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2017 (9) TMI 522 - AT - Income TaxRejection of books of the accounts u/s 145(3) - g.p. determination - Held that:- While finalizing the annual accounts, the assessee went ahead and accounted for the said undisclosed income of ₹ 22,60,000 in its profit/loss account. So, even this defect was removed and duly accounted for in the financial statements. During the course of assessment proceedings, the AO took this ground of surrender of undisclosed income as the very basis for rejection of books of accounts. But the fact remains that such defect in the books of accounts by way of not disclosing the investment in construction of godown was cured by passing appropriate entries in the books of accounts finalized subsequently and which was duly offered to tax. Further, there is no other specific defect in the trading results or in the overall determination of business results which has been highlighted by the AO during the course of assessment proceedings. As far as setting off of undisclosed income of ₹ 22,60,000 is concerned against the regular business loss is concerned, the ld CIT(A) has given a finding that such undisclosed income have to be taxed under the head of “business income” and not to be taxed separately, a finding which has been accepted by the Revenue and is not under challenge before us. In light of above, we are of the view that there was no basis with the AO for rejection of books of accounts in the instant case as contemplated under section 145(3) of the Act. Depreciation on the godown building - no evidence of asset being put to use was submitted - Held that:- We prima facie found force in the argument of the ld AR that where rental income has started accruing to the assessee, the same demonstrate that the asset was actually put to use. However, there is no finding of the lower authorities in this regard. We are accordingly setting aside the matter to the file of the AO to examine the above said contention of the ld AR and where the same is found to be in order, allow the depreciation as per law. In the result, the ground is allowed for statistical purposes. Addition u/s 69C - low household withdrawals - Held that:- AO without bringing on record any demonstrable evidence that the assessee has in fact incurred expenditure more that the money which has been withdrawn by the assessee from his bank account. In terms of Section 69C, the initial onus is on the Assessing Officer to prove that the assessee has incurred the expenditure. Once the Assessing Officer discharges the onus, the onus gets shifted on the assessee to offer an explanation about the source of such expenditure. In the instant case, the Assessing Officer, has not discharged the initial onus placed on him. In light of the same, we are setting aside the order of the AO and delete the subject addition.
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