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2016 (4) TMI 911 - ITAT VISAKHAPATNAM

2016 (4) TMI 911 - ITAT VISAKHAPATNAM - TMI - Addition towards additional income declared during the course of search - Held that:- The additional income admitted by the assessee during the course of search is not supported by any material evidences gathered during the course of search. Though assessee admitted additional income of ₹ 18,28,000/- by stating that the income is offered to cover up inconsistencies in the past, the assessee has declared the said income in the hands of the T Ram .....

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by the AO. Therefore, we set aside the order passed by the CIT(A) and direct the A.O. to delete the additions. - Decided in favour of assessee

Disallowance of income tax payable - A.O. was of the opinion that income tax is not a allowable deduction under sec. 40(a)(ii) - Held that:- Admittedly, the assessee has estimated the income from construction project on estimation basis. To arrive at the income from the project, the assessee has prepared a P&L account and as per the financial .....

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ditions made by the A.O. We do not see any error or infirmity in the order passed by the CIT(A). - Decided against assessee - ITA No. 328/Vizag/2012 - Dated:- 18-3-2016 - V. Durga Rao, JM And G. Manjunatha, AM For the Appellant : Shri C Subrahmanyam, AR For the Respondent : Shri G Guruswamy, DR ORDER Per G. Manjunatha, Accountant Member This appeal filed by the assessee is directed against the order of CIT(A)-1, Hyderabad dated 26.6.2012 and it pertains to the assessment year 2008-09. 2. The bri .....

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veals that the assessee has suppressed sales turnover. When these seized documents were confronted to the assessee, the Managing Director of the Company admitted undisclosed income of ₹ 1,30,00,000/-. Accordingly, filed a letter dated 9.5.2008 and agreed to disclose undisclosed income of ₹ 65 lakhs in the name of M/s. Livewell Estates Pvt. Ltd. and a sum of ₹ 19,20,000/- in the name of M/s. Livewell Constructions Pvt. Ltd. and a further sum of ₹ 18,28,000/- was offered to .....

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0/-. The case has been selected for scrutiny and accordingly, notices u/s 143(2) and 142(1) of the Act along with questionnaire were issued on 29.1.2010. In response to notices, the authorized representative of the assessee appeared from time to time and filed the information called for. During the course of assessment proceedings, the A.O. noticed that the assessee has admitted undisclosed income of ₹ 18,28,000/- towards other inconsistencies took place in the past, however no such income .....

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ring the course of search proceedings, the group as a whole has admitted undisclosed income of ₹ 1,30,00,000/- and accordingly filed revised return as per the letter filed, subsequent to the date of search. The assessing officer after considering the explanations furnished by the assessee made additions of ₹ 18,28,000/- to the returned income. While doing so, the A.O. held that during the course of search, the assessee has admitted additional income in the hands of the company for th .....

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refore, the explanation offered by the assessee cannot be accepted and accordingly made additions of ₹ 18,28,000/-. 4. During the course of assessment proceedings, from the profit & loss account filed by the assessee, the A.O. noticed that the assessee has claimed ₹ 11 lakhs expenditure towards income tax payable. Therefore, asked to explain the nature of expenditure debited in the P&L account and also why the same should not be disallowed u/s 40(a)(ii) of the Act. In reply t .....

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tax payable of ₹ 11 lakhs and added to the total income of the assessee. While doing so, the A.O. held that income tax paid or payable is not an allowable deduction u/s 40(a)(ii) of the Act. Though, assessee admitted the income on estimation basis, the profit & loss account filed by the assessee showing the complete financial results cannot be ignored. In the said profit & loss account, the assessee has clearly stated expenditure incurred for the year under consideration. On perus .....

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tions furnished by the assessee confirmed the additions made by the A.O. and dismissed the appeal filed by the assessee. Aggrieved by the CIT(A) order, the assessee is in appeal before us and raised the following grounds: 1. The orders passed u/s 143(3) r w 153C of the IT Act are contrary to the facts of the case and provisions of law. 2. The issue of notice u/s 153C of the IT Act and completion of the assessment thereto is legally not tenable in the absence of any incriminating material for dra .....

