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TMI Blog2013 (11) TMI 270X X X X Extracts X X X X X X X X Extracts X X X X ..... itten later after considering the loose paper transactions - Rejection of books was not justified when no defects were found in the books - Revenue has not brought any material on record to controvert the above findings – Addition deleted – Decided against the Revenue. Disallowance of Partner’s salary on the ground of it being excessive – Disclosure made during survey u/s 133A to be included for computation of partner’s salary u/s 40(b) of the Income Tax Act – Held that:- Since the disclosure made during the survey is on account of business income, the same cannot be excluded for applying section 40(b) to compute allowable deduction in respect of partners remuneration – Reliance has been placed on the judgment in the case of Jamnadas Mul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esults u/s 145(3) of the Income Tax Act, 1961, ignoring the fact that the assessee had inflated the expenses through bills and self made vouchers. 2 On the facts and in the circumstances of the case and in law, the CIT(A) erred in directing the Assessing Officer to consider Rs. 12,00,000/- as business income overlooking the fact that assessee itself had disclosed Rs. 12,00,000/- as unrecorded income during the survey after considering the noting in the papers, which income was subsequently squared up by inflating expenses through self serving vouchers, etc. 3 On the facts and in the circumstances of the case and in law, the CIT(A) erred in deleting the disallowance of partners salary of Rs. 1,19,000/-, though the partners were not in In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be rejected u/s 145(3) and the gross profit be calculated on the basis of previous year. The submissions made by the Assessee were not found acceptable to the AO. He therefore concluded that against the undisclosed income of Rs 12 lacs declared during the course of survey, Assessee has inflated the expenditure through the bills and self made vouchers and therefore the assessee's books does not reflect the true and correct picture of the affairs of the Assessee and thus rejected the book results u/s 145(3) of the Act and thereafter calculated the gross profit @ 9% (on the net receipts of Rs. 75,27,155/-) i.e. Rs 6,77,444/-as against the deficit of Rs 3,17,836/-. He further, applying the ratio of the decision in the case of Fakir Mohammad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2/Rjt/2006 in the case of Amul Industries Pvt. Ltd. also upheld the decision of CIT(Appeals) distinguishing that case from the case of Fakir Mohd. Haji Hasan. In view of above, it is held that the disclosure of Rs,12,00,000/- made by the appellant during the course of P survey is assessable under the head 'D' of Chapter IV of the I. T. Act, i.e.Profits and gains of business or profession'. 2.2.1 Regarding G.P. addition, after rejecting appellant's books of accounts, the main reason for Assessing Officer's action is that after excluding additional income of Rs.12,00,000/- disclosed during survey, G.P. of the appellant was lower and was in fact a loss, which compared unfavourably with the preceding and subsequent years. The Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of AO and CIT(A). He further submitted that similar addition made in the case of Sadbhav Developers made pursuant to the same survey was upheld by H'ble Tribunal in ITA No 2659/ahd/2005 order dated 15.10,2010. He placed on record the aforesaid order. He thus supported the order of AO. 8. The Ld. A.R. on the other hand submitted that the facts of the case in the case of Sadhbhav builders which is relied upon by Revenue is different from that of Assessee in view of the fact that in the case of Sadhbhav Builders unrecorded cash receipts were found wherein the case of Assessee unrecorded cash payments were found. He further submitted that the undisclosed income has been reflected by the Assessee in its books of accounts. He thus supporte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bited partner's salary of Rs 2,19,000/- as against Rs 1 lac in preceeding and subsequent years though the Assessee had not made any profit during the year. He also noticed that Shri Dilipbhai Patel and Rajendra Patel to whom the salary was paid, had left India. He therefore concluded that Assessee has debited excess salary with a view to reduce the taxable income. He accordingly considered the salary of Rs 1 lac to be reasonable instead of Rs. 2,19,000/- claimed by Assessee and accordingly disallowed Rs 1,19,000/-. Aggrieved by the order of AO, the matter was carried before CIT(A). CIT(A) deleted the addition by holding as under: Since the disclosure made during the survey is on account of business income, the same cannot be excluded for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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