9911796707
TMI Blog2016 (1) TMI 455X X X X Extracts X X X X X X X X Extracts X X X X ..... lso in sustaining the addition on another ground i.e., that sections 40(a)(ia) and 40A(3) also might be applicable to the assessee. 2. Brief facts of the case are that there was a search and seizure operation conducted in the business premises of the assessee on 20.08.2009. During the course of search, certain incriminating material/ documents were found and seized. From the residence of Mr. B. Seenaiah, Managing Director of the company, five small note books were seized vide Annexure A/BSR/02 which contain entries of certain receipts and payments. During the assessment proceedings under section 143(3) read with section 153A of the Act, the statement of Mr. B. Seenaiah with regard to these books was recorded wherein he had stated that thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years as suppressed receipts of the company. Mr. B. Krishnaiah, Chairman of the Company M/s. BSCPL Infrastructure Ltd and one of the Directors in assessee-company, submitted his objections on 19.12.2011 according to which, Mr. B. Seenaiah is one of the promoters of M/s. Bollineni Casting & Steels Ltd., and he personally visits all the sites in BSCPL due to which, the staff under him have taken advantage of his absence and misused their positions which has resulted in not only great financial stress to the company but has also effected the reputation and credibility of the company. It was submitted that Mr. B. Seenaiah got hint about the mismanagement of the company and therefore, he personally went to the factory and collected all the info ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the books are not allowable expenditure. He therefore, treated the receipts mentioned in these registers as income of the assessee for the relevant assessment years. 3. Aggrieved, assessee filed an appeal before the Ld. CIT(A), who, though agreed in principle that the payments recorded in the books are to be allowed against the receipts mentioned therein, finally held that the assessee had chosen to keep the undisclosed receipts and payments from out of the regular books of account and but for the search, this fact would certainly not have come to the notice of the department. She held that by keeping this part of the business out of the regular books of account, the assessee should not be allowed to be in a relatively advantageous posi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us. The Ld. Counsel for the assessee, while reiterating the submissions made by the assessee before the authorities below, submitted that in order to buy peace with the department, the assessee has accepted that the amounts mentioned in the seized material as receipts are the undisclosed income of the business of the assessee. He submitted that in the same breath, the Revenue ought to have allowed the claim of expenditure as recorded in the seized material. He submitted that the Ld. CIT(A) has erroneously held that the expenditure is not allowable even under sections 40A(3) and 40(a)(ia) of the I.T. Act. As regards the issue as to whether any addition under section 40A(3) can at all be made in the case of seized material, he placed relianc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee and that the receipts and payments mentioned therein are also relating to the business operations of the assessee. Whatever may be the reason for accepting the receipts mentioned in the books, the lone contention of the assessee before us is that the expenditure relating to the receipts should be allowed. We agree with the contention of the Ld. D.R. that the expenditure which has been incurred wholly and exclusively for the purpose of business alone can be allowed and it is not verifiable from the seized material that this expenditure is incurred wholly and exclusively for the purpose of business of the assessee. We also agree with the Ld. D.R. that most of the expenditure being incurred in cash and some of which may be for illega ..... X X X X Extracts X X X X X X X X Extracts X X X X
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