TaxTMI 
TaxTMI 
2018 (4) TMI 307
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....14. For the sake of convenience, we pass a common order. 2. Assessee is a private limited company incorporated on 15.3.89 and is engaged in the business of civil construction. Pursuant to the search u/s 132 of the Income-tax Act, 1961 (hereinafter referred to as "the Act") conducted at the premises of the asssessee on 30.3.2011, the Chairman of the company Mr. Vinod Kumar Jain declared a sum of Rs. 3 crores. Subsequently, the assessee filed a return of income on 7.9.2012 declaring an income of Rs. 3,68,69,930/-. During the scrutiny, learned AO on the strength of the documents identified as Annexure 3 & 11 observed that out of so many entries contained in this document, certain entries were not carried to the regular books of accounts and....
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....contended that for reaching the figure of Rs. 2,59,10,692/- to be added on account of the entries in Annexures 3 and 11, the learned AO considered the only debit entries and ignored the credit entries. As such, there was no fair play on the part of the learned AO. The learned CIT(A) vide para 3.3 of his order considered this aspect and agreed that for a just and fair view in the matter, both debit and credit entries need to be considered. On this aspect, neither the assessee nor the revenue is in appeal before us. However, having observed so, learned CIT(A) proceeded further and held that all the debit entries amounting to Rs. 2,59,10,692/- are treated as hit by the provisions of Section 40A(3) of the Act. As such the addition was confirmed....
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....A) is challenged by the assessee in this appeal on the ground that inasmuch as Section 40A(3) has no application to the facts of the assesses case, the peak of such registers as worked out by the assessee at Rs. 1,44,84,835/- has to be set off against the surrendered amount of Rs. 1,65,60,000/- leaving a sufficient balance to take care of this addition of Rs. 6,35,000/-. 5. Now coming to the addition ofRs.31,98,000/- on account of difference in the surrendered and declared amount and Rs. 31,70,200/- on account of the unexplained labour and petty contractor charges, assessee contended before the learned CIT(A) that in the absence of any incriminating material substantiating the additions, mere surrender does not take the revenue to anywhe....
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....expenditure has to be incurred in cash; (ii) such an expenditure was in excess of the prescribed limit; and (iii) the assessee should have claimed the expenditure as allowable expenditure. It is further submitted by him that none of the entries in the seized register of Annexure 3 & 11 are claimed by the assessee as an expenditure, the invocation of the provisions of Section 40A(3) of the Act does not arise. Assessee worked out the peak as per the register as on 31.12.2010 at Rs. 1,44,84,435/- . According to the assessee, as per the directions of the learned CIT(A) both the credit and debit entries are to be considered, as such out of the surrendered amount of Rs. 1,65,60,000/- only this peak of Rs. 1,44,84,435/- has to be adjusted leaving ....
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..../- as unexplained amount, if it is not adjusted towards the ultimately taxable amount arising out of the entries in Annexure 3 & 11, certainly it would amount to double taxation and the surrendered amount would go unaccounted for. We, therefore, find that the observations of the learned CIT(A) that the surrendered amount must be adjusted towards any amount i.e. drawn from the entries in Annexure 3 & 11. However, in the preceding paragraphs, we direct the learned AO to verify whether any expenditure was claimed in respect of the debit entries of Annexure 3 & 11 and then to decide the applicability of Section 40A(3). The observations of the learned CIT(A) would be subject to such finding of the learned AO after verification. We, therefore, do....