2016 (8) TMI 1199 - AT - Income Tax

Tribunal Upholds CIT(A) Decision on Unexplained Expenditure Appeal

ACIT, Central Circle-9, New Delhi Versus Brij Kishor Kochar

The Tribunal upheld the CIT(A)'s decision, dismissing the appeal and affirming the deletion of the addition of unexplained expenditure under section 69C ... Reopening of assessment - Addition u/s 69C on account of unexplained expenditure - Held that:- The assessee put up all the relevant documents during the assessment proceedings. During the search the papers seized clearly mentioned that: “in the 2nd part of the booking form the rate is mentioned as ₹ 1,500/- per Sq. feet making it clear that the difference i.e., ₹ 2,800/- per Sq feet has been received in cash which comes to 2800 X 5000= ₹ 1,40,00,000”. Thus there does not constitute any substantial reason to believe that the Assessee is incorrect in showing the genuineness of the transaction. The Assessing Officer has not made out finding on the factual & documentary bases. There is no substantial material taken by the Assessing Officer while making that addition. The CIT(A) has rightly deleted the addition. Therefore, we uphold the order of CIT(A). - Decided in favour of assessee. Issues:- Jurisdiction under section 147 of the Income Tax Act, 1961- Addition of unexplained expenditure under section 69C of the ActJurisdiction under section 147 of the Income Tax Act, 1961:The appeal challenged the assumption of jurisdiction under section 147 of the Income Tax Act. The assessee had filed the return of income, but a notice was issued under Section 148 stating that income had escaped assessment. The reasons recorded for reopening the assessment highlighted discrepancies related to property transactions. The AO added an amount under section 69C of the Act, alleging unexplained expenditure. The CIT(A) allowed the appeal, ruling that the assumption of jurisdiction under section 147 was flawed. The CIT(A) pointed out contradictions in the factual matrix and the reasons recorded by the AO. The CIT(A) emphasized the non-application of mind by the AO and discrepancies in the figures mentioned in the reasons. The CIT(A) held that the AO failed to establish a tangible basis for the addition, referencing relevant case law.Addition of unexplained expenditure under section 69C of the Act:The AO added an amount as unexplained expenditure under section 69C of the Act. The assessee objected, providing details of transactions and payments made. The CIT(A) deleted the addition, emphasizing that the AO did not provide a proper basis for the addition. The CIT(A) noted that the assessee had submitted relevant documents during the assessment proceedings, and the seized papers indicated the genuineness of the transaction. The CIT(A) found that the AO lacked substantial material for the addition and upheld the deletion of the amount. The Tribunal upheld the CIT(A)'s decision, dismissing the appeal and affirming the deletion of the addition.In conclusion, the Tribunal upheld the CIT(A)'s decision, emphasizing the lack of substantial basis for the addition of unexplained expenditure and the flaws in the assumption of jurisdiction under section 147 of the Income Tax Act. The appeal was dismissed, and the order of the CIT(A) was upheld.