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TMI Blog2016 (5) TMI 344X X X X Extracts X X X X X X X X Extracts X X X X ..... ded in favour of assessee in part. Additions made on protective basis - Held that:- Though the authorities below have not mentioned the section under which the disallowance and the consequential additions are made, from the order of the Assessing Officer, it appears that the receipts of the assessee were disallowed as they are not used for business activity. Thus, it is disallowance of business expenditure. The CIT(A) has rightly pointed out that the amounts withdrawn cannot be presumed to have been deployed and incurred towards revenue expenditure and got debited to the Profit & Loss Account. Where there is estimation of business income, disallowance and consequential addition of revenue expenditure is not sustainable, as held by the ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of by this common and consolidated order for the sake of convenience. 2. Facts of the case common in all these cases are that there was a search and seizure operation under S.132 of the Act in the case of Madhucon Projects Limited and group of cases on 4.2.2011. After the search in the case Madhucon Projects Ltd. and its group concerns including the assessees herein, notices under S.153A were issued to the assessees. In response thereto, the assessees filed returns of income for relevant assessment years. During the assessment proceedings, under S.143(3), the books of account maintained by the assessees were rejected and the income of the assessees was estimated at 8% of the gross receipts, and the Assessing Officer accordingly made add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evant financial year, the Assessing Officer concluded that these amounts were never used for the business activity of the assessees herein but were returned back to the contractor. He therefore, disallowed the same in the hands of the principal contractor, and added the same protectively in the hands of the assessee firms herein. 4. Against the assessments thus made, assessees preferred appeals before the CIT(A), who though, confirmed the estimation of income at 8% of the gross receipts, granted relief by deleting the additions made on protective basis. 5. Learned counsel for the assessees submitted that the assessees were maintaining regular books of account, but the Assessing Officer rejected the same and estimated the income of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned Departmental Representative also relied upon the decision of the coordinate Bench of this Tribunal in the case of Prabhu Wines in ITA No.1100/Hyd.2013 dated 23.10.2013, wherein after considering the principles laid down in Indwell Constructions (232 ITR 776), it has been held that they are applicable only to the extent of computation of income under the head Business and as far as addition of cash credits under S.68 and S.69, the decision of the Hon'ble Supreme Court in the case of CITV/s. Devi Prasad Vishwanath Prasad reported in 72 ITR 194 (SC) was followed. 8. On the other hand, the learned counsel for the assessees also relied upon the decision of the jurisdictional High Court in the case of Indwell Constructions (232 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss expenditure of the assessee, particularly, when, the same is not debited to the Profit Loss Account. The CIT(A), after examining the issue has held at para 6.5.3 as under- 6.5.3. Knowing that the amount withdrawn from bank account was appropriated by the main contractor and that it was not used by the appellant is one aspect. However, to say that this item needs to be disallowed in the hands of the appellant, we have to first establish that the specific withdrawals were accounted in books as expenditure incurred during the year and further, the expenditure was not only revenue in nature but was also debited to the P L account to be disallowed as expenditure. In the absence of books and vouchers, one cannot specifically conclude th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds revenue expenditure and got debited to the Profit Loss Account. Where there is estimation of business income, disallowance and consequential addition of revenue expenditure is not sustainable, as held by the jurisdictional High Court in the case of Indwell Constructions (supra). In view of the same, we agree with the view of the CIT(A) that this issue is also squarely covered by the decision of the jurisdictional High Court in the case of Indwell Constructions (supra), wherein it has been categorically held that where business income of an assessee is estimated, no other disallowance may be made. In the case of Maa Highways, cited supra, as well, the Tribunal has taken into consideration the decision of the jurisdictional High Court a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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