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2013 (9) TMI 809 - ALLAHABAD HIGH COURTAddition on the basis of loose papers – expenditure towards building construction have already been made on account of loose papers - Held that:- The admitted facts of the case are that seized/impounded loose papers found at the time of survey were recorded in the books of account and no incorrectness was found in respect of recording such transaction in books of account. Only grievance of the Revenue was that at the time of survey books of account was not found maintained upto the date - The A.O himself admitted before the CIT (A) that all the entries in the loose papers were found duly incorporated in the books of account - A.O made addition on the basis of loose paper which has been incorporated in the books of account and no defect otherwise has been found that those loose paper entries were recorded incorrectly - No addition is warranted – Decided against the Revenue. Difference of Rs.5,05,769/- as unexplained - Error made by Valuation Officer – Held that:- Apart from the technical objections, the CIT (A) found that the difference in C.P.W.D. and P.W.D. rates were well explained which is upto 10% value. It has also been recorded by the CIT (A) that some of the items of expenditure towards building construction have already been made on account of loose papers of which addition of Rs.40,85,115/- has been deleted, that to the extent there is explanation from the assessee - Deleted the addition of Rs.11,83,249/- - Decided against the Revenue. Exemption u/s 10(23C) of the Income Tax Act – Held that:- There is no provision under the Act that if the books of account are not found at the time of survey, the exemption under section 10 (23C) will be withdrawn. When finally at the time of assessment and before the CIT (A) the books of account was found in order, even otherwise also exemption under section 10 (23C) does not depend upon books of account but it depends upon relevant provisions of the Act – Reliance has also been placed upon the judgment in the case of Kedarnath Jute Mfg. Co. Ltd vs. CIT [1971 (8) TMI 10 - SUPREME Court] - Records were not available at the time of survey and some loose papers were found, the assessee had made a statement on specific question regarding maintenance of books of accounts that books of accounts are with the auditor. The AO did not make any effort to get these books of account. After the books of account were produced, no defects or discrepancies were found – Decided against the Revenue.
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