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TMI Blog2018 (4) TMI 307X X X X Extracts X X X X X X X X Extracts X X X X ..... r or not the provisions u/s 40A(3) are applicable so also the AO has to verify from the entries of the ledger A3 & A11 to calculate the peak amount - direct the AO to verify whether any expenditure relatable to the un-carried entries in Annexure 3 & 11 and if there is any such expenditure claimed to calculate the net amount of the credit and debit entries so as to adjust the same from out of the surrendered amount. While making such adjustments, the AO will consider the possibility of adjusting the amount of ₹ 6,35,000/-. We, therefore, allow the grounds of appeal of the assessee for statistical purposes. Set off of the surrendered amount - Held that:- As in the preceding paragraphs, we direct the learned AO to verify whether any e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 3,68,69,930/-. During the scrutiny, learned AO on the strength of the documents identified as Annexure 3 11 observed that out of so many entries contained in this document, certain entries were not carried to the regular books of accounts and the debit total of such entries came to ₹ 2,59,10,692/-. When called upon to explain this discrepancy, the assessee admitted that few entries in respect of the imprest account of Shri Vinod Kumar Jain could not be entered in the regular books of accounts and the assessee company surrendered ₹ 1,65,60,000/-. However, the learned AO proceeded to add sum of ₹ 2,59,10,692/- to the income of the assessee. Further basing on the entries in Annexure A3, learned AO found that an amount o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aspect, neither the assessee nor the revenue is in appeal before us. However, having observed so, learned CIT(A) proceeded further and held that all the debit entries amounting to ₹ 2,59,10,692/- are treated as hit by the provisions of Section 40A(3) of the Act. As such the addition was confirmed, albeit, for a different reason. The assessee is challenging this observation of learned CIT(A) in its appeal. Further, the learned CIT(A) directed the learned AO to go to set off the surrendered amount of ₹ 1,65,60,000/- at the time of giving effect to such order. This observation is challenged by the revenue in their appeal. 4. In respect of the addition of ₹ 6,35,000/- made on account of untallied entries of ₹ 3 lacs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the addition ofRs.31,98,000/- on account of difference in the surrendered and declared amount and ₹ 31,70,200/- on account of the unexplained labour and petty contractor charges, assessee contended before the learned CIT(A) that in the absence of any incriminating material substantiating the additions, mere surrender does not take the revenue to anywhere and it is for the revenue to work out the unexplained income before making such addition. 6. Having perused the record, learned CIT(A) found that when the assessee resiles from the surrender and declared a lesser amount, it is for the learned AO to prove through the seized material in this case that the said amount actually represented the unexplained income. Holding so, learned CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3) of the Act does not arise. Assessee worked out the peak as per the register as on 31.12.2010 at ₹ 1,44,84,435/- . According to the assessee, as per the directions of the learned CIT(A) both the credit and debit entries are to be considered, as such out of the surrendered amount of ₹ 1,65,60,000/- only this peak of ₹ 1,44,84,435/- has to be adjusted leaving sufficient balance for the adjustment of ₹ 6,35,000/- on account of the untallied entries of ₹ 3 lacs and ₹ 3,35,000/- in the imprest account of Mr. Ashish and Aten Jain. We do not find any reason not to agree with the statement of the learned AR on this aspect of law and adjustability of the peak amount and the other amount of ₹ 6,35,000/- fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d towards any amount i.e. drawn from the entries in Annexure 3 11. However, in the preceding paragraphs, we direct the learned AO to verify whether any expenditure was claimed in respect of the debit entries of Annexure 3 11 and then to decide the applicability of Section 40A(3). The observations of the learned CIT(A) would be subject to such finding of the learned AO after verification. We, therefore, do not find any merit in the contention of the revenue that no set off should be allowed in respect of the surrendered amount from out of the amount ultimately found to be taxable. We reject this ground. 9. Now coming to the addition of ₹ 31,19,800/-, we do not find any illegality or irregularity in the observations of the learne ..... X X X X Extracts X X X X X X X X Extracts X X X X
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