TaxTMI 
TaxTMI 
2016 (5) TMI 344
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....h, concerning three assessees of a common group. There are cross appeals for assessment years 2007-08 to 2010-11 in the case of M/s. Maa Highways, Khammam, besides cross appeals for assessment years 2009-10 and 2010-11 in the case of M/s. Ragini Constructions. In the case of M/s. Sree Nagendra Constructions, there are cross appeals only for assessment year 2010-11 and there is only assessee's appeal for assessment year 2009-10 and only Revenue's appeal for assessment year 2011-12. Since the factual background and the issues involved in all these appeals are common, these appeals are being disposed of by this common and consolidated order for the sake of convenience. 2. Facts of the case common in all these cases are that there was a sear....
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....served that these accounts are used for withdrawing funds by the employees of Madhucon Projects Ltd., as it was unearthed during the course of search and that though the payments are realised and cheques were issued in favour of these sub-contractors, the money was eventually withdrawn by the promoters of M/s. Madhucon Projects Ltd. through their employees by way of self signed cheques, which are handed over by these sub-contractors to the Managers of M/s Madhucon Projects. Observing that these amounts were withdrawn and siphoned back to the management of M/s. Madhucon Projects Ltd. during the relevant financial year, the Assessing Officer concluded that these amounts were never used for the business activity of the assessees herein but wer....
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....as the books of account of the assessees are not reliable, the Assessing Officer on a notional basis can estimate the income. According to her, the estimation of income at 8% of the gross receipts is quite reasonable and justified. 7. As regards the Revenue's appeal against the deletion of additions made on protective basis, the Learned Departmental Representative submitted that since the substantive additions made in the hands of M/s. Madhucon Projects Ltd., are pending adjudication by the CIT(A), these appeals may be kept pending, to which the learned counsel for the assessee objected. The Learned Departmental Representative also relied upon the decision of the coordinate Bench of this Tribunal in the case of Prabhu Wines in ITA No.110....
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.... if any, may be determined accordingly. Assessees appeals are accordingly treated as allowed. 10. As regards the Revenue's appeals against the deletion of the additions made on protective basis in the cases of these assessees, we find that the additions have been made consequent to detecting that the assessees received funds from M/s. MPL Ltd. and rerouted the same back to M/s. MPL itself. Assessing Officer therefore, presumed that the assessees have not expended the said receipts towards their business activity. But as rightly held by CIT(A), all withdrawals cannot be presumed to be the business expenditure of the assessee, particularly, when, the same is not debited to the Profit & Loss Account. The CIT(A), after examining the issue ha....
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....fore us. In the cited case, besides the addition on account of estimation of business income, further additions under S.68 were upheld. In the cases before us, though the authorities below have not mentioned the section under which the disallowance and the consequential additions are made, from the order of the Assessing Officer, it appears that the receipts of the assessee were disallowed as they are not used for business activity. Thus, it is disallowance of business expenditure. The CIT(A) has rightly pointed out that the amounts withdrawn cannot be presumed to have been deployed and incurred towards revenue expenditure and got debited to the Profit & Loss Account. Where there is estimation of business income, disallowance and consequent....