TMI Blog2014 (8) TMI 1110X X X X Extracts X X X X X X X X Extracts X X X X ..... . Similarly, while recording statement during the course of search and seizure operation no attempt should be made to obtain confession as to the undisclosed income. Any action to the contrary shall be viewed adversely. Thus we hold that the addition of ₹ 15,00,000 has been made based purely on the confession made by the assessee in the course of survey and hence cannot be sustained without any further supporting evidence. - Decided in favour of assessee Disallowance u/s. 40A(3)- Held that:- We find that the assessee has filed paper book giving the particulars of payment in cash which was disallowed as well as other payments which has been disallowed for non-deduction of tax at source. The assessee contends that the expenditure in cash are such provision of 40A(3) will not apply and the payment of ₹ 2,44,163 does not attract provision of sec. 40(a)(ia). This evidence or argument do not appear to have been considered by the AO or CIT(A). In the interest of justice, we remit the issue of disallowance of ₹ 13,63,209 u/s. 40A(3) and ₹ 2,44,163 u/s. 40(a)(ia) to the file of the AO. The AO shall give reasonable opportunity to the assessee to submit his case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payments have been done on weekly basis based on the attendance by the labourers. The said labour payments did not attract the provisions of section 40A(3) as no one individual labour had received the amount exceeding the specified limit under that section. It was further submitted that the details of list of labourers for whom actual disbursement was made was not recorded but entries were made based on the cash received on site office for the purpose of payment to labourers. 5. The learned AR also argued that in case of material payments also the payments were made on site for purchase of steel and metal and are accounted under that head. However, the payments are made to different vendors and also against different bills and loads delivered at the site. 6. The second issue as found by the Assessing Officer is that no tax was deducted at source on the amount of ₹ 2,44,163 and disallowed the same u/s. 40(a)(ia) and added to the income returned. 7. On further appeal, the learned CIT(A) held that there is a clear violation of the provisions of both s. 40A(3) and s. 40(a)(ia) and the assessee has not been able to controvert any of the discrepancies pointed out by the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of survey. 13. Assessee had filed return of income on 3.10.2008 declaring net taxable income of ₹ 9,38,203. The AO has proceeded to add a further sum of ₹ 13,63,209 u/s. 40A(3) and ₹ 2,44,163 being disallowance u/s. 40(a)(ia) as also a sum of ₹ 15,00,000 offered at the time of survey. The CIT(A) though confirmed the addition of ₹ 15,00,000 offered at the time of survey, held that taking into account the disallowance u/s. 40A(3) [Rs. 13,63,209] and disallowance u/s. 40(a)(ia) [Rs. 2,44,163], the amount of ₹ 15,00,000 offered is included in these additions. Otherwise he held that it would amount to double addition. In effect he deleted the addition of ₹ 15,00,000 made by the AO. 14. In this appeal, the Revenue has assailed the deletion of ₹ 15,00,000 offered during the course of survey. It is well settled that mere statement offering additional income in the course of search/survey should not be the sole basis of addition in the assessment. It should be supported by other documentary evidence to sustain the disallowance. In this case the revenue would like to sustain the addition of ₹ 15,00,000 offered during the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applied to compute the income, the expenses are deemed to be considered while applying the GP rate and that, therefore, no further disallowance under section 40A(3) could be made. This view finds support from the judgement of Allahabad High Court in the case of CIT v. Banawarilal Bansidhar (1998) 229 ITR 229 (All) and recent judgement of Madhya Pradesh High Court in the case of CIT v. Purshottam Lal Tamrakar [2004] 270 ITR 314 (MP). 17. The AR also relied on the judgement AP High Court in the case of lndwell Constructions v. CIT (1998) 232 ITR 776 (AP) wherein It has been clearly held that where the books of account have been rejected, the revenue cannot rely on the same books of account for addition of an exact amount of expenditure in the P L account. It was also held in that case that when an estimate is made, it is in substitution of the income that is to be computed under section 29 and in other words, all the deductions which are referred to under section 29 are deemed to have been taken into account, while making such an estimate. 18. With respect to disallowance u/s. 40(a)(ia) the AR submitted that provisions of section 40(a)(ia) do not apply to the payments made to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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