. - The CIT(A) confirmed the disallowance, leading to an appeal by the assessee. - The Tribunal found merit in the assessee's submissions, noting the surrender of ?4 crores to cover any deficiencies. - The disallowance was set aside, directing the AO to delete it. Issue 2: Addition of Unexplained Bank Deposits for AY 2010-11: - The AO proposed to assess bank deposits of ?40.45 crores as unexplained credits due to lack of explanation. - The CIT(A) deleted the addition, as it was confirmed in Shri K. Mahesh Kumar's case. - The revenue appealed this decision, arguing for the reinstatement of the addition. - The Tribunal upheld the CIT(A)'s decision, considering the related case's developments. Issue 3: Deletion of Protective Addition of Unexplained Bank Deposits for AY 2011-12: - Similar to AY 2010-11, the AO made a protective addition of ?76.34 crores in the assessee's hands. - The CIT(A) deleted this addition as it was confirmed in Shri K. Mahesh Kumar's case. - The revenue challenged this deletion, leading to the Tribunal's decision to set it aside for further examination by the CIT(A) in light of related developments. Issue 4: Validity of Assessment on a Non-Existing Assessee for AY 2011-12: - The assessee claimed non-existence during the relevant period for AY 2011-12. - Grounds questioning the assessment on a non-existing entity were raised before the CIT(A) but not adjudicated. - The Tribunal directed the CIT(A) to address these grounds as they are fundamental to the assessment's validity. In conclusion, the Tribunal allowed the assessee's appeal for AY 2010-11 and the revenue's appeals for both AY 2010-11 and 2011-12, with various issues being remanded for further examination or deletion based on related developments and legal considerations.
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