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2016 (10) TMI 97 - MADRAS HIGH COURT

2016 (10) TMI 97 - MADRAS HIGH COURT - [2016] 388 ITR 148 - Double addition made over and above the income offered and taxable under any of the provisions of the Income Tax Act - sworn statement recorded from the assessee during survey operations - Held that:- In the instant case, the statement of the assessee during the survey operations, no doubt, could have been made due to duress or stress of the very operations, but however, the circumstance which could be taken note therefrom is that there .....

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income. When expenditure in cash is incurred, receipts/vouchers have got to be maintained accurately and the same will have to be produced for acceptance of the assessing officer. No explanation is forthcoming as to why an expenditure to the tune of ₹ 6 lakhs, has been shown to have been incurred for the first time during the relevant assessment year towards the payment of commission, while similar expenditure was not reflected at all in the preceding four years, particularly, when there .....

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come Tax JUDGMENT (The Judgment of the Court was delivered by Nooty.Ramamohana Rao,J) This appeal is preferred by the assessee under Section 260-A of the Income Tax Act, against the order passed by the Income Tax Appellate Tribunal, A-Bench, Chennai on 12.02.2014, allowing the appeal preferred by the Revenue before it. 2. The substantial questions of law that have been raised for consideration in this appeal are as follows: "(i) Whether on the facts and circumstances of the case, the order .....

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02.2008, survey operations were carried out at the business premises of the assessee under Section 133-A of the Income Tax Act. During the course of answering the questionnaire, the assessee offered to return additional income for ₹ 15 lakhs. But however, the total income in respect of which the Return was filed by him, fell short of the said amount. Right at this stage, it will be relevant for us to notice the following from the sworn statement recorded from the assessee during survey ope .....

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d I don't have any kind of record, and hence I could not tell the quantum of expenses in cash for the period from 1.4.2007 and 27.2.2008. Apart from this I don't have any other record. For Gautham Pharma I am not maintaining regular Day Book and ledger required under income tax Act either in computer or manually. Q.No.16: In the answers to Q.No.6, you have staed that there is no records for the expenses incurred from 1.4.2007 to 27.2.2008 and also quantum of expenses incurred, and you ha .....

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only) as income over and above the regular income and pay tax on this sum." 4. From the above statement, it is more than clear that the assessee has offered voluntarily ₹ 15 lakhs as income over and above the regular income. But however, he has booked certain expenditure in the immediate aftermath of the survey operations carried on 27.02.2008 and claimed that because of the expenditure thus incurred, the net income has come down, though he did include ₹ 15 lakhs increase in th .....

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essee. 5. Against the above order of assessment, an appeal was carried to the Commissioner of Income Tax (Appeals), who by his order dated 17.01.2013, has allowed the appeal partly. Insofar as the additions made by the assessing officer by disallowing the inflated expenditure, the CIT (Appeals) reversed the same upon the following reasons: "11.2. I had gone through the submissions made by the AR and the observations of the AO. It is a fact admitted by the assessee during the course of surve .....

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h and every item of expenditure debited to the P&L account, especially an estimated amount is admitted as additional incomes. In a sense where the additional incomes over and above the regular income were offered, the AO cannot go into the details of the expenditures as book results gets submerged under the provisions of S.145. Hence the additions cannot be sustained." 6. Hence, the Revenue went before the Income Tax Appellate Tribunal, which by its order, dated 12.02.2014, allowed the .....

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has said the following, which would be relevant for our inquiry: " .... For expenses incurred I don't have any kind of record, and hence I could not tell the quantum of expenses incurred in cash for the period from 1.04.2007 to 27.02.2008. Apart from this, I don't have any other record .... I am not maintaining regular Day Book and ledger required under the Income Tax Act either in the computer or manually...." 9. From the above statement of the assessee, it becomes clear that .....

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sessee voluntarily is in respect of filing Return with regard to ₹ 15 lakhs over and above the regular income. This is the reason why, to ascertain the quantum of regular income, normally that can be expected in respect of the Return filed by an assessee for the relevant assessment year, the assessing officer will look into the Returns of the immediately preceding four years period. From that, it has emerged that the gross turnover for the four preceding years, was shown to the tune of  .....

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sed some of the expenditure said to have been incurred in cash, for the relevant assessment year, and added it to the taxable income. 12. The order passed by the assessing officer has contained adequate reasons as to why he has discredited the expenditure incurred in cash. When the expenditure has been booked in the post-27.2.2008 period, upto 31.03.2008, it has not inspired enough confidence in the assessing officer's mind, for it, to pass the muster, whereas, the CIT (Appeals) has not look .....

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commission in cash, which was considered by the assessing officer, is booked to nullify the offer of additional income of ₹ 15 lakhs. Further, during the course of assessment, no receipts had been produced by the assessee, on his own showing as of 27.02.2008, there are no records/registers maintained by the assessee with regard to the cash payments made. Therefore, the finding of the assessing officer is that there are no proper books of accounts maintained by the assessee and hence, it is .....

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rference at our hands. 13. Perversity, as is too well known, is a factor which vitiates any exercise, legal or otherwise, determinative of the rights and obligations of the parties. Broadly understood, the concept of perversity, would mean all the facts possibly leading to one inference/conclusion, and if an opposite inference/conclusion is drawn, then any such exercise can be called as a result of perversity. Further, upon considering the same material, if no reasonable body of men would have r .....

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