2018 (6) TMI 494 - AT - Income Tax

Tribunal decisions on undisclosed income: additions confirmed, others remitted, deletions upheld.

The Tribunal confirmed some additions, remitted others for fresh consideration, and upheld deletions in a tax case involving undisclosed income from ... Unaccounted/ undisclosed income in respect rent received in cash - Held that:- As decided in assessee's own case for assessment year 2010-2011 Assessing Officer has clearly given a finding that the income against which the assessee wants them to be telescoped related to separate piece of loose papers and they have nothing to do with the seized paper with reference to which this addition has been made. Now the assessee is submitting that there has been no such rent receipt in cash. Merely making such a statement will not support the case of the assessee when incriminating material has been found. Furthermore, the assessee pleas that the assessee follows cash system of accounting. This also does not helps the case of the assessee. The assessment being based upon specifically identified loose paper which the assessee has duly agreed during the course of assessment cannot be said to be arbitrary. - Decided against assessee Addition being notional rent for Penthouse - Held that:- Assessee’s submission are that assessee was not having any other premises for office and this was only premises for use of office, has not been addressed by the authorities below. In our considered opinion, the assessee being a professional artist is entitled to have a proper office and storage space. Hence, in our considered opinion, this issue needs to be remitted to the file of the assessing officer. The assessing officer is directed to consider the issue afresh Addition on the basis of loose papers - unexplained cash payments - Held that:- As it is seen that the same is a scribbling for a real estate property of 5100 ft. total price this has been mentioned as ₹ 7 cr 65. There is also mention of cash ₹ 3.35 and cheque of ₹ 2.15. In this regard, the assessee’s case is that the said paper was only a proposal and was later on cancelled with the same party. The assessee entered into a new agreement for 2995.70 ft. for ₹ 4.65 crore. Assessee has duly submitted confirmation of payment and agreement for the new project. The cancellation of the cheques given for the earlier project have also been shown and conformed - The above said document cannot be said to be a conclusive proof of cash payment of ₹ 3.5 crores. The assessee's plea that the same is a proposal which was not carried through cannot be brushed aside in light of the confirmation from the parties involved. It is also on record that the assessee never purchased estate property of 5100 sq. ft. from the said builder. Hence, the claim that it was a proposal later on not carried through and cancelled is having sufficient cogency. No addition to be confirmed Telescoping of the income with the declaration of undisclosed income by assessee's mother - Held that:- Revenue's plea is not sustainable. Throughout the search assessment it has been noted that assessee's mother has been handling all the affairs of the assessee. When the Revenue can make additions in the hands of the assessee, on the basis of that it was so stated and accepted by the assessee's mother, there is no reason why such telescoping cannot be granted. Accordingly, we do not find any infirmity in the order of the ld. Commissioner of Income Tax (Appeals) as allowed telescoping of the income with the declaration of undisclosed income by her mother Undisclosed income - arranging of wedding functions - Held that:- Addition has solely been made on the basis of a statement obtained from the secretary of the assessee. There is no corroborative material whatsoever. A mere statement by the secretary cannot be said to be a conclusive proof of undisclosed income earned. Hence, we are of the considered opinion that the ld. Commissioner of Income Tax (Appeals) has correctly accepted the assessee’s submission in this regard and deleted the addition Issues Involved:1. Addition of Rs. 4,80,000/- as undisclosed income from rent.2. Addition of Rs. 14,00,000/- as notional rent for penthouse.3. Deletion of Rs. 3,35,00,000/- as cash component for property purchase.4. Deletion of Rs. 1,06,00,000/- as unaccounted income for property purchase.5. Deletion of Rs. 50,000/- as unaccounted payment for interior decoration.6. Deletion of Rs. 1,70,000/- as unaccounted payment for expenses.7. Deletion of Rs. 