2019 (9) TMI 435 - AT - Income Tax

ITAT upholds CIT(A)'s decision on undisclosed income, citing reconciliation with seized Excel sheet.

D.C.I.T., Central Circle-2, Jaipur. Versus Shri Sandeep Chhabra

D.C.I.T., Central Circle-2, Jaipur. Versus Shri Sandeep Chhabra - TMI Issues Involved:1. Legality of the assessment order under Section 143(3) read with Section 153B(1)(b) of the Income Tax Act, 1961.2. Justification of the addition of Rs. 68,40,468/- as undisclosed income based on seized documents.Issue-Wise Detailed Analysis:1. Legality of the Assessment Order:The assessee challenged the legality of the assessment order under Section 143(3) read with Section 153B(1)(b), claiming it was based purely on the appraisal report without the Assessing Officer (AO) applying his mind. The appellate authority (CIT(A)) dismissed this ground, noting that the AO examined the seized documents and dealt with the explanations filed by the assessee during the assessment proceedings. Thus, the assessment was not solely based on the appraisal report, and the CIT(A) found no merit in this challenge.2. Justification of the Addition of Rs. 68,40,468/-:The primary issue was whether the addition of Rs. 68,40,468/- as undisclosed income was justified. The AO based this addition on a discrepancy found in the MS Excel file 'Accnt-19.9.11' seized from the accountant's pen drive, which reflected accounted and unaccounted expenditures in the construction of Motisons Tower. The AO noted that the total amount for work done by Alumayer India Pvt. Ltd. (AIPL) was Rs. 5,92,22,392/-, while only Rs. 5,23,81,924/- was recorded in the Excel sheet, leading to the disputed addition.CIT(A)'s Findings:The CIT(A) deleted the addition, observing that:- The assessee had reconciled the figures in the seized Excel sheet with the books of accounts, showing that the total unaccounted payments for construction were Rs. 11,31,37,408/-, against which the assessee had already surrendered Rs. 14,57,28,753/-. This indicated an excess surrender of Rs. 3,25,91,345/-.- The assessee's statement during the search clarified that the surrender amount was tentative and subject to reconciliation.- The AO did not point out any defects in the reconciliation sheet submitted by the assessee, which included ledger accounts and bank statements verifying the payments made by cheque.ITAT's Conclusion:The Income Tax Appellate Tribunal (ITAT) upheld the CIT(A)'s decision, noting that:- The assessee's surrender during the search was conditional and subject to verification from the books of accounts.- The assessee had honored the surrendered amount in the return, and the reconciliation provided was not disputed by the AO.- The addition of Rs. 68,40,468/- was covered by the excess surrender of Rs. 3,25,91,345/- made by the assessee.Final Judgment:The ITAT dismissed the revenue's appeal, finding no justification to interfere with the CIT(A)'s order deleting the addition of Rs. 68,40,468/-. The appeal of the revenue was dismissed, and the order was pronounced in the open court on 16th May 2019.