2016 (10) TMI 487 - AT - Income Tax

Appellate Tribunal Reverses Decisions, Allows Appeal on All Grounds

The Appellate Tribunal ruled in favor of the appellant, reversing the decisions made by lower authorities. It found that the undisclosed bank account ... Undisclosed credit entries reflecting in the bank statements - Held that:- We disagree with the view taken by the lower authorities that the credit entries reflecting in the undisclosed bank statement are representing the income from undisclosed sources. It is because that it is the duty of the lower authorities to establish the exact nature and character of such receipts. The argument placed by Ld AR that these credit entries are reflecting from the disclosed bank account has not been considered by the lower authorities. Ld. AR before us has filed the reconciliation statement of all the entries reflecting in the disclosed and undisclosed bank account. We find that all the credit entries reflecting in the undisclosed bank account are coming from the disclosed bank account of assessee. In support of this, Ld. AR has filed bank statement along with reconciliation which are placed on record. Ld. DR has not brought any defect in the details filed by assessee. In view of above, we find no undisclosed income / investment has escaped assessment. Therefore, we reverse the order of Authorities Below. AO is directed accordingly. Hence, inter-connected ground of assessee is allowed. Addition u/s 40A - Held that:- As decided in CIT vs. Crescent Export Syndicate [2008 (7) TMI 977 - CALCUTTA HIGH COURT ] the genuineness of the purchase has been accepted by the ld. CIT (Appeal) which has also not been disputed by the department as it appears form the order so passed by the learned Tribunal. It further appears from the assessment order that neither the Assessing Officer nor the CIT ((Appeal) has disbelieved the genuineness of the transaction. Therefore was no dispute that the purchase were genuine. Tribunal has correctly came to the conclusion by deleting the addition under section 40A(3) of the Act. - Decided in favour of assessee. Issues:1. Undisclosed bank account transactions2. Disallowance under Sec. 40A(3) read with Rule 6DD(k) of IT Rules 19623. Interest charges under Sec. 234A/234BUndisclosed Bank Account Transactions:The appeal concerned undisclosed bank account transactions, where the Assessing Officer added amounts from undisclosed sources to the total income. The appellant argued that the transactions were personal in nature and not undisclosed income. The Appellate Tribunal found that all credit entries in the undisclosed accounts originated from the disclosed account, indicating no undisclosed income. The Tribunal disagreed with lower authorities, stating they failed to establish the nature of the receipts. As a result, the Tribunal reversed the decision, directing the Assessing Officer accordingly.Disallowance under Sec. 40A(3) read with Rule 6DD(k) of IT Rules 1962:The appellant contested the disallowance of a cash payment under Sec. 40A(3) amounting to &8377;19,62,575 made to a service provider. The Assessing Officer disallowed the payment, which was upheld by the Commissioner of Income Tax (Appeals). However, the Tribunal noted that the transaction's genuineness and parties involved were not in question. Citing a relevant High Court judgment, the Tribunal allowed the appeal, emphasizing that the payment was for business expediency. Consequently, the Tribunal reversed the decision of the lower authorities.Interest Charges under Sec. 234A/234B:The appellant raised an issue regarding interest charges under Sec. 234A/234B, stating they were mechanically imposed and did not require adjudication. This issue was considered consequential and did not warrant separate deliberation.In conclusion, the Appellate Tribunal ruled in favor of the appellant, allowing the appeal on all grounds. The judgment highlighted discrepancies in the treatment of undisclosed income, the disallowance of cash payments, and the imposition of interest charges, ultimately leading to a reversal of the decisions made by the lower authorities.