2019 (5) TMI 1305 - AT - Income Tax

Tribunal rules in favor of taxpayer, deletion of disputed addition

The Tribunal directed the deletion of the addition of Rs. 20 lacs for alleged undisclosed investment in furniture and equipment, as the reliance on the ... Undisclosed investment in furniture and fixture - addition on the ground that assessee during the course of survey has offered towards investment in furnishing and in equipments in showroom over and above the investment already recorded in the books of account which was subsequently retracted - second round of proceedings after remand by High Court to examine investment - onus of proof - HELD THAT:- Once, the basis of surrender and letter written by the AO stands negated by the Tribunal later on by the High Court in the sense that the Hon'ble High Court has directed the AO to consider the issue of purported investment afresh and assessee is open to challenge the said proposed addition on the ground that there is no basis for making such addition, then it was not open for the AO to again make the addition on same reasoning. If the assessee has denied making any such investment and had shown certain investment in the books, then onus shifts upon the AO to bring on record either by way of inquiry or any material which has been found during the course of survey that there was certain investment in fixture and furniture during the relevant Assessment Years. Even in the DVO’s report the subject matter of valuation was not the investment in fixture and furniture but was only restricted to the investment made in the construction of building. Thus, even the DVO’s report does not support the case of the AO Once there is no material to support such addition then addition cannot be made on certain estimate or presumption and accordingly same is directed to be deleted. - Decided in favour of assessee. Issues:Challenging addition of Rs. 20 lacs in respect of alleged undisclosed investment in furniture and fixture.Analysis:1. The appeal was filed against the order of the Commissioner of Income Tax (Appeals) for the Assessment Year 2002-03, challenging the addition of Rs. 20 lacs for alleged undisclosed investment in furniture and equipment. The assessee retracted the surrender made during a survey, stating no such investment was made, which led to the addition under section 68.2. The Tribunal initially deleted the addition, stating no material was found during the survey regarding the investment. However, the High Court remitted the issue back to the Assessing Officer for fresh adjudication. The Assessing Officer again made the same addition based on the assessee's statement during the survey.3. The CIT(A) upheld the addition, noting differences in property valuation and assets shown in the balance sheet. The CIT(A) justified the addition based on the presumption that essential items for a jeweler's shop were not accounted for in the balance sheet.4. The assessee argued that the addition was unjustified as no material evidence supported the investment outside the books. The Tribunal reiterated that the addition based solely on the survey statement was not valid, especially without any inquiry or material to substantiate the claim.5. The Assessing Officer's reliance on the surrender statement and the CIT(A)'s presumption of unaccounted investments were deemed insufficient to justify the addition. The absence of material evidence or verification regarding the alleged investment led to the deletion of the addition.6. The Tribunal concluded that without concrete evidence or basis, additions cannot be made on estimates or presumptions. Therefore, the addition of Rs. 20 lacs for undisclosed investment in furniture and equipment was directed to be deleted, and the appeal of the assessee was allowed.