2015 (6) TMI 880 - AT - Income Tax

Tribunal partially allows appeal, reverses rejection of revised books, deems gifts genuine, remands investment examination.

The Tribunal partly allowed the assessee's appeal by reversing the rejection of revised books of account under section 145(3) due to unjustified action by ... Rejection of revised books of account u/s 145(3) - AO did not make an Ex-parte assessment or an estimated assessment but added amounts under section 69,69A,69B69C of the I.T.Act 1961 taking the figure from revised accounts - Held that:- The assesse has submitted the revised balance sheet and explanations to the differences and the balance sheet filed along with the return of income. But no defect has been pointed by the AO. Under such circumstances and facts of the case AO is not justified in invoking the provision of section 145(3) of the Act by simply calculating the differences between the revised balance sheet and the balance sheet in the audited accounts attached with the return of income and adding the same to the income of assessee. Therefore under such circumstances of the case this action of the AO for rejecting the books of account only on account of computation difference between the revised balance sheet and the audited balance sheet is no basis for invoking the provision of section 145(3) - Decided in favour of assessee. Addition on gifts received u/s 69 from mother-in-law and from father - Held that:- The finding of the AO and the ld. CIT(A) that there was no drawing during the five days prior to the date of gift and mere cash withdrawal by the donor long back i.e. 120 days cannot make the act probable. Such reasonings by both the authorities below cannot convert the facts of genuineness and creditworthiness of the transactions. In such circumstances and facts of the case we are of the view that the assessee has explained the identity, creditworthiness and genuineness of the transactions and the AO was not justified in treating the same as income of the assessee. Accordingly the order of the ld. CIT(A) is reversed. - Decided in favour of assessee. Undisclosed investment u/s 69 - difference in capital arising out of audit and revised balance sheet - Held that:- The ld. Counsel of the assesee before us tried to explain the difference and the reconciliation and prayed to examine the differences between the revised balance sheet and audited balance sheet by us. Prima facie as appears from the order of ld. CIT(A) the assessee has stated to have reconciled the differences but the same has neither been examined by the AO in the right perspective nor by the ld. CIT(A). It will be in the interest of justice if it is set aside the matter to the file of AO, who will examine the issue in the right perspective being the differences between the revised balance sheet and the audited balance sheet and if the explanation is found satisfactory the addition may be deleted. - Decided in favour of assessee for statistical purposes. Addition in respect of furniture and fixture for personal purposes - Held that:- The assessee having incurred the expenditure in cash for personal purposes and in the absence of any documents for the expenditure not filed before any of the authorities below or before us we do not find any infirmity in the order of ld. CIT(A), who has rightly confirmed the action of AO. - Decided against assessee. Additions in respect of entire chamber maintenance, printing and stationery, books and periodicals , electricity expenses and miscellaneous expenses - Held that:- As per the report of the AO which has not been rebutted by the ld. AR that assessee himself has admitted vide his submission dated 14.12.2010 which states that he has made a chamber at his ancestral home but rarely get the time to provide the consultation. Nothing has been substantiated before the authorities below or even before us to establish that the expenditures having been incurred wholly and exclusively for the purpose of profession and not allowable u/s 37(1) of the Act. We find no infirmity in the order of ld. CIT(A), who has rightly confirmed the action of AO - Decided against assessee. Issues:1. Rejection of revised books of account under section 145(3)2. Addition of gifts received under section 693. Addition of undisclosed investment under section 694. Addition of furniture and fixture as undisclosed income5. Treatment of various expenses as additions to total incomeIssue 1: Rejection of revised books of account under section 145(3):The assessee's appeal challenged the rejection of revised books of account by the Income Tax Officer under section 145(3) of the Income Tax Act. The AO noted discrepancies between the audited accounts and the revised balance sheet. However, the Tribunal held that the AO's action was unjustified as no defects were pointed out in the revised balance sheet. Therefore, the Tribunal directed the reversal of the decision to reject the books of account under section 145(3).Issue 2: Addition of gifts received under section 69:The assessee received gifts from mother-in-law and father, which were added to the income under section 69 by the AO. The Tribunal found that the assessee provided explanations, affidavits, and documents to establish the genuineness of the transactions. The Tribunal held that the gifts were genuine, and the AO's reasoning for adding them to income was not valid. Consequently, the Tribunal reversed the decision to treat the gifts as income.Issue 3: Addition of undisclosed investment under section 69:An addition of undisclosed investment was made under section 69 due to differences in capital between audit and revised balance sheets. The Tribunal noted that the assessee submitted explanations and reconciliations, which were not adequately examined by the AO or CIT(A). Therefore, the matter was remanded to the AO for proper examination, with directions to delete the addition if the explanations were satisfactory.Issue 4: Addition of furniture and fixture as undisclosed income:An addition was made for furniture and fixture expenses for personal purposes. The Tribunal found that the assessee failed to provide supporting documents for the expenditure. Consequently, the Tribunal upheld the decision of the CIT(A) to confirm the addition as undisclosed income.Issue 5: Treatment of various expenses as additions to total income:The AO added various expenses like chamber maintenance, printing, stationery, and electricity expenses to the total income. The Tribunal noted that the assessee failed to substantiate that these expenses were wholly and exclusively for the profession. As a result, the Tribunal upheld the CIT(A)'s decision to confirm these additions to the total income.In conclusion, the Tribunal partly allowed the assessee's appeal, reversing some additions while upholding others based on the merits of each issue presented before the Tribunal.