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ation was accepted by the lower authorities. 5. For these and other reasons that are to be urged at the time of hearing of the case, the appellant prays that the additions made by the assessing officer and sustained by the learned Commissioner of Income Tax(A) are against the facts of the case and provisions of law and the same needs to be deleted in the interest of justice. 6. From the ground nos.1 & 2, the assessee has challenged the validity of the assessment proceeding u/s 143(3), r.w.s. .....

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h regard to the additions of ₹ 18,28,000/-, as this amount factually and legally has not been received or accrued during the assessment year under consideration. The A.R. further submitted that the disclosure given during the course of search and consequent letter filed on 9.5.2008 signed by Shri T. Ramakrishna on behalf of Livewell Group as a whole, but not on behalf of Livewell Construction Pvt. Ltd., therefore, the additional income disclosed in the name of T. Ramakrishna (HUF) towards .....

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/- was offered in the name of Shri T. Ramakrishna (HUF). In the statement given u/s 132(4) of the Act, the assessee nowhere stated that the additional income of ₹ 18,28,000/- will be offered in the name of company. The assessee admitted the additional income without any seized material, so as to cover up any other discrepancies took place in the past in the case of group concerns. Therefore, the A.O. was not correct in coming to the conclusion that the additional income disclosed during th .....

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of search, the Managing Director of the company Shri T. Ramakrishna has deposed a statement u/s 132(4) of the Act and admitted additional income of ₹ 1,30,00,000/- and accordingly, filed letter dated 9.5.208. As per the said letter, the assessee has admitted undisclosed income of ₹ 1,30,00,000/- and agreed to disclose the income for the assessment year 2005-06 to 2007-08. As per the disclosure made during the course of search, the assessee admitted an additional income of ₹ 1, .....

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y and also it pertains to the business transactions. But, assessee claimed to have admitted the undisclosed income in the name of Shri T. Ramakrishna (HUF), which cannot be accepted. It was the contention of the assessee that the undisclosed income offered during the course of search is not on account of discrepancies in the books of accounts of the company, however, the additional income offered to cover up any inconsistencies took place in the past which has had the cascading effect. The asses .....

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On perusal of the statement recorded u/s 132(4) of the Act, we find that the assessee has admitted undisclosed income of ₹ 1,30,00,000/- and given details of such income and also specified the names of firms and companies in whose hands the income will be offered, except for the impugned addition of ₹ 18,28,000/-. During the course of search, in the statement u/s 132(4), the assessee has stated that during the financial year relevant to assessment year 2008-09, a sum of ₹ 18,2 .....

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dmitted additional income of ₹ 18,28,000/-. On perusal of such revised return, we find that the assessee has declared short term capital gain of ₹ 16,36,870/- and income from other sources of ₹ 1,91,130/- and also appended a note in the return of income filed stating that as per the declaration given on 9.5.2008 at the time of search, the income was offered in the hands of the HUF. We find force in the arguments of the assessee for the reason that it was not the case of A.O. th .....

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undisclosed income. As stated by the AO, the addition is solely based on statement recorded u/s 132(4) of the Act. The assessee relied upon the circular issued by the CBDT vide circular no.286/98/13 dated 18.12.2014. The CBDT vide above circular instructed its all officers that no undisclosed income should be taken under coercion or undue influence. Any admission of undisclosed income should be based on evidences gathered during the course of search or survey. 10. In the present case on hand, on .....

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are of the opinion that the A.O. was not correct in making separate additions of ₹ 18,28,000/-, when assessee has admitted the income in the hands of Shri T. Ramakrishna(HUF). The CIT(A) failed to appreciate the fact that the undisclosed income offered during search, was admitted in the hands of T Ramakrishna (HUF). The CIT(A), without appreciating the proper facts, confirmed the additions made by the AO. Therefore, we set aside the order passed by the CIT(A) and direct the A.O. to delete .....

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the contention of the assessee that the income from the project was offered on estimation basis, therefore, no separate additions can be made to any item of expenditure debited in the profit & loss account, when income is estimated. The assessee further submitted that during the course of search proceedings, the Managing Director of the company has admitted income of ₹ 19,20,000/- from construction project and accordingly, filed the return. During the course of assessment proceedings, .....

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