2010 (2) TMI 7 - HC - Income Tax

Unexplained Expenditure Addition made under Block Assessment - Three additions were made by the Assessing Officer of Rs 1.94 crores Rs 0.35 crores and Rs 0.15 crores under the head unexplained expenditure under Section 69C of the Income Tax Act 1961 on the basis of certain seized documents CIT(A) and ITAT deleted the additions - The addition of Rs 1.94 crores has been made on the basis of the transactions which involved the purchase of 100 acres of land by Maruti Udyog Ltd. in village Bhondsi District Gurgaon Haryana. The said 100 acres of land were admittedly purchased for an amount of Rs 3.86 crores by Maruti Udyog Ltd held that - The findings arrived at by the Tribunal are pure findings of fact and do not warrant any interference by this Court. Consequently the appeal filed by the Revenue does not raise any substantial question of law.

Summary

Issues:
1. Addition of unexplained expenditure under Section 69C of the Income Tax Act, 1961.
2. Treatment of undisclosed cash receipts as income for the block period.
3. Addition of unexplained expenditure of the assessee under Section 69C of the Income Tax Act, 1961.

Issue 1: Addition of Unexplained Expenditure under Section 69C:
The case involved an appeal against the Income Tax Appellate Tribunal's order regarding block assessment for a specific period. The Assessing Officer made additions under unexplained expenditure, but both the Commissioner of Income Tax (Appeals) and the Tribunal deleted these additions based on the explanation provided by the assessee. The Tribunal, being the final fact-finding authority, found no logic in the Revenue's contentions, especially regarding a transaction where the assessee made a minimal profit. The Revenue failed to explain adequately how the assessee could have spent a significant amount in a transaction of lesser value.

Issue 2: Treatment of Undisclosed Cash Receipts:
Another issue was the treatment of Rs 15 lakhs as undisclosed cash receipts of the assessee for the block period. The Assessing Officer added this amount as undisclosed income, but the CIT (A) and the Tribunal both deleted this addition. They found that no independent corroborative material supported the conclusion that the amount was paid to the assessee. The explanation provided by the assessee remained uncontroverted by the Assessing Officer, leading to the deletion of this addition.

Issue 3: Addition of Unexplained Expenditure under Section 69C (Second Instance):
The third dispute involved the addition of Rs 35 lakhs as unexplained expenditure under Section 69C. The CIT (A) and the Tribunal both ruled in favor of the assessee, stating that no independent material or evidence was presented by the Assessing Officer to establish the unaccounted nature of the transaction. The explanation provided by the assessee, supported by entries in the books of VTPL, was deemed satisfactory. The Tribunal upheld the deletion of this addition, emphasizing that the loose sheet did not represent any expenditure incurred by the assessee.

In conclusion, the High Court dismissed the appeal filed by the Revenue as it did not raise any substantial question of law. The judgments of the CIT (A) and the Tribunal, which deleted the additions made by the Assessing Officer, were upheld. The Court found no reason to interfere with the concurrent findings of fact regarding the disputed amounts, leading to the dismissal of the appeal.