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2016 (11) TMI 434 - AT - Income TaxUndisclosed bank account - Undisclosed transactions - Held that:- The receipt of cash or funds from out-station parties may though perhaps explain the inordinate increase in the postage expenses claimed qua the undisclosed transactions. We are in this regard, however, not in agreement with the ld. counsel for a direction to the AO to adopt a particular percentage as a net profit, i.e., as claimed to have been accepted by him for other years. The assessment orders for those years are not on record. The AO, where he has issued definite findings upon examination/verification, would though be obliged to take guidance from the factual findings or inferences drawn for those years. He has to, we may though add, act in a reasonable, yet, cogent manner, taking a broad view of the matter in that the full details and evidences in respect of expenses, hitherto undisclosed, may not be forthcoming. That apart, even the assessee’s undisclosed capital, i.e., the capital deployed in the assessee’s undisclosed business, would have to be separately considered for addition. Toward this, in our view, the AO shall himself or cause the assessee to compile the consolidated balance sheet, incorporating the erstwhile undisclosed bank account also. This, on a comparison with the balance-sheet already furnished, would reveal the additional capital, so that the same, to the extent unexplained, would merit being separately added u/s.69/69A. The accounts, including the final accounts, compiled on the basis of the said account, are only the assessee’s explanation toward the credits appearing therein, also enabling the determination of the correct income, i.e., liable to be brought to tax qua the said credits, which the Revenue has extended to the entire credit, disbelieving the assessee’s explanation. The A.O. shall, accordingly, redo the assessment with reference to the assessee’s undisclosed bank account, determining the amount that is in the facts and circumstances of the case properly assessable as income.
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