TMI Blog2014 (2) TMI 786X X X X Extracts X X X X X X X X Extracts X X X X ..... addition is already made to the income of the assessee and apart from that there is no other cogent evidence which necessitates lump sum addition - The assessee made the disclosure voluntary and AO had not brought on record any evidence for estimating income at Rs.20,00,000/-. The difference into cash book worked out to Rs.13,62,259/- thus, the CIT(A) was right in upholding the addition of Rs.13,62,259 – Decided against Assessee. Disallowance u/s 40(a)(ia) of the Act – Legal and professional expenses, office rent and commission to others - Held that:- CIT(A) held that the assessee could not give any reasons as to why no TDS has been made from the payment of legal and professional fees, office rent and commission to others - As no TDS is made from the expenditure, provisions of Sec 40a(i)(a) of the Act is directly applicable - the word payable used in the section does not at all mean that there should be any outstanding amount at the end of the year & there is no legislative intent to disallow only the outstanding amount - The assessee had not deducted TDS on above amount, but had claimed as expenditure - As per Section 40(a)(ia), this expenditure is not allowable - The CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Appeals) has erred in confirming the action of the Assessing Officer in rejecting book result by invoking provisions of section 145(3) of the Act. 2. On the facts and circumstances of the case as well as law on the subject, the learned CIT (Appeals) has erred in partly confirming the addition of Rs 13,62,259/- out of Rs. 20,00,000/- made by Assessing Officer on account of unexplained expenditure. 3. On the facts and circumstances of the case as well as law on the subject, the learned CIT (Appeals) has erred in confirming the action of Assessing Officer in making disallowance of Rs. 5,26,811/- u/s 40(a)(ia) of the Act. 4. On the facts and circumstances of the case as well as law on the subject, the learned CIT (Appeals) has erred in confirming the action of Assessing Officer in making disallowance of Rs. 1,58,216/- u/s 40A(3) of the Act. 5. On the facts and circumstances of the case as well as law on the subject, the learned CIT (Appeals) has erred in confirming the action of Assessing Officer in making disallowance of Rs. 30,200/- on account of donation. 6. On the facts and circumstances of the case as well as law on the subject, the learned CIT (Appeals) has erred in pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ri Bharatbhai Choksi one of the partners of the firm was recorded on 28.03.2006 in connection with the action u/s.133A of the IT Act. Shri Bharatbhai Choksi was out of India for the business purpose on 10.03.2006, that is date of survey. The A.O. had reproduced the relevant part of the statement on page nos. 7 to 15. Further, on 28.03.2006, the statement of Shri Bharatbhai choksi was recorded which also had been reproduced by the A.O. on page no.15. The assessee submitted his reply vide letter dated 26.12.2008 before the A.O. During the course of survey, the assessee had disclosed an additional income Rs.13,63,259/- for taxation purposes. The books of account maintained without proper supporting evidence. As found during the course of survey at 7/4622, Prakash Talkies Compound, Station Road, Surat, was inventoried as per Annexure 1 to 6, which were not impounded u/s. 133A of the IT Act by the A.O. The same has not been produced by the assessee at the time of assessment proceeding. Therefore, the A.O. rejected the book result u/s. 145 of the IT Act. 4. Being aggrieved by the order of the A.O., the assessee carried the matter before the CIT(A) who has confirmed the action of the A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sustained considering the fact that for violation of TDS provisions separate addition is already made to the income of the assessee and apart from that there is no other cogent evidence which necessitates lump sum addition to the extent of Rs. 20,00,000/-. Hence addition is confirmed to the extent of Rs. 13,62,259/- and the balance addition of Rs. 6,37,741/- is directed to be deleted. 9. Now the assessee is before us. Ld. Counsel for the assessee submitted that the modus operandi has been explained by the assessee during the course of survey proceeding as well as during the course of assessment proceeding. It is true that assessee maintained manual cash book and after sometime cash book on computer was mentioned on the basis of actual expenditure voucher received by it. These facts had been admitted by the partner in the statement recorded after dated of survey u/s. 131 of the IT Act. On that basis, the assessee has surrendered additional income of Rs.13,62,259/-. The ld. Sr. D.R. supported the order of the A.O. and submitted that the ld. A.O. reasonably estimated the income on the basis of discrepancy found during the course of survey proceeding. 10. We have heard the rival c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A). 14. We have heard the rival contentions and perused the material on record. It is admitted fact that assessee had not deducted TDS on above amount, but had claimed as expenditure. As per Section 40(a)(ia), this expenditure is not allowable. The ld. CIT(A) examined this issue thoroughly and confirmed the addition. In assessee s case, the income has not been estimated u/s. 144 but determined after detailed scrutiny of the impounded documents as well as statement of the partner. The case laws cited by the assessee are not squarely applicable. Thus, this ground of assessee s appeal is dismissed. 15. Ground no.4 of assessee s appeal is against confirming the action of A.O. in making disallowance of Rs.1,58,216 u/s. 40A(3) of the Act. The A.O. found that assessee incurred the expenditure in cash on various dates to the tune of Rs.7,91,080/-. Therefore, he disallowed 20% on above expenses at Rs.1,58,216/-. On appeal, ld. CIT(A) held that the assessee could not explain the reasons to make cash payments. Thus, he confirmed the addition made by the A.O. Before us, ld. A.R. for the assessee simply argued that when the A.O. made estimation of income, the other disallowance cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Rs.45,27,670/-. However, on verification of the cash book maintained manually impounded during the course of survey the cash balance has been shown at Rs.3,99,493/- as on 31.03.2005. Therefore, it was held that the cash of Rs.41,28,177/- had been brought in the books of account as unexplained and the same was added in the income of the assessee. On appeal, the ld. CIT(A) deleted the addition by observing as under: I have carefully considered the submissions made by the appellant and also the reasons given by assessing officer. After carefully going through the same, I am unable to understand as to how such addition can be made for the alleged difference by holding that the same represents unexplained cash introduced in the books of account. This is so because assessee has already shown cash balance of Rs. 45,27,670/- in the audited balance sheet as on 31.03.2005. As against this, cash balance as on 01/04/2005 in the manual cash book found during the course of survey is only Rs. 3,99,493/- i.e. the same is much lower then the cash balance which is already shown in the books of accounts. Now when the balance as per manual cash book is much lower than the balance as per the audit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s seen that one of \he major reason for the above difference is that whenever there is higher cash balance on certain days in the office premises, the partners used to carry the same at home at the end of day and entry for the same is passed only in the manual cash book and not in the main cash book as the said amount does not represent actual withdrawal of the partners. This is again corroborated from the fact that assessee made deposit in the bank account after the date of survey in order to explain the issue partner of assessee firm pointed out this fact in reply to Q-25 in his statement recorded u/s 131 of the Act. The assessing officer has also failed to rebut the above contentions of assessee as nothing has been brought on record which indicates that cash deposited in the bank account was not forming part of cash balance as per the regular cash book maintained in computer. In any case, I am of the considered opinion that there is neither any case of unexplained introduction of cash nor any inflation of expenditure. As such there is no reason for making such addition of Rs. 41,28,177/-. Hence, the same is directed to be deleted. 19. Now the Revenue is before us. Ld. Sr. D ..... X X X X Extracts X X X X X X X X Extracts X X X X
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