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TMI Blog2012 (9) TMI 694X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of Section 263 against the order passed after scrutiny u/s. 143(3) on 31/12/2008 in the case of appellant inasmuch as that the order passed u/s.143(3) is neither erroneous nor prejudicial to the interest of revenue. 2. The Ld. CIT Ahmedabad-IV, Ahmedabad has grievously erred in law and on facts in directing to compute the disclosed unaccounted expenditure by invoking deeming provisions of Section 69 C of the I.T. Act and to disallow business expenses claimed against undisclosed income which are not proved to have been incurred for earning such undisclosed income without appreciating the facts that such aspects have already been considered by the assessing officer while passing the scrutiny order u/s. 143(3) of the I.T. Act. 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of the decision of Hon'ble Gujarat High Court in case of Fakir Mohmed Haji Hassan Vs. CIT (247 ITR 290). After considering the assessee's reply and Hon'ble Gujarat High Court decision in case of Fakir Mohmed Haji Hassan vs. CIT (supra) had held as under:- "I have carefully considered the written submission of the assessee, but the same has not been found satisfactory. Survey u/s. 133A was conducted at the business premises of the assessee on 7/11/2006. During the course of survey proceedings, the survey team observed that the assessee had shown liability of Rs.1,03,24,530/- as unpaid freight as on 31/3/2006, but on verification of vouchers and payment details found during the course of survey proceedings, it was noticed that an amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assesses has admitted to have paid outstanding liability of Rs.77,01,958/- from out of undislosed income and in view of that admission, deeming provisions of section 69C was required to be invoked. However, the AO failed to apply his mind and accepted the disclosed income from unaccounted sources as business income and ignored the decision of' territorial jurisdictional High Court in the case of Fakir Mohmed Haji Hasan Vs.CIT (247 ITR 290). In fact, unaccounted expenditure disclosed during the course of survey was required to be taxed under the deeming provisions u/s.69C of the IT Act under the head 'income from other sources." The AO failed to do so. As the AO failed to tax the disclosed unaccounted expenditure by invoking deeming provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 06....................The turnover is Rs.11.68 crores." After raising query by the A.O., he had given findings in the assessment order and no adverse inference had been drawn by the A.O. in original assessment order on account of disclosure made during the course of survey. The A.O. made following additions: (i) Out of major operational expenses - Rs.14,60,450/- (ii) Disallowance u/s. 40(A) (ia) - Rs. 53,824/- (iii) Disallowance out of personal expenses - Rs. 1,32,456/- (iv) Bad debt - Rs.1,16,13,286/- The ld. A.O. had observed that: "2.1 During the course of survey proceedings it was noticed that the assessee has shown a liability a sum of Rs. 1,03,24,530/- as unpaid freight as on 31-03-200. On verification of vouchers and pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee challenged the confirmation made by the CIT Rs.14,60,450/- i.e. 1/5th disallowance out of freight account, Trip expenses, Diesel expenses, tyre expenses and truck expenses in total Rs.9,73,63,349/-. The Hon'ble ITAT 'C' Bench had decided this issue and confirmed the addition partly. The ITAT 'C' Bench vide its order in ITA No. 2638/Ahd/2009, dated 16.12.2011 has held as under:- "7. We have heard the rival submissions and perused the materials on record. From the facts and circumstances of the case, it is evident that the expenses incurred by the assessee are not verifiable and cannot be relied upon completely from the bills and vouchers produced before the revenue authorities. There is every possibility of certain adjustments made ..... X X X X Extracts X X X X X X X X Extracts X X X X
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