TaxTMI 
TaxTMI 
2012 (9) TMI 8
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....s sundry creditors in the name of Shri Phaniraj Rama Rao. 3. Brief facts of the case are as follows:- The assessee is an individual. She filed the return of income for the concerned assessment year disclosing an income of Rs.1,94,409/- compring of income from salary, house property and business. Scrutiny assessment was completed vide order dated 10/9/2008 under section 143(3) of the Act fixing the total income at Rs.7,30,180/-. The Assessing Officer made an addition of Rs.3,79,810/- being unexplained sundry creditors. The assessee had shown the above credit balance in the name of one Shri Phaniraj Rama Rao. It is the case of the assessee that she was running a hotel in Bangalore and Shri Phaniraj Rama Rao was actually managing/conduct....
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....fforts the same could not be obtained. Only now it has been possible for the appellant to obtain the said ledger extract which is now produced for inspection. It is submitted that as the appellant was prevented by reasonable cause from presenting the same to the learned Assessing Officer it is prayed that the appellate authority be pleased to admit the same under the rules in the interests of substantive justice. It will be seen there from that it was he who had incurred these expenses for and on behalf of the assessee and as the said sum was due to him during financial year 2004- 05 (assessment year 2005-06), the said balance was brought forward and remaining due to him on the last day of the previous year 2005-06 (assessment year 2006-....
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....n we must conclude that almost all the assets were brought by Sri Pani Raj and in addition, he also contributed cash. Alternatively, Sri Pani Raj had borne the expenditure incurred by the firm. Both the situations appear improbable. Further, the appellant has more or less admitted that Sri Pani Raj had left without any address or whereabouts and is no more in contact with the appellant. In other words, Sri Pani Raj is not going to come back and claim this amount. A conclusion can therefore be drawn that the outstanding amount has become appellant's income under section 41(1) because the liability in Pani Raj's name apparently represents either the expenditure incurred or the cash balance shown on the assets side. 5.4 Considering all the ....
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....ssee, was not a credit introduced during the year in appeal but the total sum expended by Shri Phaniraj Rama Rao and the remaining to be paid to him as on 31/3/2005. The copy of the ledger account of Shri Phaniraj Rama Rao which is furnished in the paper book at pages 5 to 9, clearly indicate that many of the expenses incurred, relates to various items like, computer, electrification, UPS, furniture and fittings, kitchen equipments, kitchen utensils and other plant and equipment which figures in the balance sheet for the assessment year 2006-07, which according to the assessee, was acquired in the earlier year. On perusal of the ledger account, many of the items of expenses are on the revenue front and some of the items are on the capital a....