2023 (7) TMI 669 - AT - Income Tax

Tribunal upholds CIT(A) on voluntary surrender & unexplained transactions; remands on-money payment for fresh adjudication.

The ACIT (Central) -2, Versus Shri Sanjeev Agrawal, Bhopal

The ACIT (Central) -2, Versus Shri Sanjeev Agrawal, Bhopal - TMI Issues Involved:1. Deletion of addition on account of voluntary surrender under Section 132(4) of the Income Tax Act, 1961.2. Deletion of addition on account of unexplained transactions.3. Deletion of addition on account of overdraft interest.4. Deletion of addition on account of on-money payment against land purchase.Summary:Issue 1: Voluntary Surrender under Section 132(4)The Revenue contended that the Assessing Officer (AO) was correct in making an addition of Rs. 6.5 crores based on the assessee's statements during the search proceedings. However, the assessee argued that the addition was based on surmises and conjectures without corroborative evidence. The CIT(A) deleted the addition, noting that no incriminating material was found during the search to support the AO's conclusion. The Tribunal upheld the CIT(A)'s decision, emphasizing that additions cannot be sustained solely on the basis of statements without corroborative evidence, as supported by various judicial precedents.Issue 2: Unexplained TransactionsThe AO made additions of Rs. 75,61,000 and Rs. 6,25,000 based on loose papers indicating cash transactions. The CIT(A) deleted these additions, stating that the AO failed to provide corroborative evidence linking these transactions to the assessee. The Tribunal agreed with the CIT(A), highlighting that additions cannot be made merely on the basis of suspicion or loose papers without clear evidence of actual transactions.Issue 3: Overdraft InterestThe AO disallowed an amount of Rs. 82,35,639 claimed by the assessee as overdraft interest, arguing it was not allowable as business expenditure under Section 14A. The CIT(A) deleted the addition, referencing judicial precedents that allowed such deductions when the interest was paid on loans used for business purposes. The Tribunal upheld the CIT(A)'s decision, noting that the interest was indeed related to the assessee's business activities.Issue 4: On-Money Payment Against Land PurchaseThe AO made several additions on account of alleged on-money payments for land purchases. The CIT(A) deleted these additions, noting the lack of corroborative evidence and the reliance on statements from third parties without cross-examination. The Tribunal upheld the CIT(A)'s decision for the first part of the issue, but remanded the second and third parts back to the CIT(A) for fresh adjudication after obtaining comments from the AO. The Tribunal also dismissed the fourth part, agreeing with the CIT(A) that the deeming provisions of Section 50C cannot be extended to the purchaser under Section 69B.Conclusion:The Tribunal upheld the CIT(A)'s deletion of additions for voluntary surrender, unexplained transactions, and overdraft interest, while remanding certain parts of the on-money payment issue for fresh adjudication. The appeal was partly allowed in favor of the Revenue.