Sai Granites and Tiles Vs ITO (ITAT Chennai)
ITAT Deletes Section 69B Addition Because No Corroborative Evidence Proved Unexplained Investment; ITAT Removes Sections 69B and 69C Additions Because Suspicion Cannot Replace Legal Proof; Unexplained Investment Addition Quashed Because Revenue Produced No Independent Evidence; ITAT Deletes Unexplained Expenditure Addition Because Revenue Failed to Discharge Initial Burden.
The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) allowed the assessee’s appeal for Assessment Year 2017-18 after condoning a delay of 56 days in filing the appeal. The assessee, a partnership firm engaged in the business of granite and tiles, had been subjected to a survey during which loose sheets and a diary were impounded. Based on these materials and statements recorded from the partners, the Assessing Officer (AO) made additions under Section 69B for alleged unexplained investment in construction of a shed/building and under Section 69C for alleged unexplained expenditure towards interest paid to partners outside the books of account.
The Commissioner of Income Tax (Appeals) [CIT(A)] partly allowed the appeal. In respect of Section 69B, the CIT(A) found that the AO had incorrectly adopted the construction cost of ₹77.38 lakh instead of ₹62.38 lakh reflected in the impounded document. After allowing credit for a discount, the CIT(A) sustained an addition of ₹15.88 lakh. The addition of ₹27.57 lakh under Section 69C was confirmed on the basis of diary entries and the statement of one partner.
