2014 (1) TMI 552

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....ound are that the assessee showed sales of Rs.2.29 crores. During the course of assessment proceedings, assessee filed list of purchases and creditors. Notice under section 133(6) was issued to some of the parties. One Shri K.S. Ahluwalia responding to the Assessing Officer's notice and stated that sales to the tune of Rs.46,04,439/- were made to the assessee. As against that, the assessee had shown purchases from this party only to the tune of Rs.30,66,089/-. The Assessing Officer made addition for the balance amount of Rs.15,38,350/- as 'Suppression of purchases'. The ld. CIT(Appeals) was pleased to delete this addition by observing that if the amount of purchase was to be increased, then the amount of profit would correspondingly stand r....

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....ssessee, shall not be allowed as a deduction in any head of income. The crux of this provision, when read in totality, is that if any expenditure is incurred outside the books of account, for which there is unsatisfactory explanation of the source, then the addition would be called for u/s 69C and there is no mandate for allowing deduction for the expenditure which is represented by such addition. The reasoning given by the ld. CIT(Appeals) for deleting the addition is in contradiction to the prescription of proviso to section 69C. If the purchases are found to be unrecorded, then such amount is to be added but there can be no question of allowing any further deduction of this sum. If the addition is made u/s 69C for unrecorded expenses and....

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.... by ld. D.R. to show that the finding recorded by ld. CIT(Appeals) is incorrect in any manner. When the position as noticed by the ld. First appellate authority is that only a sum of Rs.12,000/- was paid by the assessee as sales tax penalty, then there can be any question of making any addition of Rs.65,257/- which was paid as regular demand of sales tax. We, therefore, uphold the impugned order on this issue. 9. Revised Ground No. 6 is against the deletion of Rs.16,23,510/- made on account of 'cessation of liability' under section 41(1) of the Act. 10. Briefly stated the facts of this ground are that the assessee had shown opening balance of Rs.2,00,000/- in the account of M/s. Roy Industries and closing debit balance of Rs.14,678/-. The....

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....CIT(Appeals) for deleting this addition. The ld. DR could not show that in the preceding year this amount abeit debited to the account of Roy Industries, was not credited to the Profit and loss account. 12. Be that as it may, we find that the opening balance of the account of of Roy Industries for the year in question is only Rs.2 lakhs. The amount written back in the preceding year cannot be considered as income for the current year under section 41(1). This section clearly provides that where any allowance of deduction has been made in assessment for any year in respect of loss, expenditure, or trading liability incurred by the assessee and subsequently "during any previous year" the assessee obtains whether in cash or in any other manne....