2021 (9) TMI 398 - AT - Income Tax

Unaccounted sale of scrap - HELD THAT - Addition made on account of sale of scrap is not based on any seized material. The seized material reflecting the scrap belongs to the financial year 1999-2000 and also doesn't belong to the assessee. CIT(A) has given a categorical finding that the addition is based on estimation. In the absence of any seized material produced before us proving contra, we decline to interfere with the order of the ld. CIT(A). Estimating speed money expensed - AO made addition of amount @ 0.5% on the sales Made to SEBs - HELD THAT - CIT(A) gave a categorical finding that the amount has been added on estimate basis and no incriminating material is found or seized. CIT(A) has also held that the expenses have not been claimed in the books of accounts and hence no disallowance is attracted as per Section 37 of the Income Tax Act, 1961. In the absence of any seized material produced before us proving contra, we decline to interfere with the order of the ld. CIT(A). Disallowance of commission - HELD THAT - Addition has been made based on the information received from the Addl. CIT, Range-3, Kolkata that the case of one of the recipients of commission has been reopened u/s. 148. This issue has been examined during the proceedings u/s. 143(3). Duly considering this fact on record, still the issue doesn't cross the threshold of being emanated from the seized material. Hence, in the absence of any seized material no addition is called for. The action of the ld. CIT(A) is not interfered with.Addition of unvouched expenses. Assessment u/s 153A - Unvouched expenses - HELD THAT - AO made the addition on the grounds that the assessee has not produced bills vouchers. Such disallowance made do not fall under the purview of Section 153A. Hence, we decline to interfere with the order of the ld. CIT(A). Bogus purchases and wrong claim of CENVAT while the claim of the assessee was that the addition has been made merely based on the show cause notice issued by the Excise Authorities the finality of which was still pending - CIT(A) deleted the addition after obtaining the remand report from the AO - HELD THAT - Since, the finding of the ld. CIT(A) could not be controverted on facts and as well as on jurisdictional issue, we hereby affirm the order of the ld. CIT(A)

Summary

Issues:
Appeal against orders of CIT(A) - Deletion of addition of scrap sale - Estimation basis - Speed money addition - Disallowance of commission - Unvouched expenses - Bogus purchase addition - Completed assessments vs. abated assessments - Jurisdictional issues.

Deletion of Addition of Scrap Sale:
The revenue appealed against the deletion of the addition of scrap sale by the Assessing Officer. The Tribunal noted that the addition was not based on any seized material and belonged to a financial year not relevant to the assessee. The CIT(A) found the addition to be based on estimation. As no seized material was produced to prove otherwise, the Tribunal declined to interfere with the CIT(A)'s order.

Speed Money Addition:
Regarding the speed money addition, the Tribunal observed that it was made on an estimate basis without any incriminating material found or seized. The CIT(A) held that since the expenses were not claimed in the books of accounts, no disallowance was warranted under Section 37 of the Income Tax Act. As no seized material contradicted this, the Tribunal upheld the CIT(A)'s decision.

Disallowance of Commission:
The addition of commission was based on information from another authority, not on seized material. Even though the recipient's case was reopened, it did not stem from seized material. The Tribunal found no justification for the addition without seized material and upheld the CIT(A)'s decision.

Unvouched Expenses:
The Tribunal rejected the addition for unvouched expenses as the assessee's failure to produce bills did not fall under Section 153A. Therefore, they upheld the CIT(A)'s decision in this regard.

Bogus Purchase Addition:
The Tribunal discussed the deletion of the addition related to bogus purchases. The CIT(A) deleted the addition after receiving a remand report from the AO, which highlighted factual inaccuracies in the original assessment. As the CIT(A)'s findings were uncontroverted, the Tribunal affirmed the decision to delete the addition.

Completed Assessments vs. Abated Assessments:
The Tribunal clarified that the assessments were completed and not abated, emphasizing that additions could only be made based on material found during the search action. This distinction guided their analysis of the issues raised in the appeals.

Jurisdictional Issues:
No specific jurisdictional issues were highlighted in the judgment, and the Tribunal's decision was primarily based on the absence of seized material to support the revenue's additions. The Tribunal dismissed both appeals of the revenue, affirming the orders of the CIT(A).

This detailed analysis of the judgment provides insights into the Tribunal's reasoning and decisions on each issue raised in the appeals, emphasizing the importance of seized material and jurisdictional clarity in tax assessments.