Tribunal partially allows appeals, stresses thorough verification by Assessing Officer for fair resolution.

The appeals were partly allowed for statistical purposes. The Tribunal remitted various issues back to the Assessing Officer for re-examination, including the treatment of additional income declared during a survey as business income, disallowances under Section 40(a)(ia), set off of losses against additional income, remuneration to partners, and interest on partners' capital account balances. The Tribunal stressed the importance of thorough verification by the AO for a fair resolution of the disputes.

---

---

Issues Involved:
1. Treatment of additional income declared during survey as deemed income under Section 69 of the Income Tax Act.
2. Disallowance under Section 40(a)(ia) of the Income Tax Act.
3. Set off of current year losses against additional income declared during survey.
4. Remuneration to partners on account of disclosure made during the survey.
5. Disallowance of interest on debit balance of partners' capital account.
6. Addition on account of difference in balance of sundry creditors.

Detailed Analysis:

Issue 1: Treatment of Additional Income Declared During Survey
The primary issue in both appeals concerns the treatment of additional income declared during a survey action under Section 133A of the Income Tax Act. The assessees argued that the additional income, arising from excess cash and stock found during the survey, should be treated as business income. However, the Assessing Officer (AO) and Commissioner of Income Tax (Appeals) [CIT(A)] treated it as deemed income under Section 69 of the Act. The Tribunal restored the issue to the AO for re-adjudication, allowing the assessees to provide fresh evidence to substantiate that the excess cash and stock were part of their regular business income. If the assessees succeed, they can claim the set-off of current year losses against the additional income.

Issue 2: Disallowance Under Section 40(a)(ia) of the Income Tax Act
The AO disallowed certain expenses under Section 40(a)(ia) due to non-deduction of tax at source. The Tribunal noted the insertion of a proviso by the Finance Act, 2012, which allows for relief if the payees have included the payments in their income and paid tax. The Tribunal remitted this issue back to the AO for verification, allowing the assessees to furnish necessary documents to prove that the recipients had declared the income and paid taxes.

Issue 3: Set Off of Current Year Losses Against Additional Income Declared During Survey
The assessees sought to set off current year losses against the additional income declared during the survey. This issue is directly linked to the first issue. The Tribunal remitted it back to the AO for re-adjudication along with the first issue. If the assessees establish that the additional income is part of their regular business income, they can claim the set-off.

Issue 4: Remuneration to Partners on Account of Disclosure Made During the Survey
In ITA No.103/PUN/2015, the assessee challenged the disallowance of remuneration to partners based on the additional income declared during the survey. The Tribunal linked this issue to the first issue and remitted it back to the AO for re-adjudication. If the additional income is proven to be part of the business income, the remuneration to partners should be allowed.

Issue 5: Disallowance of Interest on Debit Balance of Partners' Capital Account
The assessee in ITA No.103/PUN/2015 contested the disallowance of interest on the debit balance of partners' capital accounts. The Tribunal noted that there were both debit and credit balances in the partners' capital accounts and that the assessee did not charge interest on credit balances. This issue was remitted back to the AO for verification and re-adjudication.

Issue 6: Addition on Account of Difference in Balance of Sundry Creditors
The assessee in ITA No.103/PUN/2015 also contested an addition due to a difference in the balance of sundry creditors. The Tribunal upheld the CIT(A)'s findings, as the assessee failed to provide any material evidence to substantiate their claim. This ground was dismissed.

Conclusion:
Both appeals (ITA No.102/PUN/2015 and ITA No.103/PUN/2015) were partly allowed for statistical purposes. The Tribunal remitted several issues back to the AO for fresh adjudication, allowing the assessees to present additional evidence. The issues primarily revolved around the treatment of additional income declared during a survey, disallowances under Section 40(a)(ia), and related matters. The Tribunal emphasized the need for a thorough verification process by the AO to ensure a fair resolution of the disputes.

---