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2018 (11) TMI 1747 - HC - Income TaxReopening of assessment u/s 147 - disallowance u/s 40A(3) - payment was related to the transaction of sale of imported car by one Shri.Balan Pillai to one Sri. Arun Choksi and assessee is said to have acted as a middle man - HELD THAT:- Entire price of the car and the customs duty would have been borne by the assessee and on subsequent transfer being made, it would have been on payment by Sri. Arun Choksi to the assessee. Even in such a circumstance, there could not be a dis-allowance made under Section 40A(3) of the Act. The assessing officer having not attempted to view it in that perspective, we do not think that there need be a remand. However if as held by the Tribunal there could not be a dis-allowance under Section 40A(3) of the Act since the payment was not from the assessee to the registered owner of the vehicle; then there is no scope for allowing an expenditure, since that was not an amount received by the assessee from Arun Choksi and then passed on to Balan Pillai. The said amount was merely shown as an expenditure, by virtue of the payment made to Balan Pillai, without explaining the same. We, hence, find the ground of dis-allowance under Section 40A(3) to be improper but still find the dis-allowance to be apt for no explanation of the source of such funds. Unexplained cash credit u/s 68 - A.O. has, on facts, found that even though in the first instance, Sri. M.K.A. George accepted the fact that he handed over the Demand Draft for ₹ 22,000/- to the assessee. But later he stated that the affidavit pertaining to such acceptance was actually prepared and brought to him by Sri. Jose, brother of Sri. Alex C.Joseph, and that he had simply signed it and the contents of that affidavit were denied when he was examined by the AD(I). Consequently, the affidavit was rejected and addition of ₹ 22,000/- was made. Sri. M.K.A. George had later filed a letter before the A.O. stating that he did not give any statement to the AD(I) voluntarily and that he had handed over the draft and the same was encashed through the bank account of the assessee. The Tribunal has held that without any cross-examination by the assessee in this regard, the statement before the AD(I) cannot be a basis for making such an addition. We agree with that. We answer the said question of law also in favour of the assessee and against the Revenue. Unaccounted business receipts - No reason to interfere with the Tribunal's order except with respect to ₹ 9,00,000/-, wherein two demand drafts of ₹ 9,00,000/- and ₹ 6,50,000/- were found to be credited to the accounts of Sri. Alex C. Joseph, out of which an amount of ₹ 9,00,000/- was reflected in the accounts of the assessee. The Tribunal's order is interfered with to the limited extent of making an addition of ₹ 9,00,000/- being the amounts reflected in the accounts of the assessee with respect to a transaction between Sri. Bagla and Sri. Alex C. Joseph. All the other business proceeds are seen to have been those found in the accounts of Alex C. Joseph. Only on information received of the same being that of the assessee itself the additions were proposed. There was nothing recovered in search to substantiate such information and confirm its veracity. We hence concur with the Tribunal except on the limited addition sustained herein above. Sale of a jeep belonging to Sri. M.K.A. George - There is an affidavit proffered of that person, in which he admitted the transaction. But, before the Additional Director (Investigation), he denied the same. Later, again a confirmation letter was submitted. What assumes significance is the fact that there was no cross-examination permitted of the person when he appeared before the AD(I). Hence, we cannot interfere with the deletion made by the Tribunal on that account. Unexplained cash found and seize - The assessee cannot merely contend that the cash belonged to Sri. Alex C. Joseph without any confirmation from him; especially when he declined to own up the same in his statement. The cash having been found from the assessee's premises, the assessee has a duty to reveal and substantiate the source, which was not done. In such circumstances, we do not think that the Tribunal was right in deleting the addition of income with respect to the cash recovered from the assessee's premises, which was not accounted by the assessee. We, hence set aside the deletion of the said addition by the Tribunal, restoring that made by the A.O.
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