9911796707
TMI Blog2019 (12) TMI 1078X X X X Extracts X X X X X X X X Extracts X X X X ..... , the facts of the case are that the assessee was subjected to survey action u/s.133A of the Income-tax Act, 1961 (hereinafter called 'the Act') on 13-03-2007. In the course of survey, statement of the partner was recorded. In response to question nos.7, 8, and 10, he made a declaration of income to the tune of Rs. 56.00 lakh, comprising of Rs. 26.00 lakh towards unexplained business promotion expenses; Rs. 25.00 lakh towards unaccounted receipts; and Rs. 5.00 lakh towards other omissions and errors. However, the return was filed with the additional income of Rs. 17.00 lakh. The Assessing Officer (AO) made addition of Rs. 39.00 lakh (Rs. 56.00 lakh - Rs. 17.00 lakh) on the ground that the assessee ought to have declared the income offered d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id any possible litigation & to buy peace of mind 5,00,000 Total 16,71,000 Income offered (rounded off to the nearest Rs. 1,00,000/-) 17,00,000 6. It can be seen from the above chart that the assessee offered Rs. 10,71,000/- on account of unaccounted investment in residential flat, which has no connection with the surrender of Rs. 56.00 lakh made by the assessee in total. Obviously, this amount ought to have been included by the assessee in the return. Thereafter, there is an item of Rs. 26.00 lakh, which was on account of business promotion expenses admitted by the assessee at the time of survey incurred in the shape of commission paid to certain parties who were bringing in customers for the assessee's hotel business. The assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excess of one over the other, which can be charged to tax. Adverting to the facts of the instant case, it is seen that there is net outflow of Rs. 1.00 lakh which calls for addition in as much as the assessee received business receipt of Rs. 25.00 lakh outside the books of account and also spent business expenses of Rs. 26.00 lakh outside of the books of account. The payment of commission to certain persons for fetching customers has direct relation with the running of Hotel business from which unaccounted receipts of Rs. 25.00 lakh were earned. Further, the payment of commission is a normal incidence of business and is not hit by Explanation 1 to section 37(1) of the Act. Once this is the position, we fail to appreciate as to how any addi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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