2012 (12) TMI 659 - AT - Income Tax

Appeal partially allowed, grounds dismissed, disallowances reduced.

The appeal was partly allowed by the tribunal. The grounds concerning the ex-parte order and the addition of Rs. 2 lakhs as unexplained cash credit were ... Ex-parte order - assessee contested against non allowing proper opportunity of being heard - Held that:- CIT(A) has given eight opportunities to the assessee commencing from 30/06/2005 to 14/01/2011 & the order was passed by the CIT(A) on 10/02/2011. However, the concept of natural justice cannot be extended to an absurd limit of affording endless opportunity, to an assessee, who is not willing to avail of such opportunities, thus the ground of appeal, raised by the assessee is without any merit. Unexplained Cash Credits - Held that:- Following the decision of Kale Khan Mohammad Hanif Versus Commissioner Of Income-Tax, M. P. And Bhopal (1963 (2) TMI 33 - SUPREME COURT) onus of proving the source of any sum found credited in the books of the assessee is upon the assessee - the sanctity of the affidavit, filed by the assessee, patently uncorroborated by any evidence, cannot be accepted as having any legal consequence as mere filing of confirmatory letter does not discharge the onus that lays on the assessee. The payment through cheque merely indicates movement of fund and not the creditworthiness and genuineness of the transaction - The assessee has failed to discharge the onus cast on him within the meaning of section 68 as also under the general law - the assessee himself admitted non-traceability of such cash creditors - against assessee. Disallowance of Staff Welfare Expenses – Held that:- This disallowance has been made in the computation of income without giving any finding, whatsoever by AO thus disallowance is founded on surmises and conjectures, as not been supported by any evidence - disallowance need to be deleted - in favour of assessee. Disallowance of car running expenses & depreciation – Held that:- AO has disallowed 1/4th of care running expenses & depreciation in respect of personal use of the car without bringing any material on record - in the interest of fairness and justice, the disallowance is reduced to 1/10th in each head - partly in favour of assessee. Issues Involved:1. Ex-parte order without proper opportunity of being heard.2. Addition of Rs. 2 lakhs as unexplained cash credit.3. Disallowance of Rs. 1,000/- out of staff welfare expenses.4. Disallowance of Rs. 2,490/- in respect of car running expenses.5. Disallowance of Rs. 8,074/- out of depreciation on car.Issue-wise Detailed Analysis:1. Ex-parte Order Without Proper Opportunity of Being Heard:The appellant contended that the CIT(A) erred in passing an ex-parte order without allowing a proper opportunity of being heard. The learned A.R. argued that reasonable opportunity was not given to the assessee, rendering the order infirm. However, the learned D.R. countered this by highlighting the various opportunities provided by the CIT(A). The tribunal found that the CIT(A) had given eight opportunities to the assessee from 30/06/2005 to 14/01/2011. It was noted that the concept of natural justice does not extend to providing endless opportunities to a non-compliant assessee. Given the ample opportunities already provided, the tribunal dismissed this ground of appeal as without merit.2. Addition of Rs. 2 Lakhs as Unexplained Cash Credit:The assessee argued that the Rs. 2 lakhs represented an amount advanced by the father of the assessee to certain parties, which was later received back. The assessee relied on several case laws to support the contention. However, the Assessing Officer (AO) found the addresses of the alleged creditors to be false and added the amount as unexplained cash credit under Section 68 of the Income Tax Act. The CIT(A) upheld the addition, noting that the assessee failed to furnish credible evidence to support the claim. The tribunal also found that the affidavit filed by the assessee was not corroborated by independent evidence and held no legal value. The tribunal reiterated that the onus of proving the source of any credited amount lies with the assessee, which was not satisfactorily discharged in this case. Therefore, this ground of appeal was dismissed.3. Disallowance of Rs. 1,000/- Out of Staff Welfare Expenses:The AO disallowed Rs. 1,000/- out of staff welfare expenses claimed at Rs. 3,915/- on the grounds of unverifiable nature. The tribunal found that this disallowance was made without any supporting evidence and was based on surmises and conjectures. Consequently, the disallowance upheld by the CIT(A) was deleted, and this ground of appeal was allowed.4. Disallowance of Rs. 2,490/- in Respect of Car Running Expenses:The assessee contended that the CIT(A) erred in confirming the disallowance of Rs. 2,490/- for car running expenses. The AO had disallowed 1/4th of the car running expenses and depreciation for personal use without any material evidence. The tribunal, in the interest of fairness and justice, reduced the disallowance to 1/10th in each head. This ground was partly allowed.5. Disallowance of Rs. 8,074/- Out of Depreciation on Car:Similar to the car running expenses, the AO had disallowed 1/4th of the depreciation on the car for personal use. The tribunal reduced this disallowance to 1/10th, aligning with their decision on car running expenses. This ground was also partly allowed.General Grounds:Grounds No. 8, 9, and 10 were general in nature and did not require specific adjudication. Therefore, these grounds were dismissed.Conclusion:The appeal was partly allowed. The tribunal dismissed the grounds related to the ex-parte order and the addition of Rs. 2 lakhs as unexplained cash credit. However, the disallowance of Rs. 1,000/- out of staff welfare expenses was deleted, and the disallowances related to car running expenses and depreciation were reduced to 1/10th.