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2013 (4) TMI 918 - HC - Income Tax

Issues: Appeal against Income Tax Appellate Tribunal judgment on disallowing cash receipt addition and expenses under section 40A(3) of the Income Tax Act.

Cash Receipt Addition Issue:
The primary issue was the addition of Rs. 1.67 crores towards unaccounted cash receipts by the Assessing Officer. The appellant contended that the entries in question belonged to another firm, Suraj Builders, and were duly reflected in their books of accounts. The CIT(Appeals) deleted the additions after considering various evidences and remand reports, concluding that the transactions were indeed related to Suraj Builders. The Tribunal upheld this decision, noting that the entries were recorded in the regular books of account of Suraj Builders, and no addition could be made in the hands of the present assessee. The High Court concurred, stating that no question of law arose as the appellant had successfully established the connection to Suraj Builders through additional evidence.

Expenses under Section 40A(3) Issue:
Regarding the disallowance of expenses under section 40A(3) of the Income Tax Act, the Tribunal affirmed the CIT(Appeals)' decision to delete the additions made by the Assessing Officer. The disallowance was related to cash payments noted in the impounded diaries, which were found to be transactions of M/s. Suraj Builders and not of the assessee. As such, the Tribunal concluded that no addition could be made in the hands of the present assessee. The High Court dismissed the Tax Appeal, stating that no question of law arose in this respect as well, given the factual findings and evidence presented.

In conclusion, the High Court upheld the decisions of the CIT(Appeals) and the Tribunal, ruling in favor of the appellant on both the cash receipt addition and expenses under section 40A(3) issues.

 

 

 

 

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