2014 (3) TMI 72 - AT - Income Tax

Assessment of Unexplained Expenditure on Visa Fees Upheld by ITAT

The ITAT upheld the CIT(A)'s decision to delete the addition of unexplained expenditure on visa processing and consulate fees under section 69C of the IT ... Deletion made u/s 69C of the Act – Unexplained expenditure – Held that:- The case of the assessee all through was that neither the Investigating Wing nor the AO called for certain details as to the mode of operation carried on by travel agents but as a matter of abundant precaution it has filed all the details before the CIT(A) and based on the circumstance the learned CIT(A) thought it fit to admit the same after obtaining a remand report - admission of additional evidence cannot be stated to be in violation of Rule 46A of the I.T. Rules - the assessee has explained the consistent method followed by him, in the absence of pointing out any specific instance of cash payment without availability of cash on the stipulate date - the addition made by the AO under section 69C has no legs to stand – there was no infirmity in the order passed by the CIT(A) – Decided against Revenue. Issues:1. Addition of unexplained expenditure on visa processing and consulate fees under section 69C of the IT Act.2. Acceptance of additional evidence by the CIT(A) violating Rule 46A.Analysis:1. The appeal concerned the Revenue challenging the CIT(A)'s order regarding the addition of Rs. 23,56,576 as unexplained expenditure on visa processing and consulate fees under section 69C of the IT Act for A.Y. 2007-08. The assessee, a proprietor of a travel agency, claimed deductions for expenses incurred while providing services to clients. The AO observed a discrepancy in cash withdrawals and expenditure, leading to the addition. The CIT(A) allowed additional evidence submission by the assessee, including details of visa payments, contracts with clients, and reimbursement proofs. After thorough verification, the CIT(A) found no discrepancy and deleted the addition, stating the AO lacked justification for the addition.2. The Revenue contended that the CIT(A) admitted additional evidence improperly, citing Rule 46A of the IT Rules. However, the CIT(A) called for a remand report and considered the evidence provided by the assessee. The assessee argued that the additional evidence supported the reimbursements and the normal business practice of travel agents. The ITAT upheld the CIT(A)'s decision, stating that admitting additional evidence was justified given the circumstances and consistent explanation by the assessee. The ITAT found no basis for the AO's addition under section 69C, affirming the CIT(A)'s order and dismissing the Revenue's appeal.