2020 (10) TMI 1016 - AT - Income Tax

Tribunal affirms CIT(A) decisions, rejects Revenue's appeal on various issues.

DCIT Central-2, Bhopal Versus Shri Bhupendra Viswakarma, Bhopal

The Tribunal upheld the CIT(A)'s decisions on all issues, dismissing all grounds raised by the Revenue in Appeal No. ITA(SS) No.206/Ind/2018. The deletion ... Addition u/s 69C of the Act on account of unexplained expenses incurred in foreign tour - HELD THAT:- A fair estimation has been made by him looking to the nature of expenditure which was incurred during foreign tour for both business and personal purpose. Thus no interference is called for in the finding of Ld. CIT(A) Ground No.1 of the Revenue’s appeal is dismissed. Addition u/s 69B on account of unexplained jewellery - HELD THAT:- CIT(A) has duly considered the permissible limits provided in the Central Board of Direct Taxes Circular No. 1916 dated 11.5.2014, ratios laid down by Hon’ble Courts and considering the number of family members, has rightly deleted the addition for unexplained jewellery made by the Ld. A.O u/s 69C of the Act. We thus find no reason to interfere in the finding of Ld. CIT(A) and confirm the same. Accordingly Ground No.2 raised by the Revenue stands dismissed. Addition for unexplained cash found at the assessee’s residence during the course of search - HELD THAT:- We observe that looking to the consistent substantial taxable income offered by the assessee for Assessment Year 2008-09 to 2013-14 and withdrawals made, we are of the view that the cash found at assessee’s residence is reasonable and explainable. We thus find no reason to interfere in the findings of Ld. CIT(A) and the same stands confirmed. Addition for unexplained opening balance of capital - HELD THAT:- Income shown in all these years has been offered to tax in the return of income and after subtracting the withdrawals for LIC premium, Income Tax, House loan interest and household expenses the resultant figure if cumulatively added and carry forward from Assessment Year 2008-09 onwards till the Assessment Year 2014- 15 the opening capital balance would have been ₹ 2,05,33,295/-. Assessee has taken the opening capital balance of ₹ 1,79,22,599/- which is less than the cumulative fund shown by the assessee in the chart. We thus in the given facts and circumstances of the case are of the view that Ld. CIT(A) has rightly appreciated the facts and deleted the addition as the assessee had duly explained the source of opening capital balance. Thus the finding of Ld. CIT(A) is confirmed and accordingly ground No.4 raised by the revenue stands dismissed. Issues Involved:1. Deletion of addition for unexplained expenses incurred in foreign tour under Section 69C of the Income Tax Act, 1961.2. Deletion of addition for unexplained jewellery under Section 69B of the Income Tax Act, 1961.3. Deletion of addition for unexplained cash found.4. Deletion of addition for unexplained opening balance of capital.Detailed Analysis:1. Unexplained Expenses Incurred in Foreign Tour:- Issue: The Revenue challenged the deletion of Rs. 2,25,000/- added by the Assessing Officer (A.O.) under Section 69C for unexplained expenses incurred in a foreign tour.- Findings: The CIT(A) reduced the addition from Rs. 3,00,000/- to Rs. 75,000/- after considering that the expenses on foreign tours were partly justified by the assessee. The CIT(A) noted that the assessee’s wife had shown some expenses in her cash flow statement, and the remaining expenses were estimated based on prevailing market rates.- Conclusion: The Tribunal upheld the CIT(A)’s decision, stating that a fair estimation was made considering the nature of the expenses incurred during the foreign tour for both business and personal purposes. Ground No.1 of the Revenue’s appeal was dismissed.2. Unexplained Jewellery:- Issue: The Revenue challenged the deletion of Rs. 38,96,987/- added by the A.O. under Section 69B for unexplained jewellery found during the search.- Findings: The CIT(A) observed that the jewellery found was within the permissible limits provided in the Central Board of Direct Taxes (CBDT) Circular No. 1916 dated 11.05.1994, which allows a certain quantity of jewellery to be considered as explained. The CIT(A) noted that the total jewellery found (1167.33 grams) was less than the permissible limit for the assessee’s family (1550 grams).- Conclusion: The Tribunal confirmed the CIT(A)’s decision, agreeing that the jewellery found was reasonable and within the permissible limits as per the CBDT circular. Ground No.2 raised by the Revenue was dismissed.3. Unexplained Cash Found:- Issue: The Revenue contested the deletion of Rs. 1,35,500/- added by the A.O. as unexplained cash found at the assessee’s residence during the search.- Findings: The CIT(A) noted that the cash found was claimed by the assessee’s wife, who had shown income from salary and tuition in her cash flow statement. The CIT(A) also considered the substantial taxable income of the assessee over the years and the presence of aged parents in the household.- Conclusion: The Tribunal upheld the CIT(A)’s decision, finding the cash found at the residence reasonable and explainable given the family’s size and status. Ground No.3 of the Revenue’s appeal was dismissed.4. Unexplained Opening Balance of Capital:- Issue: The Revenue challenged the deletion of Rs. 1,79,22,599/- added by the A.O. as unexplained opening balance of capital.- Findings: The CIT(A) observed that the assessee had not maintained regular books of accounts up to Assessment Year 2013-14 and had shown income on an estimated basis under Section 44AD. For Assessment Year 2014-15, the assessee prepared a balance sheet for the first time, incorporating opening balances based on records from various firms/companies and property purchase deeds. The CIT(A) found that the cumulative surplus earned by the assessee over the years adequately explained the opening capital balance.- Conclusion: The Tribunal confirmed the CIT(A)’s decision, noting that the opening capital balance was less than the cumulative fund shown by the assessee in the chart. The source of the opening capital balance was duly explained. Ground No.4 raised by the Revenue was dismissed.Final Judgment:All grounds raised by the Revenue in Appeal No. ITA(SS) No.206/Ind/2018 were dismissed. The Tribunal upheld the CIT(A)’s decisions on all issues. The order was pronounced in open Court on 20.10.2020.