TMI Blog2010 (1) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... nal that the amounts in question represent the amount paid by the assessee to its employees in AY 1998-99 cannot be faulted. Consequently, the first question raised by the revenue cannot be said to give rise to any substantial question of law. - once the cash withdrawal of Rs.5 lacs from the bank by the assessee is established, irrespective of the entry in the cash book, it was possible to reasonably hold that out of the cash withdrawal of Rs.5 lacs, an amount of Rs.4 lacs was given to cashier Mr. Desai. In such a case, it cannot be said that the decision of the Tribunal is perverse or contrary to the evidence on record. - when the assessee has been claiming deduction under section 80IA even on goods manufactured from outside agencies, there is no reason to suspect that the assessee would suppress the above facts in the assessment years in question and consequently make disallowance under section 80IA of the Act in the block assessment order.- Revenue appeal dismissed. - 541 OF 2009 - - - Dated:- 22-1-2010 - Dr. D.Y. Chandrachud J.P. Devadhar, JJ. Mr.Abay Ahuja for the appellant. Mr.Deepak Tralshawala with Mr.V.S. Hadade for the respondent. JUDGEMENT Per J.P. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ank as well as prerecorded audio cassettes of motion pictures and musical software under the trade name and logo `TIPS'. The business premises of the assessee are situate at Andheri, Palghar, Silvassa etc. 4. A search and seizure action under section 132 of the Income Tax Act, 1961 (1961 Act for short) was initiated at the business premises of the assessee as well as the residential premises of the assessee's group concerns on 27th July 1999. During the course of search, loose papers (23 pages) concealed behind a photoframe were seized from the residence of Shri Kumar Taurani, a director of the assessee Company. The seized papers, prima facie related to the unaccounted business transactions of Shri Kumar S. Taurani, Shri Ramesh S. Taurani, Tips Films Private Limited and Tips Industries Private Limited. 5. During the course of search, statement of Ramesh S. Taurani, director of the assessee company, was recorded wherein the said Mr. Ramesh S. Taurani admitted that the transactions noted in the seized papers were not recorded in the regular books and that the transactions noted in the seized papers related to the period rom January to March 1998. 6. In the light of the seized m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure which is deemed to be the income of the assessee cannot be allowed as a deduction under any head of income if the assessee fails to explain the source of such expenditure. It is contended that to overcome this difficulty, the assessee has sought to claim that the expenditure was incurred during A.Y. 1998-1999 without any justification. 11. Relying upon a decision of the Calcutta High Court in the case of C.I.T. V/s. Bhagwati Developers P. Limited reported in 261 ITR 658 (Cal), it is contended on behalf of the revenue that in the present case, since the assessee has failed to explain, satisfactorily the source of unaccounted expenditure, the additions made were proper and the Tribunal ought not to have deleted the additions made by the assessing officer. Reliance is also placed by the counsel for the revenue on the decision of this Court in the case of Rameshchandra Co. V/s. C.I.T. [168 ITR 375 (Bom)], decision of the Karnataka High Court in the case of C.I.T. V/s. P.R. Metrani HUF [251 ITR 244 (Karnataka)], decision of the Kerala High Court in the case of Kunhambu (v) Sons V/s. CIT [219 ITR 235 (Ker)] in support of his contention that the statements recorded during th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition on the basis that the unaccounted expenditure was incurred out of the unaccounted income, it was not open to the assessing officer to hold that the source of expenditure was not explained, especially when the seized papers itself contain the names of the persons who are claimed to be the employees of the assessee. Moreover, admittedly the unaccounted expenditure noted in the seized papers relates to the assessee as well as Tips Films Private Limited. In the case of Tips Films Private Limited, the assessing officer has accepted the contention of the assessee therein that the said expenditure relates to A.Y. 1998-1999. Therefore, there was no reason for the assessing officer to hold that in the case of the assessee the unaccounted expenditure was incurred in A.Y. 1999-2000. The fact that the assessing officer, in the case of Tips Films Limited has recorded a finding that the expenditure was incurred for the purposes of business in AY 1998-99 cannot be said to be distinguishing feature so as to hold that in the case of the assessee the expenditure was incurred in AY 1999-2000. In other words, in the absence of any material on record, it was not open to the A.O. to hold tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the addition of Rs.4 lacs made by the assessing officer. 18. We see no merit in the above contentions. As rightly held by the Tribunal, the statement recorded during the course of search does not even remotely suggest that the amount given to Mr.Desai (cashier) was out of the undisclosed income of the assessee. What was stated during the course of search was that the notings on page 7 of the seized papers represent amounts given to various persons. Therefore, once the cash withdrawal of Rs.5 lacs from the bank by the assessee is established, irrespective of the entry in the cash book, it was possible to reasonably hold that out of the cash withdrawal of Rs.5 lacs, an amount of Rs.4 lacs was given to cashier Mr. Desai. In such a case, it cannot be said that the decision of the Tribunal is perverse or contrary to the evidence on record. In any event, the decision of the Tribunal does not give rise to any substantial question of law. 19. The fourth question relates to deletion of the addition of Rs.68 lacs made on the basis of the notings contained in Page 13 of the seized paper which reads thus:" "Page 13 - Ravi 21/4 11.00 22/04 05.00 24 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the books maintained by the assessee. There is no material on record to suggest that over and above the agreement dated 27-4-1999, the assessee had entered into an agreement with Weston Components Ltd. or any other person which could be connected to the notings contained in the seized paper. In these circumstances, the explanation given by the assessee being reasonable and possible, the decision of the Tribunal in accepting the contention of the assessee cannot be faulted. As held by the Apex Court in the case of P.R. Metrani V/s. CIT (287 ITR 209), the presumption under Section 132(4A) is a rebuttable presumption and in the present case, the assessee has successfully rebutted the presumption. In these circumstances, the fourth question raised by the revenue cannot be said to be a substantial question of law arising out of the order of the Tribunal. 22. The last question raised by the revenue relates to the Tribunal deleting the proportionate disallowance of deduction under Section 80IA of the Act made by the A.O. On verification of the seized papers, the A.O. noticed that the assessee was at times getting the manufacturing work done on job work basis from other units. The as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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