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TMI Blog1989 (5) TMI 149X X X X Extracts X X X X X X X X Extracts X X X X ..... g debits on the exact dates in the books of accounts which were seized. In the course of assessment, the ITO mentioned that the assessee had stated that there were expenditure to the extent of about of Rs. 2,90 lakhs towards supply of materials and Rs. 2.36 lakhs towards wages which could not be traced by way of debits in the cash and bank accounts. There were also certain other debits. The ITO enquired of the assessee about the source of the expenditure of Rs. 6,90,231. The assessee contended that he had borrowed Rs. 3.25 lakhs from his father-in-law Shri.Kasirajan but after examining Shri Kasirajan, the ITO was of the view that the father-in-law could not have advanced the amounts. The ITO, in the course of the assessment order, had menti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t profit of 16.19% in the Housing Board Contracts before allowing depreciation and interest, which was an unusually high profit, the CIT(A) considered that a portion of the expenditure of Rs. 6,90,231 was to be apportionable between Housing Board Contract and unaccounted theatre expenditure. He determined such figure at Rs. 1 lakh as relating to Housing Board Contract and directed exclusion of the same. Having regard to the ratio of the decision of the Ahamedabad Bench of the Tribunal, the Commissioner (A) eventually upheld the inclusion of the balance of Rs. 5,90,231. 6. The assessee contests the addition retained of Rs. 5,90,231. The Department its cross objection consists the deletion of Rs. 1 lakh. The Grounds taken in the cross object ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this was evidenced by the valuation independently made by the Valuation Officer, a copy of which was not given to him on the plea that it would be supplied if it was to be used against the assessee. Therefore, the full amount of Rs. 6,90,231 will relate only to the Housing Board Contracts and the deduction to be allowed by the CIT(A) should have been the full amount. He also submitted that it was possible to link specifically some more items as relating to Housing Board Contracts out of the 15 items which aggregated to Rs. 6,90,231. In view of the contentions adduced by the learned counsel for the assessee and in view of the contentions raised in the cross objections by the Department and since the valuation report has not been made availab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... offered by him is not, in the opinion of the ITO, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year." The gist of the decision of the Tribunal in (1986) 19 ITD 306 was that an explained expenditure had to be added with reference to the provisions of s.69C but where such unexplained expenditure was actually incurred for business purposes and not recorded in the books, such expenditure will have to be allowed separately as a deduction. To illustrate : suppose the total unexplained expenditure comes to 'A' and those is comprised of personal expenditure of rupees 'B' capital expenditure of rupees 'C' and expenditure relating to disclo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... angu Pillai Maistry. Rs. 51,595 4231 6-3-85. 14. Manohar Padmanabhan, Kuppuswamy and Raja. Rs. 22,842 1420 9-2-85. 15. Muthu Brick Works. Rs. 96,500 Rs. 6,90,500 12726 The aforesaid tabular statement would show that out of the unaccounted expenditure of Rs. 6,90,231, on a careful analysis with books maintained at site which were subsequently gone through by the ITO and which he has categorically stated as prima facie genuine in his Remand Report 6th April, 1989, the expenditure attributable to the cinema theatre is only Rs. 12,726. In the light of what we have explained earlier, while Rs. 6,90,231 has to be added back with reference to the provisions of s. 69C because the source from which the expenditure was made is also not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ately Rs. 25 lakhs was invested in this theatre. He pointed out that the major portion of the expenditure of Rs. 6,90,231 was related to the construction of the theatre and hence, being capital expenditure, the decision of ITAT, Ahamedabad relied by the learned representative will not apply to this case." It is clear that before the CIT(A), the categorical stand was that a major portion of the expenditure of Rs. 6,90,231 related to the construction of the theatre. Thereafter, we called for the Remand Report and after a complete analysis it has now been stated that only Rs. 12,726 related to the construction of the theatre. The Department in its Cross Objection has also contested the finding of the CIT(A) on the ground that he had no basis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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