2014 (2) TMI 507 - AT - Income Tax

ITAT affirms CIT(A) on disallowance for AY 2003-04, partially allows appeal for AY 2007-08.

The ITAT upheld the CIT(A)'s decision on disallowance of unaccounted transactions for A.Y. 2003-04, dismissing the appeal. For A.Y. 2007-08, the ITAT ... Undisclosed sales and purchase - Search made u/s 132 of the Act – Incriminating documents found during search – Held that:- The CIT(A) was reasonable as also justified in granting the part relief to the assessee - The reasons assigned is evident that it is justifiable on the part of CIT(A) - This is not a case where the addition was made in a regular or normal course of assessment proceedings - But where on account of search or surveys certain documents were unearthed and on that basis the addition was made - The amount which was already declared by the assessee was considered and due relief was given, but for rest of the amount in the absence of satisfactory explanation the addition was made - In the absence of any evidence on merits from the side of the assessee, the order of the CIT(A) upheld – Decided against Assessee. Unaccounted transactions as undisclosed sales and purchase - Search made u/s 132 of the Act – Incriminating documents found during search – Held that:- The amount as reflected in AS-21 of Rs.4,69,000/- and an amount as appeared at AS-24 of Rs.42,000/- did not belong to the assessee - the entries on that paper did not relate to the assessee rather no name of the assessee had appeared at any place on this document marked as AS-21 which was not recovered from the assessee but from the premises - the treasury receipt marked as AS-24 did not belong to the assessee but it was related to some other party, namely, M/s. Royal Enterprises - the assessee's contention has some force, thus, deserves relief only in respect of these two additions - For rest of the documents, the same have been proved to be connected to the assessee, hence, no interference is required in respect of those additions – Decided aprtly in favour of Assessee. Issues:1. A.Y. 2003-04 - Disallowance of unaccounted transactions.2. A.Y. 2007-08 - Disallowance of unaccounted transactions.A.Y. 2003-04:In the case for A.Y. 2003-04, the issue revolved around the disallowance of unaccounted transactions amounting to Rs.5,39,439/- as detected during a search operation under Section 132. The Assessing Officer (AO) made the addition due to the failure of the assessee to explain the entries related to these transactions. The CIT(A) granted partial relief, considering the voluntary disclosure made by the appellant. The appellant disclosed Rs.3,15,563/-, leading to the deletion of certain amounts, but the remaining unexplained amount of Rs.3,94,439/- was confirmed by the CIT(A). The ITAT upheld the decision of the CIT(A), stating that in the absence of satisfactory explanation from the assessee, the addition was justified. The ITAT dismissed the appeal for A.Y. 2003-04.A.Y. 2007-08:For A.Y. 2007-08, the issue involved the disallowance of unaccounted transactions amounting to Rs.11,09,753/- as detected during a search operation under Section 132. The AO added this amount due to the failure of the assessee to explain the entries related to the impounded documents. The CIT(A) affirmed the addition, stating that the appellant had not disclosed any amount related to the loose papers. The ITAT noted that certain documents did not belong to the assessee, such as AS-21 and AS-24, and granted relief in respect of these specific additions. The ITAT allowed a partial relief of Rs.5,11,000/- out of the total addition of Rs.11,09,753/- for A.Y. 2007-08. Therefore, the appeal for A.Y. 2007-08 was partly allowed.In conclusion, the ITAT upheld the CIT(A)'s decision regarding the disallowance of unaccounted transactions for both A.Y. 2003-04 and A.Y. 2007-08, dismissing the appeal for the former and partly allowing the appeal for the latter year.