2012 (12) TMI 638 - AT - Income Tax

Tribunal dismisses most appeals, upholds Commissioner's decisions, and partially allows claim under Section 10B.

The Jt. Commissioner of Income Tax, Central Circle IV (1), 46, Chennai Versus Shri V. Sampath

The Jt. Commissioner of Income Tax, Central Circle IV (1), 46, Chennai Versus Shri V. Sampath - TMI Issues Involved:1. Deletion of additions towards inadequate drawings.2. Assessment of Rs. 2,85,00,000/- under the head 'other sources' versus Section 69B.3. Deletion of addition towards unexplained cash amounting to Rs. 7,05,000/-.4. Sustaining de-novo assessment under Section 153(A).5. Denial of liability to interest under Section 234B.6. Claim for deduction under Section 10B.Issue-wise Detailed Analysis:1. Deletion of Additions Towards Inadequate Drawings:The Revenue argued that the Commissioner of Income Tax (Appeals) erred in deleting additions made towards inadequate drawings for the assessment years 2002-03 to 2008-09. The Assessing Officer had made additions based on estimated drawings, but the Commissioner of Income Tax (Appeals) found no material evidence indicating suppression of drawings. The Commissioner noted that the cost of living in Vellore was lower than in Bangalore, where similar drawings were accepted. The Tribunal upheld the Commissioner's findings, stating no evidence was provided to support the Revenue's claim, thus rejecting the grounds raised by the Revenue.2. Assessment of Rs. 2,85,00,000/- Under the Head 'Other Sources' versus Section 69B:The Assessing Officer added Rs. 2.85 crores as unexplained investment under Section 69B, inferred from notings in a diary. The assessee argued there was no fresh material evidence from the search to support this, and the seller denied receiving excess money. The Commissioner of Income Tax (Appeals) held that the income should be assessed under 'other sources' as offered by the assessee, not under Section 69B, as there was no evidence of excess investment. The Tribunal upheld this decision, finding no reason to interfere with the Commissioner's order.3. Deletion of Addition Towards Unexplained Cash Amounting to Rs. 7,05,000/-:The Assessing Officer added Rs. 7,05,000/- as unexplained cash seized during the search. The assessee contended this cash was part of the balance in the cash book of Everbright Exports, a proprietory concern. The Commissioner of Income Tax (Appeals) accepted this explanation, noting the concern had been regularly assessed and the books were not rejected by the Assessing Officer. The Tribunal upheld the Commissioner's findings, seeing no valid reason to interfere.4. Sustaining De-novo Assessment Under Section 153(A):The assessee argued that the de-novo assessment under Section 153(A) should be confined to search materials. However, the Tribunal referred to its decision in Harvey Heart Hospitals Ltd. v. ACIT, which held that assessments under Sections 153A to 153C are for six years preceding the search and are not confined to search materials. The Tribunal upheld the Commissioner's decision on this issue.5. Denial of Liability to Interest Under Section 234B:The assessee contested the liability to interest under Section 234B. The Tribunal noted that the levy of interest under Section 234B is consequential and found no force in the assessee's ground, thus rejecting it.6. Claim for Deduction Under Section 10B:The assessee claimed the Commissioner of Income Tax (Appeals) did not consider the additional ground for deduction under Section 10B due to delayed filing caused by search proceedings. The Tribunal noted that the Commissioner should have entertained the claim on merits, citing the Supreme Court's decision in CIT v. Kanpur Coal Syndicate, which states the appellate authority's powers are co-terminus with those of the Income Tax Officer. The Tribunal restored the issue to the Commissioner for fresh consideration on merits.Conclusion:The Tribunal dismissed all the appeals of the Department and the cross objections of the assessee except for the claim under Section 10B, which was partly allowed and remanded for fresh consideration.