TaxTMI 
TaxTMI 
2013 (7) TMI 1083
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....during the course of assessment proceedings the Assessing Officer noted that the assessee group hosts a lavish party at the residential farm house during every New Year where entry is strictly by invitation only. This expenditure has been claimed as business expenditure in the hands of concerned VH group. He referred to the assessment year pertaining to A.Y. 2007-08 where the issue is discussed and certain additions were made on the basis of certain seized documents. He, therefore, came to the conclusion that the assessee was following the same practice in all the years. He, therefore, asked the assessee to explain as to why such inference should not be drawn and why cash expenses for this year also should not be estimated in the ratio of the decision for the A.Y. 2007-08 during which certain evidences were seized which relate to A.Y. 2007-08. The assessee objected to the same. However, the Assessing Officer did not accept the contention of the assessee and made addition of Rs. 31.5 lakhs on account of 31st December party expenses. In appeal the Ld.CIT(A) following his decision in A.Y. 2003-04 directed the Assessing Officer to delete the addition. 2.2 Aggrieved with such order o....
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....stioned by the Assessing Officer the assessee admitted that the addition on account of cash of Rs. 30 lakhs may be made in the hands of VHPL for A.Y. 2008- 09. The Assessing Officer accepted the above contention of the assessee that all the concerns in the group are effectively managed by Desai/Rao families and that the money generated in VHPL is utilised for payment of Rs. 30 lakhs for purchase of vintage car appears to be reasonable. He, however, made addition of Rs. 30 lakhs as unaccounted expenditure of the assessee u/s.69C for A.Y. 2008-09. 4.2 In appeal the Ld.CIT(A) deleted the addition by holding as under : "2.5 I have gone through the grounds and also considered submissions made by the appellant company and material available on record. I find that the Assessing Officer himself has observed that assessee's contention that money generated in VHPL is utilised for payment of Rs. 30 lacs for purchase of vintage car appears to be reasonable and is accepted. The Assessing Officer has however inadvertently made an addition in the computation of income. In view of this an addition of Rs. 30 lacs made in the computation of income ought to be deleted. The learned Assessi....
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....ssessee has offered only Rs. 13 crores as undisclosed income. Thus, there was a shortfall of Rs. 2,99,45,000/- in the declaration. On being questioned by the Assessing Officer, it was explained by the assessee that it was an inadvertent omission. However, it was submitted that the declaration was given on the basis of unaccounted receipts and application both. There was substantial duplication in the declaration given by the assessee and there was no need for a separate addition. However, the Assessing Officer was not satisfied with the above explanation and held that it does not stand the test of reason. According to him, the assessee was unable to explain the difference of Rs. 2.99 crores which denotes the unaccounted income of the beginning only. He accordingly made addition of Rs. 2,99,45,000/-. 6.2 Before the CIT(A) the assessee submitted that the addition is not at all justified. It was submitted that the total unaccounted sales were not Rs. 15.99 crores as held by the Assessing Officer but were around Rs. 6.35 crores only. Against this the assessee has already offered Rs. 13 crores as additional income. Therefore, further addition of Rs. 2.99 crores is not at all justifie....
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....90 38.95 31.36 6.5 He submitted that the assessee has incurred various unaccounted expenses which were found during the course of search which amounts to approximately Rs. 9.50 crores which is not disputed. He submitted that as against the total unaccounted receipt of Rs. 15.99 crores the assessee declared undisclosed income at Rs. 13 crores. He accordingly submitted that when there is an evidence of unaccounted cash receipt and unaccounted expenditure only net income can be taxed. Since the undisclosed income of Rs. 13 crores is much more than the difference between the unaccounted receipt of Rs. 15.99 crores and cash expenditure of Rs. 9.50 crores, therefore, no further addition is made. For this proposition, he relied on the following decisions 1. CIT Vs. Indeo Airways Pvt. Ltd reported in 349 ITR 85 2. CIT Vs. P.D. Abrahim reported in 349 ITR 442 6.6 The Ld. Counsel for the assessee further submitted that when evidence of any on-money is found entire receipts cannot be taxed and only a reasonable percentage of income can be taxed. For this proposition, he relied on the following decisions : 1. Bakre Construction ITA No.....
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....d 1999-2000 - Block period 1-4-1998 to 20-8- 1998 - During search conducted against assessee certain documents, books of account were recovered - certain receipts were found to have been recorded therein - Drawing a presumption under section 132(4A) from such documents, additions were made to income of assessee - There were also certain other entries recorded in such documents which pertained to items of expenditure - Said expenditure were not allowed on ground that assessee could not prove them by producing evidence - Whether once a presumption had been drawn as to that contents of documents so recovered during search were true, revenue could not have, consistently with that presumption, proceeded to require assessee to produce materials in support of expenditure entries contained in very same documents - Held, yes (paras 14 & 16) (in favour of assessee)." Since in the instant case the difference between the unaccounted sale of Rs. 15.99 crores and the expenditure to the tune of about Rs. 9.50 crores is more than the additional income disclosed at Rs. 13 crores, therefore, we find merit in the submission of the Ld. Counsel for the assessee that no further addition on account of....
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....per in our office or it may be outstanding balance of some trade creditor. However, we reiterate that we have not taken any such loan from Shri Dimpeee". 8.3 It was further contended by the assessee that without prejudice to the above they had no objection if this was held as unexplained cash credit u/s.68. 8.4 However, the Assessing Officer was not satisfied with the explanation given by the assessee. He observed from the seized documents that assessee has taken a loan of Rs. 125 lakhs. There is also mention of interest @3% per month totalling to Rs. 21.90 lakhs. Thus, the cumulative figure of the loan and interest comes to Rs. 146.90 lakhs. According to the Assessing Officer in case of any cash credit the identity and credit worthiness of the person and genuineness of the transaction has to be established. Since the assessee in the instant case has not produced Mr. Dimpee to prove his identity and credit worthiness and the genuineness of the transaction, therefore, the Assessing Officer added an amount of Rs. 146.90 lakhs as unexplained cash credit u/s.68 of the I.T. Act. 8.5 Before the CIT(A) it was submitted that the Assessing Officer did not give set off of the additi....