1,20,00,000/- as undisclosed income from wedding ceremonies.8. Deletion of Rs. 74,80,110/- as protective addition for property purchase.Detailed Analysis:1. Addition of Rs. 4,80,000/- as Undisclosed Income from Rent:The Assessing Officer (AO) added Rs. 4,80,000/- based on a loose paper found during a search, indicating cash rent receipts from Shivani Oil and Gas Exploration. The assessee argued that no such cash receipts were received and no evidence was found during the search. The AO rejected this explanation, stating the seized papers clearly indicated cash receipts. The Commissioner of Income Tax (Appeals) [CIT(A)] confirmed the addition. The Tribunal upheld this decision, noting the incriminating material and the assessee's acceptance during assessment proceedings.2. Addition of Rs. 14,00,000/- as Notional Rent for Penthouse:The AO added Rs. 14,00,000/- as notional rent for penthouse flats 901 and 904, based on a statement from an employee that the flats were vacant. The AO also disallowed depreciation claimed on the flats. The CIT(A) confirmed this addition. The Tribunal remitted the issue back to the AO for fresh consideration, directing to take into account the assessee's submission that the flats were used for office purposes and to provide adequate opportunity for the assessee to present evidence.3. Deletion of Rs. 3,35,00,000/- as Cash Component for Property Purchase:The AO added Rs. 3,35,00,000/- as cash payment for a commercial property based on loose papers found during a search. The assessee explained the transaction was canceled and a smaller property was purchased for Rs. 4.65 crores through cheque payments. The CIT(A) deleted the addition, noting the AO relied only on loose papers without considering the actual transaction documents. The Tribunal upheld the CIT(A)'s decision, finding no conclusive proof of cash payment.4. Deletion of Rs. 1,06,00,000/- as Unaccounted Income for Property Purchase:The AO added Rs. 1,06,00,000/- as cash payment for a property in Sawantwadi based on seized documents and statements. The assessee argued only Rs. 7,00,000/- was paid in cash, which was already disclosed. The CIT(A) deleted the addition, but the Tribunal remitted the issue back to the AO for fresh consideration, directing to consider the assessee's submissions and provide adequate opportunity for the assessee to present evidence.5. Deletion of Rs. 50,000/- as Unaccounted Payment for Interior Decoration:The AO added Rs. 50,000/- based on loose papers indicating cash payment to Ms. Suzzan Roshan. The assessee sought telescoping of this amount with undisclosed income declared by her mother. The CIT(A) accepted this explanation and deleted the addition. The Tribunal upheld the CIT(A)'s decision, noting the consistent handling of affairs by the assessee's mother and the reasonableness of telescoping.6. Deletion of Rs. 1,70,000/- as Unaccounted Payment for Expenses:The AO added Rs. 1,70,000/- based on loose papers indicating cash expenses. The assessee sought telescoping of this amount with undisclosed income declared by her mother. The CIT(A) accepted this explanation and deleted the addition. The Tribunal upheld the CIT(A)'s decision for the same reasons as in the previous issue.7. Deletion of Rs. 1,20,00,000/- as Undisclosed Income from Wedding Ceremonies:The AO added Rs. 1,20,00,000/- based on a statement from the assessee's secretary about cash receipts for wedding functions. The CIT(A) deleted the addition, noting the lack of corroborative evidence and the hearsay nature of the secretary's statement. The Tribunal upheld the CIT(A)'s decision, agreeing that a mere statement without evidence cannot be conclusive proof of undisclosed income.8. Deletion of Rs. 74,80,110/- as Protective Addition for Property Purchase:The AO made a protective addition of Rs. 74,80,110/- in the hands of the assessee, corresponding to the substantive addition in the case of her daughter. Since the Tribunal remitted the substantive addition issue back to the AO, the protective addition issue was also remitted for fresh consideration in line with the directions given for the substantive addition.Conclusion:The Tribunal provided a detailed analysis for each issue, confirming some additions, remitting others for fresh consideration, and upholding deletions based on the evidence and explanations provided by the assessee. The decisions were made considering the principles of natural justice and the need for corroborative evidence in cases of alleged undisclosed income.