TMI Blog2010 (4) TMI 1059X X X X Extracts X X X X X X X X Extracts X X X X ..... surrendered amount as deemed income based on irrelevant judgment and different facts. 3. That the lower authorities have illegally and arbitrarily created new head of income deemed income in as such as there is sea difference, between deemed income and deemed to be income as used u/s 5 and 69 of the Act. 4. That the cash of five lakhs surrendered in the absence of books has been illegally not treated as part of business income / income from other sources, against facts and law negating the fiction of law applied to non-income claims. 3. The brief facts of the case are that survey operations was carried out at the business premises of the assessee on 1.9.2005. During the course of survey, cash of ₹ 5 lakhs was found and the books of account for the year under consideration were found to be not complete upto date. The assessee surrendered additional income of ₹ 5 lakhs relating to Assessment Year 2006-07 and ₹ 10 lakhs relating to Assessment Year 2005-06. The assessee company was running into losses and after adjustments of additional income surrendered during the course of survey, net income for the year under consideration was declared at a loss of &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. It is further pointed out by learned AR that in Assessment Year 2005-06, the additional income offered by assessee was assessed as Business income. The learned DR placed reliance on the orders of authorities below. 5. We have heard the rival contentions and perused the records. The copy of the statement recorded by Survey team is placed at pages 2 to 9 of the paper book. The manager of the assessee company Shri Sandeep Monga replied as under:- Since the books have not been written up-to-date, no cash as per cash book is available. Cash found ₹ 5 lacs from the office my income from other sources. I do agree that there are certain repairs in factory building and flooring. Advance to employees of above Rs. One lac has not been recorded in the books as on 31.3.2005. Packing material of about 50,000/- has also been purchased outside the books of account. Two air conditioner / machinery and furniture etc. found during survey has also not been recorded in the books. There is one unsecured loan of ₹ 70,000/- in the name of Shri Ashok Kumar for which company has no liability to pay. After considering all the above deficiencies in documents and accounts and cash etc. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om business adjustable against the current losses of the business carried on by the assessee. The plea of the assessee is that the income surrendered during survey is income from business and adjustable against the business losses determined for the year. The alternate plea of the assessee is even if the said surrendered income is includible as income from other sources, setoff of current business losses is allowable u/s 71 of the Act. The Assessing Officer had included the income as deemed income u/s 69A of the Act and denied the benefit of setoff of current business losses u/s 71 of the Act. rel ying on the ratio laid down by Gujrat High Court Fakir Mohmed Haj Hasan in Vs. CIT (supra). 8. The Hon'ble Gujrat High Court in Fakir Mohmed Haj Hasan Vs. CIT (supra)had held as under:- It follows that the moment a satisfactory explanation is given about such nature and source by the assessee, then the source would stand disclosed and will, therefore, be known and the income would be treated under the appropriate head of income from assessment as per the provisions of the Act. However, when these provisions apply because no source is disclosed at all on the basis of which the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the statement recorded during the course of survey that the said additional income is its income from other sources. The Hon'ble Gujrat High Court in Fakir Mohmed Haj Hussain Vs C IT had held as under : The scheme of sections 69, 69A, 69B, and 69C of the Income-tax Act, 1961, would show that in cases where the nature and source of acquisition of Money, bullion, etc., owned by the assessee or the source of expenditure incurred by the assessee are not explained at all, or not satisfactorily explained, then the value of such investments and money or the value of articles not recorded in the books of account or the unexplained expenditure may be deemed to be the income of such assessee. In the absence of the explanation / evidence regarding the sources of the additional income being satisfactoril y explained by the assessee and appl ying the ratio of the Hon'ble Gujrat High Court in Fakir Mohmed Haji Hasan Vs. C IT (supra), we hold that the additional income offered is deemed income assessable u/s 69A of the Act and no deduction is allowable against such deemed income assessed u/s 69A of the Act in the hands of the assessee. Following the ratio laid down by the Gujr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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