2022 (7) TMI 1204 - AT - Income Tax

Appeals Partly Allowed for ITA Nos. 307, 308, 312: Assessments Upheld, Quashed, Additions Deleted

K.G. Krishna Versus Deputy Commissioner of Income-tax Central Circle-1 (4) Bangalore

K.G. Krishna Versus Deputy Commissioner of Income-tax Central Circle-1 (4) Bangalore - TMI Issues Involved:1. Condonation of delay in filing appeals.2. Validity of assessments under Section 153A.3. Treatment of agricultural income as taxable income.4. Ad hoc disallowance of expenditure.5. Treatment of capital gains as business income.6. Unexplained investments.7. Unexplained cash credits.8. Unexplained expenditure based on seized documents.Detailed Analysis:1. Condonation of Delay in Filing Appeals:The appeals were filed with a delay of 34 days due to the appellant being occupied with post-search proceedings. The Tribunal condoned the delay, finding the reasons provided as good and sufficient.2. Validity of Assessments under Section 153A:- Assessment Year 2007-08: The Tribunal upheld the assessment under Section 153A as there was seized material (an agreement of sale) found during the search.- Assessment Year 2008-09: The Tribunal upheld the assessment, noting that the seized material from a related party (N.C. Mahesh) was validly used for the assessment.- Assessment Years 2009-10, 2010-11, and 2011-12: The Tribunal quashed the assessments as there were no incriminating materials found during the search, and these were concluded assessments.- Assessment Year 2012-13: The assessment was upheld as it was pending and abated due to the search.3. Treatment of Agricultural Income as Taxable Income:- The Tribunal deleted the additions made by the AO for treating agricultural income as non-agricultural income in the assessment years 2007-08, 2008-09, and 2011-12, noting the absence of seized material to support such treatment.4. Ad Hoc Disallowance of Expenditure:- The Tribunal deleted the ad hoc disallowance of 50% of the expenditure debited to the profit and loss account in all the assessment years, finding that the AO had no material evidence to disbelieve the expenditures claimed by the assessee.5. Treatment of Capital Gains as Business Income:- Assessment Year 2007-08: The Tribunal remitted the issue to the AO to decide whether the property was held as a capital asset or stock-in-trade.- Assessment Year 2008-09: Similar to the previous year, the issue was remitted to the AO for fresh consideration.- Assessment Years 2009-10, 2010-11, and 2011-12: Without prejudice to the findings on the legal issue, the Tribunal remitted these issues to the AO for fresh consideration based on additional evidence.6. Unexplained Investments:- Assessment Year 2007-08: The Tribunal remitted the issue to the AO to consider additional evidence regarding the alleged unexplained investment of Rs.2 crores.- Assessment Year 2009-10: The Tribunal deleted the addition of Rs.20 lakhs as unexplained investment, noting that the transaction was duly reflected in the books of accounts.7. Unexplained Cash Credits:- Assessment Year 2008-09: The Tribunal remitted the issue of Rs.2,36,34,000/- to the AO for fresh consideration based on additional evidence.- Assessment Year 2009-10: The Tribunal remitted the issue of Rs.78,97,764/- to the AO for fresh consideration based on additional evidence.- Assessment Year 2010-11: The Tribunal remitted the issue of Rs.82,66,804/- to the AO for fresh consideration.- Assessment Year 2012-13: The Tribunal remitted the issue of Rs.1,70,00,000/- to the AO for fresh consideration.8. Unexplained Expenditure Based on Seized Documents:- Assessment Year 2008-09: The Tribunal remitted the issue of Rs.3,55,00,250/- to the AO for fresh consideration, noting that the addition cannot be made solely based on notings on loose slips without corroborative evidence.Conclusion:- Partly Allowed for Statistical Purposes: ITA Nos. 307/Bang/2020, 308/Bang/2020, and 312/Bang/2020.- Allowed: ITA Nos. 309/Bang/2020, 310/Bang/2020, and 311/Bang/2020.