TMI Blog2013 (10) TMI 825X X X X Extracts X X X X X X X X Extracts X X X X ..... incurred in respect of this income declared by the assessee in the course of survey - This cannot also be inferred that the assessee in claiming any deduction in respect of amount which was declared by the assessee during the course of survey thus proviso to section 69-C of the Act is not applicable in respect of these expenses - it is also required to be examined regarding the source of these expenses because if these expenses are not recorded in the books of accounts and the same is already paid, then its source of payment requires explanation - the issue should go back to the file of AO for fresh decision - the order of the CIT(A) on this issue and restore this matter back to the file of AO. Addition as profit on sale of records – Unaccounted Expenditure – Held that:- No separate addition was made by the AO in this regard and no material facts had been brought on record by him in respect of actual sale of plots and profit - In the absence of any evidence having been brought on record by the AO regarding actual sale and actual profit, no such addition is justified - the observation of the AO that this amount might have been utilized for the purpose of incurring expenditure ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act for concealing the particulars of with regard to this income of Rs.16,00,000/- as income not disclosed in the return. 2. Briefly stated facts are that the case of the assessee was picked up for scrutiny assessment and the assessment u/s.143(3) of the Income Tax Act,1961 (hereinafter referred to as "the Act") was framed vide order dated 29/12/2010 thereby the Assessing Officer(AO) made addition on account of expenses claimed from unaccounted/non-business income, addition on account of profit on sale of plots not shown and addition on account cash payment made u/s.40A(3) of the Act for land. Against this, assessee filed an appeal before the ld.CIT(A), who after considering the submissions of the assessee dismissed the appeal. 3. Now, the assessee is in second appeal before this Tribunal. 3.1. First ground of the appeal is against confirmation of addition of Rs.28,50,000/- made u/s.40A(3) of the Act on account of cash payment made for purchase of land. The ld.counsel for the assessee strongly submitted that the authorities below have failed to consider the submissions made by the ld.counsel for the assessee in right perspective. He pointed out that one of the submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of ld.CIT(A) on this issue is not justified, the same is hereby set aside. However, this being legal issue, therefore, in the interest of justice, the same is restored back to the file of AO to verify the claim of the assessee that the payment was made to the agent for the purpose of buying the land and the person to whom the sale consideration was handed over in cash was acting as an agent to the assessee. Needless to say that the AO would give reasonable opportunity of hearing to the assessee. The AO is directed to decide this issue afresh in the light of the provisions of Rule 6DD(k) of the IT Rules, 1962. This ground of assessee is allowed for statistical purposes only. 5. Ground Nos.2, 3 4 are inter-connected and hence disposed of together. 5.1. The brief facts regarding these issues till the assessment stage are noted by the ld.CIT(A) in paragraph Nos.5.1 to 5.4, which are reproduced below:- "5.1. In appellant's case Survey proceedings were conducted on the business premises on 13/3/2008. During the proceedings, the statement of Shri Amitkumar K.Patel, partner of the firm was recorded on oath. Shri Amitkumar K.Patel in reply to Q.No.22 of his statement had stated th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so he enhanced the assessment by an amount of Rs.16 lacs. The basis of ld.CIT(A)regarding confirming the addition made by the AO and making enhancement was this that the addition of unexplained expenses whose source was admittedly not there and, therefore, was not recorded in the books of accounts and, therefore, this amount was required to be added u/s.69C of the Act. He has further noted on page-11 of his order that no such income has been offered by the assessee and the income offered is by cash entry which had been subsequently utilized in the books of accounts and cannot be said to be related to expenses already incurred. He has also given a finding that these expenses are not allowable because of the specific proviso to section 69C of IT Act. On this basis, he upheld the addition made by the AO and also made enhancement of Rs.16 lacs. Now, the assessee is in further appeal before us on these counts. 6.1. It was submitted by the ld.AR of the assessee that these expenses of Rs.9,99,009/- are allowable business expenditure which has been incurred from unaccounted income disclosed by the assessee and, therefore, should have been allowed. Regarding the enhancement of the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, the same is not allowable. But we find that as per paragraph No.5.7 of the order of the ld.CIT(A), the details of expenses incurred by the assessee of Rs.16 lacs for which disclosure was made during the course of survey is regarding purchases of Rs.11,67,594/-, carting expenses of Rs.1,97,647/-, development expenses of Rs.2,10,000/- and labour expenses of Rs.32,000/- totalling to Rs.16,07,241/-, whereas the assessee declared an amount of Rs.16 lacs in the course of survey. Hence, it cannot be said that these expenses of Rs.9.99 lacs were incurred in respect of this income of Rs.16 lacs declared by the assessee in the course of survey. This cannot also be inferred that the assessee in claiming any deduction in respect of amount of Rs.16 lacs which was declared by the assessee during the course of survey and, therefore, in our considered opinion, proviso to section 69-C of the Act is not applicable in respect of these expenses of Rs.9.99 lacs but at the same time, it is also required to be examined regarding the source of these expenses of Rs.9.99 lacs because if these expenses are not recorded in the books of accounts and the same is already paid, then its source of payment requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y selling plots on the basis of the statement of one of the partners by ignoring the explanation of the assessee that although talks were going for sale of ten plots but such sale did not materialize because the income tax survey took place at the same point of time. In the absence of any evidence having been brought on record by the AO regarding actual sale and actual profit, we are of the considered opinion that no such addition is justified. Moreover, the observation of the AO that this amount might have been utilized for the purpose of incurring expenditure made out of books is on the basis of conjectures and surmises. The AO ought to have brought on record some evidences in support of his finding. In view of above discussion, we hold that this addition is not called for because no evidence has been brought on record by the AO regarding actual sale of plots. Ground No.3 is allowed. 9. Regarding ground No.4, we find that this enhancement was made by the ld.CIT(A) on this basis that the amount declared by the assessee in the course of survey of Rs.16 lacs was in respect of expenses incurred by the assessee out of undisclosed sources but in the books of accounts the assessee had ..... X X X X Extracts X X X X X X X X Extracts X X X X
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