TaxTMI 
TaxTMI 
2016 (6) TMI 455
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....re found, which revealed suppression of receipt in the books of account, as under: Year ending 31.3.2008 31.3.2007 31.3.2006 Total collection 46,61,604 Cash receipt as per books 26,91,480 Suppression in receipt 30,00,000 47,03,172 19,70,124 We are presently concerned only with the A.Ys. 2006-07 and 2007-08, the relevant previous year being f.y.s. 2005-06 and 2006-07 respectively. The returns for these years, admitting a total income of Rs. 11,43,929/- and Rs. 14,14,282/- respectively had already been filed on 31.10.2006 and 31.10.2007 respectively. Vide letter dated 24.3.2008, the assessee declared an additional income of Rs. 5 lacs and Rs. 30 lacs as 'income' from unaccounted receipts for A.Ys. 2007-08 and 2008-09 respectively, filing a revised return for A.Y. 2007-08 on 16.7.2008. The assessee was examined on oath u/s.131 of the Act on 4.4.2008 by the Assessing Officer (A.O.) on various aspects of his business, apart from which he also had a business of providing internet connections (M/s. Microvision Network), besides another of service and maintenance of water purifiers (M/s. Unicom Corpora....
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.... out of books, was not such as would admit bifurcation between accounted and unaccounted categories. For example, it is inconceivable that the assessee would employ separate staff for collection of unaccounted (in the regular books of account) and accounted for receipts. The assessee had already claimed his business expenditure per the regular books of account, and allowing the expenditure being now claimed, wholly un- evidenced, would amount to a double deduction. The impugned expenditure was, accordingly, disallowed and, confirmed on the same basis, so that, aggrieved, the assessee is in second appeal. 3. Before us, the ld. Authorized Representative (AR) would, adverting to the Question # 18 (of the assessee's deposition dated 04.4.2008) and answer thereto, contend that the assessee had made reference to a note-book containing details of unaccounted expenditure. It was, therefore, incorrect to say that the note-book being now relied upon is not reliable for the reason that no such note-book had been found during survey. The assessee had also filed a police complaint on 12.9.2007 regarding theft of various documents from his office, and which explained the non-recovery of any s....
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....ediately preceding as well as the succeeding year, and converting thereby the disallowance/s of expenditure u/s. 37(1), on its' mandate being grossly not met, into one of (broad) estimation of income. While such an attempt, i.e., as by the assessee should not normally succeed, we consider the same as liable to in the present case. This is as there is reference to a note book containing such expenditure in answer to Q. No. 18, which we reproduce as under: 'Q. No. 18 While working out the undisclosed income out of the unaccounted receipts, you have deducted certain expenditure stated to be unaccounted. What type of evidence is available for the claim of such expenditure? Ans. The books impounded only contain unaccounted receipts. There is one more book for the period December 2007 to January 2008 which is produced herewith for verification. This book also contains details of expenditure incurred from time to time. The nature of expenses are such that these expenses could not be accounted in regular books of accounts. Therefore we had to keep certain collection outside books of accounts to meet such expenses. This book will be produced for further verificati....
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.... Before CIT(A) for some small disallowance Note: a Gross Receipt Includes receipt as per Profit & Loss account as increased by additional receipts as per note book found in Asstt. Years 2006-07 and 2008-09 Note :b Expenses includes Expenses as per Profit & Loss Account Plus expenses which are sought to be allowed now and not allowed before at Assessment & CIT(A) Level in Asstt. Years 2006-07 to 2008-09.' It was, during hearing, on the Bench observing a decline in the business since A.Y. 2007-08, explained by the ld. AR, that with the advent of the organized sector in the cable TV sector, the business witnessed a consistent decline and, in fact, closed down subsequently. Our first observation in the matter is that the figures reported by the assessee do not apparently match with that stated in the assessment order/s (refer para 2), and would therefore require being verified, even as we may proceed in our exercise of estimation of profit on the footing that the same represent the profits of the assessee's proprietary business (M/s. Micro Vision), i.e., taking into account all the receipts - accounted and unaccounted, as well as the ....
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....ondly, the statement of 'no margin' is qualified by the word 'now', and which would only indicate a reference to recent months, while here the year under reference is the financial year 2006-07. Coming, next, to the turnover by way of subscription, the assessee's operating results would first be required to be reckoned after elimination of the STB turnover, against which no profit has been admittedly disclosed by the assessee. We further observe that the expenses claimed by the assessee are in the nature of semi-variable expenditure, so that they would vary with the increase in the volume, though not in linear proportion thereto. As such, to contend, as does the assessee, that its' profit be estimated at 11.95%, i.e., as reported for A.Y. 2005-06, or justifying its results with reference thereto, is not acceptable in-as-much as the expenditure would not stand to increase in the same proportion (of sales). The turnover for A.Y. 2005-06, assuming the entire of it as of other than STBs, to our mind, represents a normative level (attained after over a decade of being in business), based on which the income for the subsequent years could be estimated. The expenditure can be said to h....