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2014 (1) TMI 598 - AT - Income TaxWhether order passed by the AO u/s 143(3) r.w.s 158BC and r.w.s 264 is sustainable in law as the AO did not take prior approval of the Additional CIT Held that:- The learned DR has produced the copy of the approval and it is seen there from that the relevant approval as required u/s 158BG has been obtained - The legal ground raised by the assessee does not survive Decided against assessee. Whether any incriminating material was found during the course of search for initiating proceedings u/s 158BC Held that:- It was found that the assessee was not maintaining proper books of accounts and has not disclosed the correct income - For invoking the jurisdiction u/s 158BC of the IT Act, there should have been a search conducted u/s 132 or books of account and other documents or assets should have been requisitioned u/s 132A - The AO should be satisfied that the assessee has not or would not disclose its correct income but for the search - The assessee has not only not maintained proper books of accounts but has also during the course of search in the sworn statement admitted to not disclosing the proper and correct income - The AO has rightly invoked the jurisdiction u/s 158BC of the Income-tax Act Decided against assessee. Whether the cash deposits recorded by the assessee in its books of accounts could be treated as undisclosed income u/s. 158B(b) Held that:- Following CIT Vs. J.M.D International [2008 (9) TMI 880 - DELHI HIGH COURT] - The assessee has claimed to have maintained regular books of accounts and filed returns regularly reflecting the income but the AO has not examined this claim of the assessee - If the receipts were reflected in the regular returns of the relevant assessment years falling in the block period, then they cannot be considered as undisclosed income of the assessee for the block period - The assessee has failed to file any documents in support of its claim of filing returns regularly for the relevant assessment years - The entire receipts cannot be considered as the income of the assessee. If the assessee has not been able to prove the claim of expenditure, the AO ought to have allowed reasonable expenditure The issue was set aside for fresh adjudication. Disallowance of expenses Held that:- When the assessee makes a claim of expenditure, the burden is on the assessee to prove its claim with necessary evidence - The agreements of the assessee with the principles as well as the sub-contractors were seized during the course of search - The stand of the assessee has been that these documents were the evidence in proof of necessity to make the payments made by the assessee and were in the custody of the Assessing Officer - He was rightly prevented from furnishing necessary evidence before the AO in proof of the expenditure claimed by it is correct - If the assessee fails to prove its claim, the AO has to make the assessment on the basis of the material available with him - The view taken by the CIT(A) that the entire addition has to be deleted because the AO has not looked into the material available with him, is wrong - The income of the assessee not only constitutes the receipts but also the expenditure incurred by the assessee for earning those receipts The issue was set aside for fresh adjudication.
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