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2008 (4) TMI 726 - HC - Income TaxUnexplained investment u/s 69 - cash payment - survey conducted u/s 133A - during search found foreign made gold bar biscuits - Applicability of Section 40A(3) - Tribunal deleted the addition equivalent to purchase of gold on behalf of the assessee by his son Lalit Kumar - Deleted the additions made by the AO within the meaning of Section 40A(3) - Applicability of Section 40A(3) - HELD THAT:- In our view, a bare reading of the language of this sub-section is enough to show, that the provisions of Section 40A(3) are not attracted with respect to either of the transactions; obviously because it only prohibits allowing of deduction as expenditure. Expenditure obviously means expenditure admissible to be deducted from out of the income, which may include the expenditure on purchase and the like, and the subsection provides that if any such expenditure is incurred after specified date, in a specified manner, then 20 per cent of such expenditure shall not be allowed as a deduction. In the present case the assessee has not claimed any deduction of any expenditure and therefore, there is no question of not allowing any part of that expenditure, as deduction. Thus, the finding arrived at in this regard, by the learned CIT(A), and the ld Tribunal cannot be said to be wrong. Accordingly answered in favour of the assessee, and against the Revenue. Unexplained investment u/s 69 - From a reading of the order of the ld Tribunal it is clear that the whole thrust of the order is that the assessee was having sufficient cash balance on the relevant dates inasmuch as on 13th May, 1998, the cash balance is Rs. 4,85,334, then on 14th May, 1998 the cash balance is Rs. 5,33,290, and then on 15th May, 1998, the cash balance is 5,78,545, and then from 15th to 19th it is static, at figure Rs. 5,78,545. This figure obviously exceeds Rs. 3,88,000, but then the million dollar circumstance which has been considered by the learned AO and the learned CIT(A) is that if the existing cash balance has been used for purchasing gold bars, obviously the available cash balance would have decreased, while it has not so decreased, and thus the only possible conclusion is that the gold bars were purchased worth Rs. 3,88,000 from the amounts available with the assessee from undisclosed source, obviously beyond the amount shown in the cash book to be lying with the assessee. Mere fact that the assessee alleges that the gold was sold is not enough to refuse to make addition u/s 69. So far as the allegation of the gold having been sold away is concerned, that can be an additional aspect, that the transaction is unrecorded transaction, but then thereby it cannot be said that the investment is shown to have been made from out of disclosed resources available with the assessee. The investment is clearly investment, on the face of it, made from out of the funds available with the assessee, from undisclosed sources, and is unexplained investment. What happened to the sale proceeds, where that money has gone etc., are all aspects, which are alien to the present controversy. Therefore, we have not been able to persuade ourselves to concur with the finding of the ld Tribunal on this question, rather the findings of the AO, and the learned CIT(A), are the findings in accordance with law. Accordingly answered in favour of the Revenue, and against the assessee. Consequently, the appeal is allowed in part. The judgment of the ld Tribunal is set aside, and that of the learned CIT(A) is restored.
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