Court dismisses appeals for AY 2016-17 & 2017-18, allows appeal for AY 2018-19 for statistical review.

The court dismissed the appeals for Assessment Years (AY) 2016-17 and 2017-18 due to insufficient evidence supporting the claimed expenses. For AY 2018-19, the court allowed the appeal for statistical purposes and remanded the issue of unexplained cash back to the Assessing Officer for further verification.

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Issues Involved:
1. Disallowance of expenses claimed by the assessee.
2. Addition of unexplained cash found during the search.

Summary:

Issue 1: Disallowance of Expenses Claimed by the Assessee

Assessment Year (AY) 2016-17:
The sole issue is the disallowance of expenses amounting to Rs. 6,36,640/- claimed by the assessee in respect of foreman commission from chit activities. The assessee failed to produce evidence to substantiate the expenses during the search or reassessment proceedings. The AO disallowed the expenses, which was upheld by the CIT(A) on the grounds that the assessee did not demonstrate that the expenses were incurred wholly and exclusively for business purposes. The Tribunal confirmed the action of the CIT(A) due to the lack of supporting evidence from the assessee.

AY 2017-18:
The facts and issues for AY 2017-18 are identical to AY 2016-17, with the expenses claimed amounting to Rs. 7,40,640/-. The Tribunal upheld the disallowance by the CIT(A) for similar reasons as in AY 2016-17.

AY 2018-19:
For AY 2018-19, the CIT(A) gave partial relief by allowing Rs. 7,96,896/- out of Rs. 11,99,820/- claimed by the assessee, confirming the disallowance of Rs. 4,02,924/-. The Tribunal upheld the CIT(A)'s decision due to the absence of material evidence supporting the claimed expenses.

Issue 2: Addition of Unexplained Cash Found During the Search

AY 2018-19:
The AO added Rs. 41,29,500/- as unexplained cash under Section 69A of the Income Tax Act, 1961, from the total cash found of Rs. 88,16,110/-. The assessee explained the source of Rs. 46,86,610/-, which was accepted by the AO. The CIT(A) confirmed the addition. However, the Tribunal noted that the AO and CIT(A) overlooked the assessee's sworn statement about loan recoveries amounting to Rs. 74,49,000/-. The Tribunal set aside the CIT(A)'s order and remanded the matter back to the AO for verification of the loan recovery claim and to pass a fresh order after due consideration.

Conclusion:
- Appeals for AY 2016-17 and AY 2017-18 were dismissed due to the lack of evidence supporting the claimed expenses.
- The appeal for AY 2018-19 was allowed for statistical purposes, with the issue of unexplained cash remanded back to the AO for further verification.

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