TaxTMI 
TaxTMI 
2010 (10) TMI 1130
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....as directed the AO to make the addition of Rs. 8 lacs being the disclosure made by the assessee during the survey proceedings. The assessee has raised following ground: On the facts and in circumstances of the case and in law, ld. CIT-II, Baroda erred in - 1. passing the order u/s 263 of the IT Act and thereby directing the ITO to treat the disclosure of Rs. 8,00,000/- during the course of survey as income from other sources by applying the ratio of Hon. Gujarat High Court in the case of Fakir Mohamed Haji Hassan 247 ITR 290. 3. ITA No.2659/Ahd/2005 Asst. Year 2002-03 is the appeal filed by the assessee against the order of ld. CIT(A) dated 23.9.2005 in respect of various quantum additions confirmed by him made by the AO in t....
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....ted that such receipts and expenditure are outside the books. He accordingly disclosed a sum of Rs. 8 lacs and agreed to pay tax thereon. But when return of income was filed, the AO noted that net income has been declared at Rs. 69,880/- even though sum of Rs. 8 lacs was shown as credit in the profit and loss account. The assessee had shown total contract receipts of Rs. 41,58,726/- with gross profit of Rs. 3,97,055/- as against total contract receipts of Rs. 83,62,502/- with gross profit of Rs. 4,16,326/- giving GP rate of 4.97%. When the AO examined the impounded papers and books of account he found that there are discrepancies in the notings as per loose papers and entries made in the cash book as under :- Notices as per loose papers ....
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....us heads such as steel expenses, bricks expenses, octroi/transportation expenses, various payments in the contract work, cash payments, etc. and proceeded to make following additions under specific heads as under :- Add: 1. Disallowance out of steel expenses as discussed in para 6.2(A) above 1,00,000/- 2. Disallowance out of bricks expenses as discussed in para 6.2(B) above 2,00,000/- 3. Disallowance out of Octroi/transportation expenses as discussed in para 6.2 (C) above 1,00,000/- 4. Disallowance out of construction work expenses as discussed in para 6.2 (D) above 7,00,000/- 5. Unrecorded Cash payment as discussed in para 6.3 above 44,000/- 6. Disallowance of cement expenses as discussed in para 7 above ....
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....dered the rival submissions and perused the material on record. In our considered view, the ld. CIT was justified in directing the AO to make the addition of Rs. 8 lacs disclosed by the assessee during survey proceedings. The reasons are that once a sum of Rs. 8 lacs is declared by the assessee in the profit and loss account as it is undisclosed income then that has to be taxed separately and independently of other book results. Further this disclosure was made on the basis of documents impounded during the course of survey. Such documents indicate that assessee had undisclosed receipts as well as payments and net thereon had been worked out at Rs. 8 lacs. Merely because this undisclosed income of Rs. 8 lacs has been shown as a part of prof....
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....tion work on the relevant site. There is no guarantee that expenditure were incurred for the purpose of business. (3) There is substantial increase in various expenses claimed by the assessee and explanation furnished is quite general and vague. 9. Before us, the ld. AR for the assessee submitted that once books are rejected there is no case for making specific addition out of the books. The case against the assessee for rejecting the books is made out only on the ground that assessee is not able to support the claim of expenditure. Only addition which can be made would be a GP addition. Since assessee has shown GP of 4.97% in preceding year then not more than that rate should be applied on the contract receipts. 10. The ld. ....