Tribunal dismisses appeal challenging deemed income addition, deeming payment a pass-through, unjustified.

The Income Tax Appellate Tribunal upheld its decision to dismiss the appeal challenging the addition of deemed income. The Tribunal found that the payment in question was a pass-through payment received from the Insurance Company and not an actual expense incurred by the assessee. Therefore, the addition of deemed income was deemed unjustified, leading to the dismissal of the appeal.

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Issues:
Challenge to order of Income Tax Appellate Tribunal regarding addition of deemed income on account of expenses not debited in Profit and Loss account.

Analysis:
The appellant challenged the Income Tax Appellate Tribunal's order dated 10.7.2018, questioning the deletion of deemed income addition on account of expenses not debited in the Profit and Loss account. The respondent-assessee initially declared total income of Rs. 61,09,800/- for the assessment year 2009-10, which was accepted upon assessment. However, a major audit objection led to the assessment being reopened, resulting in the total income being determined at Rs. 83,94,700/-. An addition of Rs. 22,84,900/- was made due to unexplained expenditure.

The Assessing Officer noted a payment of Rs. 22,84,900/- to a professional but not debited in the profit and loss account. This led to deeming the amount as income of the assessee, resulting in the addition. The Commissioner (Appeals) partially allowed the appeal, confirming an addition of Rs. 10,32,200/- and deleting Rs. 14,19,450/-. The Income Tax Appellate Tribunal further deleted the remaining addition of Rs. 10,32,200/-, as it was a pass-through payment received from the Insurance Company, not constituting unexplained expenditure under section 69C of the Act.

The Tribunal found that the amount paid to the professional was received directly from the Insurance Company and was not an actual expense incurred by the assessee. Since the amount was merely routed through the assessee, it was not considered unexplained expenditure. The Tribunal's decision was based on the fact that the payment was not an actual expense incurred by the assessee, just a pass-through payment. Consequently, the Tribunal's order was upheld, dismissing the appeal challenging the addition of deemed income.

In conclusion, the Tribunal's decision was deemed justified as the payment in question was not an actual expense incurred by the assessee but a pass-through payment received from the Insurance Company. Therefore, the addition of deemed income was not warranted, and the appeal was summarily dismissed.

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