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2016 (3) TMI 20 - AT - Income TaxAdditional income as surrendered during the course of search u/s 132(4) - additions made on the basis of statement of Shri Balwant Singh - Held that:- There is no iota of evidence, which suggest that there is unaccounted / undisclosed income emerging out of the incriminating seized during the course of search. Thus, considering the entire factual matrix we find that the AO has not been able to demonstrate or give even an example of any document seized which has not been reflected in the books of accounts. The adverse inference drawn by the AO on the basis of the letterheads of different contractors found during the search is wrong and in fact contradictory. F We have considered the contents of statement under Section 132(4) of Sh. Balwant Singh. He has made disclosure of additional income on behalf of various companies of Ramprastha Group and other persons. In the substantive part of answer, Sh. Balwant Singh has stated that mostly the transactions are recorded in books of accounts and some parts are unaccounted. Ld. AR has argued that entire seized document was examined during post search and assessment proceeding and no incriminating material was found. Subsequent statements were recorded by the Investigation Wing as mentioned in the assessment order. However no question was asked in furtherance of the statement regarding the contents of the seized document. During original statement also subsequent details of work-inprogress, such as address, quantum of work done, accounted Work-in-progress and undisclosed work in progress were not asked for. The assessee companies during post search proceedings had twice informed the Investigation Wing that the surrender of work- in-progress has been made without pinpointing any seized material. No action was apparently taken even by the Assessing Officer, when effectively the statement got retracted. Thus we are of the considered opinion that the additions based on the statement of Shri Balwant Singh alone, cannot be sustained - Decided in favour of assessee Disallowance of Interest - Held that:- Apex Court in the case of SA Builders Ltd vs. CIT (2006 (12) TMI 82 - SUPREME COURT ) held as agrreing with the view taken by the Delhi High Court in CIT v. Dalmia Cement (Bharat) Ltd. [2001 (9) TMI 48 - DELHI High Court] that once it is established that there was nexus between the expenditure and the purpose of the business (which need not necessarily be the business of the assessee itself), the Revenue cannot justifiably claim to put itself in the arm-chair of the businessman or in the position of the board of directors and assume the role to decide how much is reasonable expenditure having regard to the circumstances of the case. No businessman can be compelled to maximize its profit. The income tax authorities must put themselves in the shoes of the assessee and see how a prudent businessman would act. The authorities must not look at the matter from their own view point but that of a prudent businessman. As already stated above, we have to see the transfer of the borrowed funds to a sister concern from the point of view of commercial expediency and not from the point of view whether the amount was advanced for earning profits. Respectfully following the ratio of the decision of the Hon’ble Apex Court, we hold that on the facts and circumstances of the case, the interest amount has been incorrectly disallowed - Decided in favour of assessee Disallowance u/s 40A - Held that:- All the detailed reasons given hereinabove that Section 40A(3) of the Act has been wrongly invoked as admittedly no expenses relatable to the addition has been claimed. Accordingly, this ground of the Department is also dismissed.- Decided in favour of assessee
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