2009 (9) TMI 1060 - AT - Income Tax

Tribunal upholds most CIT(A) decisions, directs verification under section 68

The Tribunal partly allowed the Revenue's appeal for statistical purposes, upholding the Commissioner of Income-tax (Appeals) [CIT(A)]'s decisions on most ... - Issues Involved:1. Deletion of addition of Rs. 9,76,322/- being difference of estimated development fees.2. Invoking provisions of Section 145(3) of the I.T. Act.3. Restriction of disallowance of interest from Rs. 5,49,000/- to Rs. 27,472/-.4. Deletion of addition of Rs. 40,74,165/- made u/s 68 of the I.T. Act.5. Assessee's cross objection regarding disallowance of Rs. 27,472/-.Summary:Issue 1: Deletion of Addition of Rs. 9,76,322/-The Assessing Officer (AO) added Rs. 9,76,322/- by estimating development fees at 2% of booking receipts, alleging arbitrary fee charges. The Commissioner of Income-tax (Appeals) [CIT(A)] deleted the addition, noting no defects in the books and no evidence of higher fees charged. The Tribunal upheld CIT(A)'s decision, confirming no basis for the AO's estimation and rejecting the Revenue's ground.Issue 2: Invoking Provisions of Section 145(3)The AO invoked Section 145(3) to reject the books of account, alleging arbitrary fee charges. The CIT(A) and the Tribunal found no defects in the books and no justification for rejection. Thus, this ground of the Revenue's appeal was also rejected.Issue 3: Restriction of Disallowance of InterestThe AO disallowed Rs. 5,49,000/- of interest, alleging non-charging of interest on Rs. 30,50,000/-. The CIT(A) reduced the disallowance to Rs. 27,472/-, noting that part of the interest was transferred to project cost. The Tribunal upheld CIT(A)'s decision, finding no basis for further disallowance and rejecting the Revenue's ground.Issue 4: Deletion of Addition u/s 68The AO added Rs. 40,74,165/- u/s 68, questioning the identity, creditworthiness, and genuineness of deposits. The CIT(A) deleted the addition, noting the assessee provided sufficient details, including PAN and addresses. The Tribunal restored the matter to the AO for further verification, directing the assessee to submit complete details for independent investigation.Issue 5: Assessee's Cross ObjectionThe assessee's cross objection regarding the disallowance of Rs. 27,472/- was dismissed, following the Tribunal's confirmation of CIT(A)'s order on the related issue.Conclusion:The appeal of the Revenue was partly allowed for statistical purposes, and the assessee's cross objection was dismissed. The Tribunal upheld CIT(A)'s decisions on most grounds, directing further verification only for the addition u/s 68.