TaxTMI 
TaxTMI 
2017 (1) TMI 323
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....action u/s 133A of the I.T. Act, 1961 was conducted at the business premises of the appellant on 08-02-2012. The appellant firm is a Government contractor, undertaking the contracts for construction of roads and bridges etc. The gross receipts declared by the appellant during the year under appeal are at Rs. 32,71,01,603/- on which the total taxable income declared in the return filed is Rs. 2,77,12,060/-. During the course of survey a tentative trading, profit & loss account was prepared as on the date of survey as per the regular books of account showing the gross profit of Rs. 2,27,10,494/- whereas another tentative trading account was also found from the premises of the assessee showing the gross profit of Rs. 5,70,34,614/- and based on the variation in the figures of trading account, the appellant had declared additional unaccounted income of Rs. 3,43,24,120/- and committed to pay taxes due thereon. However, subsequently the appellant vide its letter dated 22-02-2012 addressed to Jt. Commissioner of Income-tax, Khamgaon retracted the declaration given during the course of survey action on the ground that the books of account were not complete as on the date of survey and vario....
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....essee. Thus addition of Rs. 15,79,813/- is made to the total income of the assessee. Penalty proceedings u/s 271(i)(c) of the Income Tax Act, 1961 are initiated separately for furnishing inaccurate particulars of income." 5. As regards disallowance u/s 40(a)(ia) the AO held as under : " The submission of the assessee has been carefully considered and the citation given by the assessee is also gone through. In this regard it is submitted that the aforesaid citation given by the assessee has been overruled by the Hon'ble Calcutta High court in the case of CIT, Kolkata -XI vis Crescent Export syndicate. (2013) 262 CTR 525 (Calcutta). In this case the Hon'ble Calcutta High Court has given findings that provisions of section 40(a)(ia) of the Income Tax Act, 1961 are applicable not only to the amount which is shown as payable on date of balance sheet, but they are applicable to such expenditure, which becomes payable at any time during relevant previous year and is actually paid within previous year without making TDS. Thus this decision is clearly applicable to the facts of the case of assessee and it has overruled the decision of Vishakhapatt....
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....quarely lies on the appellant to explain the entries of transactions pertaining to his business activity, which the appellant has failed to discharge. Therefore, the AO is justified in rejecting the books of account as the appellant has failed to explain the variation in the figures of purchases, outstanding expenses in two different sets of trading account found during the survfey action with reference to his books of account and bills and vouchers for purchases and expenses. Consequently, the AO is also justified in taking cognizance of the material evidences surfaced from the impounded documents found during the course of survey action in the absence of any plausible explanation on the issue of variation in the gross profits between the two trading accouns. Since, the appellant has filed to explain the difference; the AO is justified in drawing the inference that the appellant has inflated the expenditure with the motive o reduce the taxable profits which is detected due to survey action conducted at the premises of the appellant. Therefore, retraction made by the appellant does not sustain and the same being the self securing piece of evidence without any corroborative evidence....
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....s in a very disturb state of mind during the course of survey. Hence he has admitted the tentative profit and loss account. Learned counsel further submitted that the profits computed by the Revenue on the basis of the tentative profit and loss account is enormous and absurd. He submitted that in the preceding assessment year this Tribunal itself in assessee's own case in ITA No. 465/Nag/2013 for assessment year 2010-11 vide order dated 24th Sept., 2015 has held that the rate of profit shown by the assessee in the preceding assessment year was quite normal. Hence learned counsel pleaded that the addition of Rs. 3,43,24,120/- made on the basis of statement during the survey should be deleted. 14. As regards the addition u/s 40(a)(ia), learned counsel placed reliance on the decision of this Tribunal in the case of M/s Chadda Transport in ITA No. 333/Nag/2014 dated 25-02-2016 wherein in absence of any jurisdictional High Court decision this Tribunal had applied the decision of Vector Shipping Services P. Ltd. of Allahabad High Court 357 ITR 642 (All.) by holding that as per Hon'ble Apex Court decision in the case of Vegetable Products Ltd. 188 ITR 192 when two constructions are pos....
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.... are outstanding. In such circumstances, we find that identical issue was considered by this Tribunal in the case of M/s Chadda Transport in ITA No. 333/Nag/2014 dt. 25-02-2016. The Tribunal in the aforesaid case has observed as under: "12. We have carefully considered the submissions and perused the records. First we deal with the issue on the ground that the provisions of section 40(a)(ia) are not attracted inasmuch as the entire freight expenditure is paid and nothing is payable as on 31-03-2007. The facts in this regard are undisputed. The assessee's plea is that the entire freight amount was paid and nothing is payable as on 31-03-2007, and that this is duly reflected by a perusal of the balance sheet/profit & loss account where no amount is payable as on 31-03-2007. In this regard learned counsel of the assessee has placed reliance upon CIT vs. Vector Shipping Services (P) Ltd. 357 ITR 642 (All.). In the said case Hon'ble Allahabad High Court has upheld the finding that when the expenses incurred by the assessee is totally paid and not remained payable as at the end of the relevant accounting period, provisions of secti....