TaxTMI 
TaxTMI 
2011 (1) TMI 125
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....ugh it was distinguishable both on facts and in law. (3.1) The ld. CIT(A) has erred in law and/or on facts in upholding that the deduction u/s 40(b) of the Act was not admissible in respect of income declared towards the excess stock. (3.2) That in the facts and circumstances of the case as well as law, the ld. CIT(A) ought to not to have upheld the disallowance of partners remuneration in respect of income declared towards excess stock. (4.1) The ld. CIT(A) has grievously erred in law and/or on facts in confirming the addition of Rs. 1,05,000 made by AO as unexplained cash credits. (4.2) That in the facts and circumstances of the case, the ld. CIT(A) ought not to have upheld that cash credit of Rs. 1,05,000 was unexplained. (4.3) The ld. CIT(A) has failed to appreciate that the appellant has discharged the burden cast upon it to prove the impugned cash credits and the appellant was not called upon to produce any of the creditors. On the contrary, the AO should have issued summons u/s 131 to the depositors so as to satisfy himself about the credit-worthiness of the depositors. 2. The facts of the case are that a survey under section 133A was carried out on 20.1.2004 at the pr....
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....2,058 Add: Addition made u/s 69B being amount of investment not disclosed in the books of account as mentioned above Rs. 35,70,518 Total income Rs. 50,42,576 Rounded off Rs. 50,42,580 4. The ld. CIT(A) confirmed the order of the AO holding that excess stock should be added separately and, therefore, remuneration payable to the partners should be consequently restricted in accordance with section 40(b). 5. Before us the ld. AR for the assessee submitted that excess stock so found and disclosed by the assessee is business income and should not be assessed separately under section 69B. He referred to the decision of the Tribunal Ahmedabad Bench 'B' in the case of M/s Fashion World v. ACIT in ITA No. 1634/Ahd/2006 Asst. Year 2002-03 pronounced on 12.2.2010. It is held therein that if excess stock found during the course of survey or search and does not have any independent identity as an asset but as mixed part of overall stock found in the search/survey then such excess stock would represent business income only. It was further held in that case that for applying provisions of section 69A or 69B the asset in which investment is made should be clearly and separ....
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.... the addition made by the Assessing Officer and thus had wrongly converted the said basis by invoking and applying the provisions of section 69C of the Act. In support of the submission made, reliance was placed on the decision of this court as reported in case of Fakir Mohmed Haji Hasan v. CIT [2001] 247 ITR 290, to submit that any addition made under the provisions of sections 69, 69A, 69B and 69C of the Act would not permit the corresponding deduction under any other provisions of the Act as the said group of sections dealing with deemed income do not fall under any of the heads of income enumerated in section 14 of the Act. According to the learned counsel, therefore, the Tribunal had erred in granting corresponding deduction of Rs. 12,80,00,000.." 6. Relying on above submissions the ld. AR submitted that additional income offered by the assessee and representing excess stock should be assessed under the head 'business income' and therefore, higher deduction under section 40(b) has to be allowed to the assessee while determining remuneration paid to the partners. 7. Against this, the ld. DR submitted that section 14 starts with "Save as otherwise provided by this Act ............
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....ignored this claim of the assessee and sought to tax the difference between book-stock and physical-stock as unaccounted investment under section 69 without considering the claim of the assessee that first the business receipt has to be considered and then investment should be treated as coming out of such unaccounted income. The difference in stock so worked out by the authorities below had no independent identity of its own and it is part and parcel of entire lot of stock. The difference between declared stock in the books and what is physically found would only be a mathematical expression in terms of value and not a separate independent identifiable asset. Therefore, it cannot be said that there is an undisclosed asset existed independently. Once this is so then what is not declared to the department is receipt from business and not any investment as it cannot be co-related with any specific asset. 13. Thus in a case where source of investment/expenditure is clearly identifiable and alleged undisclosed asset has no independent existence of its own or there is no separate physical identity of such investment/expenditure then first what is to be taxed is the undisclosed business....
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....ad 'business' and other two sums under section 69. The business income including application of section 40(b) has to be considered accordingly. For calculation of income in view of our above observations, we restore the matter to the file of AO." So far as the decision of Hon'ble Gujarat High Court in DCIT v. Radhe Developers India Ltd. (supra) referred to by the ld. AR is concerned it relates to claim of deduction for expenses against unexplained investment. It has not laid down the law that unexplained investment in an asset found during the course of search/survey cannot be taxed under sections 69A, 69B & 69C. If the arguments of the ld. AR is accepted that any unexplained income of the nature as described in sections 69, 69A, 69B & 69C and sought to be taxed has to be necessarily brought under any one head as enumerated in section 14 then the opening words of that section "Save as otherwise provided by this Act ................" will become otios and meaningless. No words of the Statute can be read as meaningless, irrelevant or otiose. Therefore, this interpretation sought to be advanced by the ld. AR is not acceptable. Hon'ble Gujarat High Court in Fakir Mohmed Haji Hasan (su....
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.... produced together with bank pass book. iv. If assessed to tax -the designation of the AO as well state PAN No. v. Whether the above amount is received back state the date and mode of receipt. The AO, however found that letters were received unserved in the following cases :- 1. Padmaben Bharatkumar Thakkar. 2. Radheshyam Panchal. 3. Shardaben Vasudevbhai. 4. Niruben Radheshyam Soni. 5. Yamnaji Punjaji Soni. 6. Tulsiji Yamnaji Soni. 7. Gopalji Lalji Soni. Since the assessee was not able to further clarify, the AO treated the sum in respect of above persons as cash credit and added the sum of Rs. 1,05,000 in the total income. 11. The ld. CIT(A) confirmed the addition through a short order as under :- "3.4 I have considered the facts of the case and submission made by the ld. Counsel for the appellant. In this case, though the letters had been issued by the AO for calling the creditors to verify the veracity of the confirmation filed by the appellant during the course of assessment proceedings, the same had b....