TMI Blog2011 (5) TMI 436X X X X Extracts X X X X X X X X Extracts X X X X ..... ure - If the expenditure is found to be genuine, the same shall be allowed in this assessment year - Decided in the favour of the assessee by way of remand - ITA No.790 of 2006 ITA No.553 of 2007 - - - Dated:- 11-5-2011 - MR. JUSTICE A.K. SIKRI, MR. JUSTICE M.L. MEHTA, JJ. For Applicant : Mr. C.S. Aggarwal, Sr. Advocate with Mr. Prakash Kumar, Advocate. For Respondent: Ms. Prem Lata Bansal, Sr. Advocate with Mr. Deepak Anand, Advocate. A.K. SIKRI, J. 1. ITA No.790 of 2006 relates to the Assessment Year 1997-98, which was admitted on the following substantial questions of law: 1. Whether the Income Tax Appellate Tribunal was correct in law in sustaining the disallowance of ₹ 18,99,255/- under the head ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting and stationery (based on two bills), as he found that, the expenditure incurred under the aforesaid head was debited in his books for the financial year 1997-98 instead of the Financial Year 1996-97 i.e. for the Assessment Year 1997-98, in which the said expenditure had been incurred. In fact, apart from these two bills further amounts incurred under the aforesaid head of ₹ 7,99,405/- (supported by seven credit bills ) were found, related to the Assessment Year 1997-98 which too, had also been claimed as a deduction. Thus, an aggregate deduction of expenditure incurred under the head printing stationery of ₹ 11,68,905/- was made. (b) Apart from the aforesaid sums, a claim of expenditure of ₹ 40,78,858/- incurr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year 1997-98. He, thus, disallowed the claim of expenditure. 5. Being aggrieved by the order of the AO, the assessee preferred appeal before the CIT (A). It was contended that since genuineness of expenditure incurred had not been disputed, the AO had erred in law in holding that the said expenditure incurred in the Financial Year 1996-97 of ₹ 3,96,500/- and ₹ 7,99,405/- aggregating to ₹ 11,95,905/- and of ₹ 18,99,255/- under the two heads had to be allowed, as the assessee was following mercantile method of accounting and could not be disallowed. It was submitted that there was no justification to say that it had to be dealt with in block assessment and that in any case, it has not been allowed thereto. The CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vised return for the Assessment Year 1997-98. The assessee had submitted that these expenses had been accounted for in the Assessment Year 1997-98 as per ledger. However, he was claiming the same in this assessment year in the revised return on the ground that he was following mercantile system of accounting. The AO has found that the assessee had not recorded advertisement bills totaling ₹ 18,99,255/- in the books of account for Financial Year 1996-97. As per seized ledger for Financial Year 1997-98, one entry of this amount had been recorded on 01.04.1997 with narration provision of bill . He, thus, observed that this consolidated entry passed on 01.04.1997 represented advertisement bill, was only an after-search-thought and was an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch has not been or would not have been disclosed for the purposes of this Act. 10. Thus, when during the search, it is found that there is wholly or partly undisclosed income or property, assessment can be carried out for the entire block period. It, thus, applies to income which is undisclosed and is found during search which may be in the form of money, bullion, jewellery or other valuable article or thing or any income based on any entry in the books of account, etc. It does not apply to expenditure claimed which was incurred in the particular financial year. Even the assessee is claiming deduction of the said expenditure as business expenditure under Section 37 of the Act and this has to be dealt with in the regular assessment and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1996-97 amounting to ₹ 3,69,500/-. When the assessee was asked to give details of these printing and stationery bills, his reply was that two bills, both dated 27.05.1996 of ₹ 1,89,000/- and ₹ 1,80,500/- were previously not entered in the books of accounts. The AO, however, disallowed the claim when he noticed that these were neither ledgerized in Financial Year 1996-97 nor in Financial Year 1997-98. Another claim of ₹ 7,99,405/- was also disallowed on the ground that the same was not recorded in the books of accounts of the assessee and same was found during search proceeding. Only when the Department seized during the course of search, the assessee made the claim by filing the revised return. Again, it was observe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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