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2021 (11) TMI 877 - AT - Income TaxUnexplained payment of margin money and excess payment for purchase of two LPG Tankers - CIT-A enhanced the addition - HELD THAT - For addition made by the Assessing Officer on account of payment based on the invoices issued on the M/s. Spark Engineers by treating the same as bogus the said addition is unwarranted as the assessee has shown the said payment as part of the total cost of the Tankers. CIT(A) has though taken up this issue but has not confirmed the said addition but enhanced the addition made by the Assessing Officer on account of the margin money. Even otherwise, once the payment of the said amount is not in dispute as the said payment was made through banking channel then the said payment considered by the Assessing Officer as excess cannot be treated as income of the assessee because the source of the said payment is not disputed. It may be an issue for determining the total cost of the capital asset in the shape of the two LPG Tankers but the amount cannot be added to the income of the assessee merely because the assessee has paid this amount in excess. Addition on account of margin money - Assessee has produced the invoices before the Assessing Officer by suppressing the total cost of two LPG Tankers so as to match the amount of payment being the loan amount of ₹ 50,00,000/- and cash payment of ₹ 50,000/-. Whereas at the time of taking the loan, the assessee has produced the invoices showing the total cost of two Tankers at ₹ 64,60,000/- out of which assessee undertook to pay ₹ 14,60,000/- as margin money from her own source. Since the assessee has paid only ₹ 50,000/- out of ₹ 14,60,000/- and the balance of ₹ 14,10,000/- was treated by the Assessing Officer as unexplained investment/payment. The Assessing Officer conducted an enquiry from the bank which has confirmed the fact that the total cost of two LPG Tankers as per the invoices/quotations filed by the assessee is ₹ 64,60,000/- out of which a margin money of ₹ 14,60,000/- was directly paid by the assessee to the supplier. Once the bank has confirmed the payment of margin money by the assessee to the suppliers then in the absence of explanation of source, this amount of ₹ 14,10,000/- is rightly added to the income of the assessee by the Assessing Officer. The CIT(A) enhanced the addition from ₹ 14,10,000/- to 15,38,880/- without issuing a show cause notice as required under section 251(2) of the Income Tax Act. Therefore, in the absence of the show cause notice, the enhancement made by the CIT(A) is not sustainable and liable to be deleted. Considering the facts and circumstances of the case, when the document produced by assessee as well as confirmation of the bank regarding the total cost of two LPG Tankers and payment of margin money by the assessee, the addition of ₹ 14,10,000/- is rightly made by the Assessing Officer. An explanation of the assessee is that the total cost of the Tankers is reduced to ₹ 50,50,000/- does not inspire confidence when there is significant discrepancies in the two set of invoices produced by the assessee. Accordingly, the addition to the extent of ₹ 14,10,000/- is confirmed. Non consideration of additional evidence by the CIT(A) - HELD THAT - The assessee has raised this ground to challenge the impugned order of the CIT(A) on merit without considering additional evidence filed by the assessee. However, it is a matter of record that the CIT(A) sent all the documents and the contentions of the assessee to the Assessing Officer and called for remand report. The impugned order has been passed by the CIT(A) after considering the remand report of the Assessing Officer and therefore, it cannot be said that the CIT(A) has passed the order without considering these documents. Even otherwise when the contradictory records were filed by the assessee then the alleged additional evidence filed by the assessee would not help the case of the assessee.
Issues Involved:
1. Confirmation of ?14,10,000/- for alleged payment of margin money. 2. Enhancement of addition to ?15,38,880/- in contravention of Section 251 of the Income Tax Act, 1961. 3. Addition of ?4,21,290/- on account of payment to M/s. Spark Engineers, Pune. 4. Non-consideration of additional evidence submitted under Rule 46A of the Income Tax Rules, 1962. 5. Non-consideration of submissions filed in response to the Remand Report. 6. Allegation that the order is contrary to law, facts, and principles of natural justice. Issue-wise Detailed Analysis: 1. Confirmation of ?14,10,000/- for Alleged Payment of Margin Money: The assessee purchased two LPG Tankers with a loan from Oriental Bank of Commerce, claiming the total cost at ?50,50,000/-. The Assessing Officer (AO) found discrepancies between the cost shown in the loan proposal (?64,60,000/-) and the payment records, noting an unexplained margin money payment of ?14,10,000/-. The AO added this amount to the income, which was confirmed by the CIT(A) after considering additional evidence and a remand report. The Tribunal upheld the AO's addition, citing significant discrepancies in the documents provided to the bank and the AO. 2. Enhancement of Addition to ?15,38,880/- in Contravention of Section 251 of the Income Tax Act, 1961: The CIT(A) enhanced the addition from ?14,10,000/- to ?15,38,880/- without issuing a show cause notice as required under Section 251(2) of the Income Tax Act. The Tribunal found this enhancement unsustainable due to the lack of a show cause notice and deleted the enhanced portion, confirming only the original addition of ?14,10,000/-. 3. Addition of ?4,21,290/- on Account of Payment to M/s. Spark Engineers, Pune: The AO added ?4,21,290/- as a bogus claim for bills issued by M/s. Spark Engineers, which was part of a total payment of ?9,70,000/-. The Tribunal found this addition unwarranted since the payment was capitalized as part of the tankers' cost and not claimed as an expenditure. The Tribunal noted that the payment was made through banking channels and the source was not disputed, thus it could not be treated as income. 4. Non-consideration of Additional Evidence Submitted under Rule 46A of the Income Tax Rules, 1962: The assessee contended that the CIT(A) did not consider additional evidence. However, the Tribunal noted that the CIT(A) had sent the documents to the AO and called for a remand report. The CIT(A) considered the remand report before passing the order, thus the Tribunal found no merit in this ground. 5. Non-consideration of Submissions Filed in Response to the Remand Report: The Tribunal did not find explicit mention or detailed analysis on this specific issue in the judgment text provided. However, it can be inferred that since the CIT(A) considered the remand report, the submissions in response were likely reviewed. 6. Allegation that the Order is Contrary to Law, Facts, and Principles of Natural Justice: The Tribunal's detailed analysis and partial allowance of the appeal indicate that it considered the principles of natural justice. The Tribunal confirmed the AO's addition of ?14,10,000/- due to significant discrepancies in the assessee's documents but found the CIT(A)'s enhancement without a show cause notice contrary to law. Conclusion: The appeal was partly allowed by the Tribunal. The addition of ?14,10,000/- was confirmed, while the enhancement to ?15,38,880/- was deleted due to procedural lapses. The addition of ?4,21,290/- was deemed unwarranted as it was part of the capitalized cost. The Tribunal upheld the CIT(A)'s consideration of additional evidence and found the order aligned with the principles of natural justice.
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