TMI Blog2018 (11) TMI 1429X X X X Extracts X X X X X X X X Extracts X X X X ..... y the learned commissioner Appeals in para number 4.3.5 also we are not inclined to interfere in the orders of the lower authorities and therefore the addition of ₹ 2 lakhs is confirmed. Accordingly, ground number one of the appeal of the assessee is dismissed. Disallowance with respect to loss of two proprietary concerns - Held that:- AO found that machineries of Guthka were running in business premises of assessee on generator, these two facts goes a long way to show that the business of the proprietary concern is not closed. Further in this year, business income is taxed as a part of disclosure, then where from these income is generated other than these two proprietary business of the assessee, is not shown. It is also unfair to tax the income as business income, and not to grant benefit of losses resulting out of expenses of that income. In view of this, we are not inclined to uphold the orders of the lower authorities and therefore we direct the learned assessing officer to allow the loss because of business losses of the proprietary concern. In the result ground number two of the appeal of the assessee is allowed. Disallowance of expenses of personal nature - Held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - as the difference between the income surrendered and the income shown in the Return of income. 2. The ld CIT(A) has erred on facts and in law in confirming the disallowance made by the Assessing Officer of ₹ 2,09,901/- with respect to loss of two proprietary concerns. 3. The ld CIT(A) has erred on facts and in law in confirming disallowance of ₹ 53130/- held to be expenses of personal nature by the Assessing Officer. 3. The brief facts of the case are that there was a search under section 132 of the income tax act on Raj Darbar group of companies and its associates. Certain documents belonging to the assessee were seized, notice under section 143 (2) of the act was also issued on 30/8/2010. During the current year as it is stated that the assessee has closed its business along with his two proprietary concerns and incurred losses due to the fixed expenses to be incurred by the assessee in respect of current assessment year. The assessee has filed his return of income on 30/8/2010 declaring an income of ₹ 2977830/ . 4. During the post-search proceedings the assessee vide his letter dated 26/9/2008 addressed to the Deputy Director Of Income Tax ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ewellery. Further, the assessee has two proprietary concerns MM enterprise and Radha Ballabh Enterprise. Assessee has claimed loss incurred by these two business entities. The learned assessing officer noted that such losses are after the businesses are wound up and not allowable as there is any business during the year. The learned AO further disallowed ₹ 56134/- being expenses of personal nature. Consequently the assessment under section 143 (3) of the act was passed on 21/12/2010 determining the total income of the assessee at ₹ 5231684 against the returned income of ₹ 2977830/ . 6. Aggrieved, assessee preferred appeal before the Commissioner of income tax appeals, who deleted the addition of ₹ 1 787823/ on account of unexplained jewellery by granting the relief on account of CBDT instruction number 1916. None of the parties is aggrieved with it. However, He confirmed the addition of the addition of ₹ 2 lakhs because of difference in the disclosure of ₹ 35 lakhs and ₹ 33 lakhs disclosed in the return of income as undisclosed income. He also upheld the disallowance of the losses of the proprietary concern of ₹ 209901/- as the bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt s letter submitted which was part of statement under section 132 (4) of the act. Assessee surrendered ₹ 35 lakhs for assessment year 2009 10 and ₹ 2 lakhs for assessment year 2008 09. The assessee disclosed ₹ 35 lakhs but has not offered the same in the income tax return and did not give the reasons also for scaling down his disclosure to ₹ 33 lakhs. The learned commissioner Appeals has noted in para number 4.3.4 where the assessee has stated that he had sold of all the machinery to scrap dealers and there were no machineries with him, however the department found Guthka making machinery being operated with generator sets and raw materials as well as finished goods in the appellant s premises. In the statement dated 17/12/2000 , date the assessee admitted that he was not only having the such machinery but also surrendered ₹ 35 lakhs towards investment in the machinery and unaccounted income from the said activity for assessment year 2009 10 and ₹ 2 lakhs for assessment year 2008 09. This was also confirmed by submitting a letter dated 26/9/2008. Assessee also did not submit in the letter that why is he disclosing income and its applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... departmental representative vehemently supported the order of the learned lower authorities and stated that assessee has not carried on any business during the year and therefore the loss cannot be allowed. 14. We have carefully considered the rival contention and perused the orders of the lower authorities. In preceding year it was submitted that there is a substantial turnover with respect to both the entities and which are assessed to the income tax and further the Commissioner of income tax appeals in his appellate order passed on 5/2/2013 has accepted the business existence of the same two proprietary concern but also deleted addition,. Further in this year it was found that machineries of Guthka were running in business premises of the assessee on generator, these two facts goes a long way to show that the business of the proprietary concern is not closed. Further in this year, business income is taxed as a part of disclosure, then where from these income is generated other than these two proprietary business of the assessee, is not shown. It is also unfair to tax the income as business income, and not to grant benefit of losses resulting out of expenses of that income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s mentioned by the learned commissioner of income tax appeals in para number 4.5.3 of his order, we do not interfere in the finding of lower authorities on e disallowance of ₹ 5 6130 out of the total expenditure incurred by the assessee. In view of this ground number three of the appeal of the assessee is dismissed. 19. In the result ITA number 2129/Del/2015 for assessment year 2009 10 filed by the assessee is partly allowed. 20. ITA number 2130/ Del/ 2015 has been filed by the assessee against the order of the Commissioner Of Income Tax Appeals 24, New Delhi wherein the penalty levied under section 271AAA of ₹ 3.5 lakhs by the learned Deputy Commissioner Of Income Tax, Central circle 05, New Delhi vide order dated 24 /6/2011 is confirmed. Aggrieved with that order assessee has raised the following ground of appeal in ITA No. 2130/Del/2015:- 1. The ld CIT(A) has erred on facts in law in confirming the penalty of ₹ 3,50,000/- under section 271 AAA of the Income Tax Act, 1961. 2. The ld CIT(A) has erred on facts and in law in holding that the entire surrender was made by the appellant on account of incriminating evidences found during the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n any opportunity to disclose the manner of deriving the income as it was never asked to the assessee. He further stated that such question was never asked to the assessee during the course of assessment proceedings also. He further relied upon the decision of the honourable Delhi High Court in Principal CIT vs. Emirates Technologies Private limited 24. The learned departmental representative vehemently supported the orders of the lower authorities. He further stated that the levy of the penalty is mandatory when the assessee has disclosed the sum during the course of search. 25. We have carefully considered the rival contention and perused the orders of the lower authorities. Admittedly, the assessee has disclosed the sum of ₹ 35 lakhs during the course of search. However, it was not shown by the revenue that whether the assessee was given an opportunity to explain the source of the undisclosed income and specify the manner in which the undisclosed income, surrendered during the course of search, had been derived. Therefore, the issue is squarely covered in favour of the assessee by the decision of the honourable Delhi High Court in case of principal CIT vs Emirates ..... X X X X Extracts X X X X X X X X Extracts X X X X
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