2012 (12) TMI 639 - AT - Income Tax

Appeals Dismissed, Commissioner's Decisions Upheld on Income Tax Issues

The Tribunal dismissed all appeals and cross-objections for the assessment years in question, upholding the decisions of the Commissioner of Income Tax ... Inadequate drawings - CIT(A) deleted the addition - Held that:- No reason to interfere with the findings of the CIT(A) as no evidence was brought on record by the Revenue in support of the addition made in the assessment order towards inadequate drawings. No material was found during the course of search to indicate any suppression of drawings and the drawings admitted by the assessee are reasonable - against revenue. Unexplained investment/expenditure u/s 69B/ 69C - CIT(A)directed to treat as income from other sources - Held that:- No material was placed on record suggesting that the assessee has made payment over and above the documentary value for purchase of the property as alleged in the assessment order the order of the CIT (A) in holding that the amounts offered by the assessee voluntarily in his return of income should be assessed as income from other sources - There being no good reason to interfere with the findings of the CIT(A) that the amounts offered by the assessee are to be assessed as income from other sources and not to be treated as an addition made under section 69B/69C as assessee is not the owner of the asset and he has not paid any amount more than the registered sale price - against revenue. Unexplained Cash - Held that:- Department had seized Rs..8.00 lakhs in assessee’s premises in the course of search. It is also not in dispute that an amount of Rs..6.00 lakhs was seized from assessee’s mother Smt. K. Rajeshwari. The Department having seized the cash of Rs. 14.00 lakhs, it has to give credit for such seized cash either in the hands of the assessee individual or in the hands of Shri V. Sankar (HUF) or mother of the assessee Smt. K. Rajeshwari. In the circumstances, no infirmity in the direction given by the CIT (A) in directing the AO to grant credit for a sum of Rs..14.00 lakhs in the hands of the assessee and in case, if credit is given for such cash seized in the hands of Shri V. Sankar (HUF) and Smt. K. Rajeshwari, the credit given in the hands of the assessee has to be withdrawn - against revenue. De novo assessment made under section 153(A) - Held that:- As per provisions of section 153A to 153C it provides for fresh assessments for six years preceding the year of search and assessments need not be confined to issues based on the materials found during the course of search Levy of Interest - Since levy of interest under section 234B is only consequential, no force in the ground taken by the assessee. Issues Involved:1. Deletion of additions made towards inadequate drawings.2. Classification of income added under section 69B/69C as income from other sources.3. Credit for seized cash of Rs. 14.00 lakhs.4. Sustaining de-novo assessment under section 153(A) without confining to search materials.5. Denial of liability to interest under section 234B.Detailed Analysis:1. Deletion of Additions Made Towards Inadequate Drawings:- Facts: A search under section 132 was conducted at the premises of Vellore Institute of Technology, including the residence of the assessee. Notices under section 153(A) and 142(1) were issued, and assessments were completed under section 153(A) read with section 143(3) for the assessment years 2002-03 to 2007-08, and under section 143(3) for 2008-09. The Assessing Officer (AO) made additions towards inadequate drawings for these years.- Assessee's Argument: The assessee contended that personal expenses were separately accounted for up to A.Y. 2004-05, leading to apparently low drawings. The family structure and living arrangements were not correctly considered by the AO. The AO's estimations lacked factual basis and material evidence.- Legal Argument: The assessee argued that section 69C requires a finding that an expenditure has been 'incurred,' which was not evidenced during the search.- Commissioner of Income Tax (Appeals) Decision: The Commissioner found no material evidence indicating suppression of drawings and deemed the admitted drawings reasonable.- Tribunal's Decision: The Tribunal upheld the Commissioner's findings, noting the absence of evidence supporting the AO's additions. The grounds raised by the Revenue were rejected.2. Classification of Income Added Under Section 69B/69C as Income from Other Sources:- Facts: The AO assessed certain incomes as unexplained investment/expenditure under section 69B/69C. The assessee argued that these amounts were voluntarily disclosed as income from other sources.- Assessee's Argument: The assessee contended that the additional amounts were related to properties purchased by Vellore Institute of Technology and not by the assessee. The assessee had offered these amounts voluntarily based on diary notings.- Commissioner of Income Tax (Appeals) Decision: The Commissioner held that the amounts should be assessed under 'income from other sources' rather than under section 69B/69C, as the properties were not owned by the assessee and the amounts were voluntarily disclosed.- Tribunal's Decision: The Tribunal upheld the Commissioner's decision, finding no reason to interfere as the Revenue did not provide evidence to the contrary. The grounds raised by the Revenue were rejected.3. Credit for Seized Cash of Rs. 14.00 Lakhs:- Facts: The AO did not give credit for Rs. 14.00 lakhs seized from the assessee's residence and mother.- Commissioner of Income Tax (Appeals) Decision: The Commissioner directed the AO to give credit for the seized amount in the hands of the assessee, with a provision to withdraw the credit if given in the hands of the actual owners.- Tribunal's Decision: The Tribunal found no infirmity in the Commissioner's direction and upheld the decision. The grounds raised by the Revenue were rejected.4. Sustaining De-Novo Assessment Under Section 153(A) Without Confining to Search Materials:- Facts: The assessee challenged the de-novo assessment under section 153(A), arguing it should be confined to search materials.- Tribunal's Decision: The Tribunal upheld the Commissioner's decision, referencing a prior case (Harvey Heart Hospitals Ltd. v. ACIT) that section 153A to 153C allows for fresh assessments for six years preceding the search, not limited to search materials.5. Denial of Liability to Interest Under Section 234B:- Facts: The assessee contested the liability to interest under section 234B.- Tribunal's Decision: The Tribunal found the levy of interest under section 234B to be consequential and upheld the Commissioner's decision. The grounds of cross objection on this issue were rejected.Conclusion:All appeals of the Department and cross objections of the assessee for the assessment years under appeal were dismissed. The Tribunal upheld the decisions of the Commissioner of Income Tax (Appeals) on all issues.