TaxTMI 
TaxTMI 
2016 (4) TMI 911
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....f the Company admitted undisclosed income of Rs. 1,30,00,000/-. Accordingly, filed a letter dated 9.5.2008 and agreed to disclose undisclosed income of Rs. 65 lakhs in the name of M/s. Livewell Estates Pvt. Ltd. and a sum of Rs. 19,20,000/- in the name of M/s. Livewell Constructions Pvt. Ltd. and a further sum of Rs. 18,28,000/- was offered to tax on account of other inconsistencies took place in the past, which has had the cascading effect in the current financial year. 3. Subsequently, the case has been notified to Central circle and accordingly, notice u/s 153C r.w.s. 153A of the Act dated 25.2.2009 was issued to the assessee calling for the return of income for the assessment year 2008-09. In response to notice u/s 153C of the Act, the assessee has filed its return of income on 27.7.2009 declaring total income of Rs. 26,26,790/-. The case has been selected for scrutiny and accordingly, notices u/s 143(2) and 142(1) of the Act along with questionnaire were issued on 29.1.2010. In response to notices, the authorized representative of the assessee appeared from time to time and filed the information called for. During the course of assessment proceedings, the A.O. noticed that th....
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....efore, once the profit is estimated, no separate additions can be made towards any item debited in the P&L account. The A.O. after considering the explanations submitted by the assessee, disallowed the income tax payable of Rs. 11 lakhs and added to the total income of the assessee. While doing so, the A.O. held that income tax paid or payable is not an allowable deduction u/s 40(a)(ii) of the Act. Though, assessee admitted the income on estimation basis, the profit & loss account filed by the assessee showing the complete financial results cannot be ignored. In the said profit & loss account, the assessee has clearly stated expenditure incurred for the year under consideration. On perusal of the P&L account, it was noticed that the assessee has claimed Rs. 11 lakhs towards income tax payable for the earlier assessment years. Since, the income tax is not a allowable deduction under the Act, the same is disallowed and added back to the total income of the assessee. 5. Aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). Before the CIT(A), the assessee reiterated the submissions made before the AO. The CIT(A) after considering the explanations furni....
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....tional income disclosed in the name of T. Ramakrishna (HUF) towards undisclosed income Rs. 18,28,000/- admitted during the search cannot be added separately in the hands of the assessee. The A.R. further submitted that the assessee has declared total undisclosed income admitted during the course of search and filed revised return accordingly. While filing the return in response to notice u/s 153C of the Act, the assessee has admitted Rs. 1,03,00,000/- in the name of assessee company and its associated company and the remaining amount of Rs. 18,28,000/- was offered in the name of Shri T. Ramakrishna (HUF). In the statement given u/s 132(4) of the Act, the assessee nowhere stated that the additional income of Rs. 18,28,000/- will be offered in the name of company. The assessee admitted the additional income without any seized material, so as to cover up any other discrepancies took place in the past in the case of group concerns. Therefore, the A.O. was not correct in coming to the conclusion that the additional income disclosed during the course of search was on account of discrepancies in the books of accounts of the company and also relates to the business activities of the compan....
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....e find that the assessee has admitted undisclosed income of Rs. 1,30,00,000/- and given details of such income and also specified the names of firms and companies in whose hands the income will be offered, except for the impugned addition of Rs. 18,28,000/-. During the course of search, in the statement u/s 132(4), the assessee has stated that during the financial year relevant to assessment year 2008-09, a sum of Rs. 18,28,000/- shall be offered to tax on account of other inconsistencies took place in the past which has had the cascading effect in the current financial year. We have examined the statement recorded under sec. 132(4) and find that nowhere it has been stated that the impugned addition will be offered in the hands of the company. On further verification of the details submitted by the assessee, we find that the assessee has filed revised return u/s 153C of the Act for Shri T. Ramakrishna (HUF) and admitted additional income of Rs. 18,28,000/-. On perusal of such revised return, we find that the assessee has declared short term capital gain of Rs. 16,36,870/- and income from other sources of Rs. 1,91,130/- and also appended a note in the return of income filed stating ....
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....ssessee has debited a sum of Rs. 11 lakhs under the head income tax payable. Since, income tax is not a allowable deduction, the A.O. disallowed the same u/s 40(a)(ii) of the Act. The A.O. was of the opinion that income tax is not allowable as a deduction as per section 40(a)(ii) of the Act. It was the contention of the assessee that the income from the project was offered on estimation basis, therefore, no separate additions can be made to any item of expenditure debited in the profit & loss account, when income is estimated. The assessee further submitted that during the course of search proceedings, the Managing Director of the company has admitted income of Rs. 19,20,000/- from construction project and accordingly, filed the return. During the course of assessment proceedings, the assessee has explained the basis and also the workings for arriving at the income of Rs. 19,20,000/-. The A.O. has made separate additions towards income tax payable based on the profit & loss account filed by the assessee over and above the income disclosed during search which is not correct. On the other hand, the Ld. D.R. supported the order of CIT(A). 12. We have heard both the parties, perused t....