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TMI Blog2018 (10) TMI 2014X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,21,377/- made by the Assessing Officer for alleged undisclosed income out of entries in loose papers found on survey by ignoring explanation of the appellant and without considering the facts of the case properly and judicially. 2. In the facts and circumstances of the case, Commissioner of Income-tax (Appeals)'s action of confirming the addition to the extent of Rs. 76,617/- is totally unjustified and uncalled for. The CIT (Appeals) should have deleted the entire additions of Rs. 1,21,377/-. 3. In the facts and circumstances of the case, Commissioner of Income-tax (Appeals) erred in confirming disallowance of Rs. 3,53,966/- made by the Assessing Officer out of remuneration paid to the partners by ignoring explana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in addition to its regular income. On verification of accounts the A.O. noted that as against the total sum of Rs. 45,01,396/- the assessee has included an amount of Rs. 40,01,396/- only in the accounts and retracted from surrender of Rs. 5,00,000/- made on account of entries in the loose papers. The assessee's contention was that the disclosure was made by brother of one of the partners who looks after the business in absence of the partner and that the disclosure in respect of excess cash, excess stock and investment on renovation of office was correctly made and he was not well aware of the business affairs. However, the Assessing Officer observed that the explanation filed by the Assessee in respect of the entries appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition/disallowance:- Particulars Amount (Rs.) Addition for alleged undisclosed income out of entries in loose papers found on survey 1,21,377.00 Disallowance out of remuneration paid to partners by following decision of Hon'ble CG High Court reported in 339 ITR 651 3,53,966.00 TOTAL 4,75,343.00 4. Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee. 5. As regards to Ground No. 1 and 2, the Ld. AR submitted that in the business premises of the assessee, survey proceedings u/s 133A was conducted on 23.09.2009. During the course of survey proceedings both the partners were out of station and survey proceedings were represented by Pravin Sard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he CIT(A) as well as Assessing Officer. 8. We have heard both the parties and perused the material available on record. As regards to Ground Nos. 1 & 2, it is pertinent to note that the CIT(A) has made categorical finding that the Assessing Officer made disallowance of Rs. 1,21,377/- after going through the loose papers and discussing about each claim in the assessment order. But the CIT(A) ignored the fact that during the course of survey proceedings both the partners were out of station and survey proceedings were represented by Pravin Sarda (brother of one of the partner Anil Sarda) in their absence and his statement was recorded by the Department to know sources of various discrepancies found on survey. In answer to question No.& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incorporated in the books of account of Rs. 40,01,396/- as not come within the ambit of book profit in terms of Section 40(b) of the Act and held it as assessable as deemed income u/s 69 of the Act. The Assessing Officer has ignored the fact that the assessee firm had given the detailed submission as to why income surrendered on survey as business income. In fact in gross total income of Rs. 37,28,836/-, the assessee firm in computation of total income for A.Y. 2010-11 disclosed the surrendered amount of Rs. 40,01,396/-. As far as the decision cited from the side of the Revenue and relied by the CIT(A) in the order that of the decision of the Hon'ble CG High Court in case of "Danush General Stores Vs. CIT 339 ITR 651 is co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se. ...... 8. In the light of the above detailed discussion, we are of the considered opinion that this issue has been dealt by several courts and tribunals and examined all the legal angles and thereupon came to the conclusion that in a situation when the excess stock was detected during the course of survey and the value of the excess stock was declared by the assessee in the return of income by incorporating the same in the profit and loss account, then such income was to be treated as business income for the purpose of computation of "Book Profit" as prescribed under Section 40(b)(v) to compute the remuneration to partners. We, therefore, conclude that the learned CIT(Appeals) has rightly allowed the claim to the assessee. Finding ..... X X X X Extracts X X X X X X X X Extracts X X X X
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