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2014 (7) TMI 1130

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..... er of Income-tax (Appeals) findings that the explanation of the assessee is an afterthought and there was no proper explanation for the cash deficit in the books of account. Since the amounts were spent without there being any explained source of the amount, addition of the above amount is called for and accordingly, the same is confirmed. - Decided against assessee. - ITA.No.1488/Hyd/2013 - - - Dated:- 4-7-2014 - SHRI B. RAMAKOTAIAH AND SMT. ASHA VIJAYARAGHAVAN, JJ. For the Appellant : Mr. S. Rama Rao For the Respondent : Mr. Solgy Jose T. Kottaram ORDER B. Ramakotaiah (Accountant Member).- This appeal by the assessee against the order of the Commissioner of Income-tax (Appeals)-XVIII, Mumbai, Camp at Hyderabad .....

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..... on. The details are as under : Sl. No. Name On 8.10.2004 (Rs.) On 25.10.2004 (Rs.) Total (Rs.) 1. Mr. R. Markendeya (self) 60,000 40,000 1,00,000 2. Smt. R. Kanyakumari w/o. R. Markendeya 40,000 25,000 65,000 3. Mr. R. Sivaprasad s/o. R. Markendeya 60,000 40,000 1,00,000 4. Mr. R. Santoshkumar s/o. R. Markendeya 60,000 40,000 .....

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..... rther stated that as there was no regular accountant, the entries could not be made in the books, it could not be explained immedi ately at the time of completion of scrutiny assessment, and requested to allow it now. As verified from the day book, on October 8, 2004 (page-161) and October 25, 2004 (page 173) there appears the deficit balances and the subsequent entries made in the names of partners to meet the deficiencies. There were contra entries on November 4, 2004 (page 182) to partners accounts. (copies obtained and placed on record). It appears that the 'payment of amounts by partners' is an after thought of the assessee before the Commissioner of Income-tax (Appeals) as it could not be explained at the time of complet .....

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..... d counsel explained the facts and submitted that the Revenue did not enquire from the persons who advanced funds and there was genuine advance made by those parties to the firm. Therefore, the deficiency worked out by the Assessing Officer should be deleted. It was his submission that partners are also having individual businesses and accountant did not enter the amounts properly thereby, certain discrepancies have come in the books. Since the affidavits were not controverted, on the strength of the affidavits the amounts should be deleted. 5. The learned Departmental representative submitted that there is no truth in the submissions of the assessee and relied on the findings of the Assessing Officer that it is an afterthought to bring e .....

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..... 377; 2,70,000 on October 8, 2009 and further amount on October 25, 2004. Thus, the Assessing Officer's contention that it is an afterthought can easily be discernible from the explanation given by the assessee. 6.1. Moreover, when this deficit was worked-out and pointed out to the partner in the course of assessment proceedings, he did not explain anything at that point of time. As seen from the affidavits filed, not only main partner advanced amounts but his wife and children who are also partners also explained that they advanced funds. If the funds are taken from the family members of Mr. R. Markendeya, it is surprising to note that he did not give any explanation on the day of enquiry. This indicates that explanation was an after .....

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..... f account which indicates that the amount was repaid out of the amount earned by the firm, outside the books of account. Therefore, in the anxiety to explain that the deficit cash balance was supported by advance from the partners, the assessee in a way committed and compounded the problem in admitting the repayment of the amounts in the same financial year. This payment outside the books calls for an addition. Looking at either way, the assessee-firm must have had the amounts to the extent of addition made by the Assessing Officer available outside books of account, so that it could finance the expenditure recorded in the books. Therefore, even if it is accepted that partners had advanced funds, the addition cannot be deleted because same .....

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