2017 (6) TMI 727 - AT - Income Tax

Appellate tribunal reverses decision on income additions, stresses need for corroborative evidence

Shri. Sai Babu, Prop : Sri Enterprises, Near Adi Anjaneya Temple Versus Deputy Commissioner of Income-tax, Circle -1, Tumkur

Shri. Sai Babu, Prop : Sri Enterprises, Near Adi Anjaneya Temple Versus Deputy Commissioner of Income-tax, Circle -1, Tumkur - TMI Issues:- Appeal against order of CIT (A) for assessment year 2008-09.- Addition to income based on survey and statement recorded.- Admissibility of additional income declared by assessee.- Corroborative evidence requirement for additions.- Validity of additions without corroborative evidence.- Appeal based on lack of evidence and judgment of Supreme Court.- Validity of additions for advances and construction costs.- Reliability of valuation report in determining construction costs.Analysis:The appeal was filed against the CIT (A)'s order for the assessment year 2008-09. The assessee initially declared an income of Rs. 45,89,180 but later allegedly admitted to additional income during a survey. The AO proposed adding back Rs. 38,85,200 to the income, which was later increased to Rs. 39,97,305. The CIT (A) confirmed the addition, leading to the appeal. The appellate tribunal noted that the additions lacked corroborative evidence beyond the statement recorded during the survey. The assessee relied on a Supreme Court judgment emphasizing the necessity of cogent evidence for additions. The tribunal found that the AO failed to provide corroborative evidence for the additions related to advances given and construction costs. The tribunal highlighted the importance of evidence and deleted the additions made without proper basis, granting relief to the assessee.The tribunal emphasized that the AO must present corroborative evidence to support additions to income. Merely relying on statements recorded during surveys is insufficient, as evidenced by a Supreme Court ruling and a circular from the Board. The tribunal found the additions made without supporting evidence for advances given to individuals were unjustified and deleted them. Similarly, the tribunal ruled that the additions for construction costs lacked a proper basis and were solely based on estimations, contrary to the valuation report submitted by the assessee. As the AO failed to dispute the valuation report, the tribunal concluded that these additions were also unwarranted and deleted them. The tribunal partially allowed the assessee's appeal, highlighting the necessity of substantiated evidence in making income additions and emphasizing the importance of following legal precedents and valuation reports in such matters.In conclusion, the tribunal's decision focused on the requirement of corroborative evidence for income additions, as highlighted in legal judgments and circulars. The tribunal stressed the need for a factual and evidentiary basis for such additions, emphasizing the importance of following legal precedents and relying on valuation reports when determining income adjustments. The tribunal's decision to delete the additions without proper evidence showcased a commitment to upholding legal standards and ensuring a fair assessment process for the assessee.