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2005 (10) TMI 421 - ITAT BANGALOREBusiness expenditure - Cash credits - Block assessment in search cases - unaccounted receipts of three incomplete projects - whether section 68 is applicable to any entry in document or whether document can be called as book - bribe payments. HELD THAT:- From the definition of undisclosed income, it is clear that income based on any entry in the books of account or document can be treated as undisclosed income. The Legislature in section 158B(b) has used the words ‘books of account or documents’. Hence these two words do not carry the same meaning. A document may necessarily be not a book of account. Section 68 is applicable to any entry credited in the books of account. Section 158BB(2) has not enlarged the application of section 68 to an entry credited in the document. Books of account are not defined in Income-tax Act and hence, the word is to be interpreted as it is understood in common parlance. As per decision of Punjab High Court in the case of CIT v. Kartar Singh [1970] 77 ITR 338 , books of account may include memorandum books. For the purposes of Explanation 5 to section 27(1)(c), books of account would mean these books of account whose main object is to provide credible data and information to file tax returns. Section 68 is a deeming provision and it is to be strictly interpreted. Applicability of section 68 cannot be enlarged. Hence, section 68 is not applicable in respect of any entry in document. The Assessing Officer at page 18 of the order has mentioned that he is adding Rs. 38,12,790 as these are credits in the documents maintained by the assessee and hence, treated as unexplained credits under section 68 of the I.T. Act. Such document cannot be treated as book and section 68 is applicable in respect of entry in book. Therefore, the Assessing Officer was not justified in including it under section 68 of I.T. Act. Keeping in view the discussion on the issue of addition, it is held that the Assessing Officer was not justified in including the same u/s 68 of I.T. Act as that section has no application for an entry credited in document particularly when the amount received has been considered as available for explaining the unaccounted expenses. The action of the learned CIT(A) in deleting the addition is confirmed. Bribe Payment - In the instant case, the seized material indicate that payments are bribe. Such payments are in contravention of provisions of prevention of Corruption Act. Shri Raja Datta vide question No. 54 was asked as to why such bribe payment be not disallowed. Shri Raja Datta has not rebutted in his answer that these payments were not bribe. He stated on 20-2-2002 in answer to question No. 54 that if I.T. Act does not permit allowance of such expenditure then he has no objection for adding the same to his undisclosed income. In view of such factual position that payments represented bribe and considering the Explanation to section 37(1), it is held that learned CIT(A) was not justified in allowing the expenses. On this issue, the order of CIT(A) is reversed and that of Assessing Officer is restored. Undisclosed income of the block period - In the instant case, the returned income is reflected from the books of account and sale of property stands disclosed by virtue of filing application u/s 230A. Such income as shown in return is not undisclosed income as defined in section 158B(b) and income also stands disclosed by way of filing return u/s 139(4). Section 158BB(ca) mentions that no return of income is filed. While in the instant case return of income has been filed u/s 139(4). Hence, on this issue order of CIT(A) is confirmed and grounds of Appeal Nos. 11 and 13 are dismissed. In the result, all the appeals are partly allowed.
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