In a significant ruling, the Income Tax Appellate Tribunal (ITAT) of Varanasi Bench has held that an addition can’t be deleted in absence of incriminating material showing the purchase of furniture and fixtures including decoration.
The AO made the addition of Rs. 43,00,000/- under section 69A on account of an undisclosed investment under the head furniture and fixture, as the assessee could not provide verifiable explanation or evidence. The CIT(A) deleted the addition. T
On a survey action u/s 133A conducted by Revenue on the business premises(showroom) of the assessee, furniture and fixtures including decoration and furnishing were found. The assessee stated that he could not obtain bills/invoices and hence the same was not shown in the books of accounts ofthe assessee, and the assessee came forward to surrender Rs. 43 lacs as undisclosed income for ay: 2017-18 because some of the investments in furniture and fixtures including decoration and furnishing of the showroom were made by the assessee in the financial year 2016-17.
The CIT(A) was of the view that the bills for furniture and fixture which were reflected in the books of accounts, were impounded during the survey and the AO did not have any incriminating material to fasten the liability of Rs. 43 lacs on the assessee, except the statement of Mr Manjit Singh, Director of the assessee recorded during the survey, which was retracted by the assessee.
It was evident that the assessee made a statementbefore the Bench that Rs. 45 lacs was invested by landlords of the said premises in Furniture &Fixtures including decoration and furnishing, by taking a loan from HDFC bank, and the entire investment in furniture and fixtures including decoration and furnishing of the showroom, was duly recorded.
The director of the assessee company could not explain the factum of recording of this furniture and fixture including decoration and furnishing in the books of accounts of the assessee, and rather admitted that concerningthis furniture and fixture including decoration and furnishing of the showroom, bills/invoices could not be obtained to the tune of Rs. 43 lakhs.
The Coram Shri Vijay Pal Rao, Judicial Member and Shri Ramit Kochar, Accountant Member viewed that this furniture and fixture including decoration and furnishing of the showroom were found from the business premises of the assessee and presumption u/s 292C shall apply that it belongs to the assessee. This presumption is rebuttable but the assessee has to bring on record cogent and credible evidence/explanation to rebut the presumption.
Section 132(4A) of the act read with Section 292C creates a deeming fiction on the assessee subjected to search wherein it may be presumed that any such document found during the course of search from the possession or control of the person searched shall belong to such person and contents of such documents are true.
The Tribunal set aside and restore the issue to the file of CIT(A) for fresh adjudication, after giving the proper opportunity of being heard to the assessee as well the AO.
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