TaxTMI 
TaxTMI 
2014 (7) TMI 1058
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....work as it could not produce details regarding the unaccounted job work receipts. 3. On the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 18,01,5007- made on account of unexplained expenditure u/s 69 C, as the fact that the assessee has not claimed any expenditure for earning such job work receipt has been ignored. 4. On the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 3,93,537/- made on account of Business & Profession without appreciating the fact that the net income returned by the assessee is less than the disclosure amount and the addition was made totally in consistent with the disclosures made during the course of survey." 3. Ground No. 1 & 2 relates to disallowance of the claim of partner's salary amounting to Rs. 13 lacs u/s. 40(b) against the income disclosed during the survey. 4. Brief facts of the case are that assessee is a partnership-firm engaged in trading and sawing of woods. A survey action u/s. 133A was carried out on 24-03-2000 and on consequent to the survey assessee made a disclosure of Rs. 39,96,537/- on account of excess cash and unacc....
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....ral judicial pronouncements including decisions of jurisdictional ITAT. Ld. CIT(A) after taking into consideration this submission of the assessee allowed the appeal of the assessee by observing as under:- "3.3 I have considered the facts of the case, basis of addition made by AO and arguments of the appellant. The basis given by AO for making addition is that the source of income disclosed by appellant during survey proceedings remains undisclosed hence it would not be classified under head income 'business and profession', rather to be taxed as 'income from other sources'. The conclusion drawn by AO does not get support from the statements given by partner during the survey proceedings, which is the only basis of making addition. During the survey, partner of the firm categorically stated as under: "Q.8 I show you this Red Maruti Book No,2 (diary) marked as Ann. B1/1 and ask you to explain who wrote this diary and what is written in this diary? A.8 Red diary seized as Ann.B1/1, has been written by myself and amount of Rs. 36,03,000/- (Rupees Thirty Six lacs Three Thousands Only) mentioned in this diary is receivable from various parties towards unaccounted sale....
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....b). As a result, this ground of assessee is allowed." 3.3.2 Further, in the case of Fashion World v Asstt CIT, Cir-2, Ahedabad (ITA No.1634 Bench-B dated 12.02.2010), it has been held by Hon'ble ITAT that if the assets disclosed during the survey are identified with business of assessee then the same have to be treated as part of business income while computing total income, and the consequential deduction under section 40(b) has to be allowed. Similar views have been taken by different Courts/lTATs as mentioned by appellant in its submissions. 3.3.3. In view of the above facts and decisions by different authorities, I do not find any merit in the AO's case that undisclosed income declared during survey proceedings has to be taxed as income from other sources. The very facts of the case clearly establish that the undisclosed income was earned from the business activity of trading of wood and job work hence it will fall under the head of 'income from business and profession'. 3.3.4 As far as remuneration to partner is concerned, once the income is assessed under the head business and profession, deduction becomes consequential in nature. The book profit of the fir....
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....rgument learned counsel of the assessee submitted that Ld. CIT(A) has rightly treated income disclosed during the survey as business income and has rightly allowed remuneration to parents from the same and therefore order passed by Ld. CIT(A) may kindly be upheld. 9. After hearing both the parties and perusing the record, we find that there is no dispute about the fact that AO while making the addition of Rs. 13 lacs by disallowing claim of the assessee of this amount in respect of partner's remuneration u/s. 40(b) of the Act against the income disclosed at the time of survey has placed reliance only on the statement of the partner of the assessee's firm at the time of survey. While going through this statement, we find that disclosure was made of Rs. 39,96,537/- as income from business. The AO however treated the sum of Rs. 3,93,537/- as income from business and the disclosure of Rs. 36,03000/- on account of unaccounted net job work income was treated by him as income from other sources only on the ground that assessee has never shown income form job work in earlier years or till the date of survey during the year under appeal, therefore this disclosed income cannot be tr....