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TMI Blog2019 (12) TMI 1078X X X X Extracts X X X X X X X X Extracts X X X X ..... e other, which can be charged to tax. Adverting to the facts of the instant case, it is seen that there is net outflow of ₹ 1.00 lakh which calls for addition in as much as the assessee received business receipt of ₹ 25.00 lakh outside the books of account and also spent business expenses of ₹ 26.00 lakh outside of the books of account. The payment of commission to certain persons for fetching customers has direct relation with the running of Hotel business from which unaccounted receipts of ₹ 25.00 lakh were earned. Further, the payment of commission is a normal incidence of business and is not hit by Explanation 1 to section 37(1) of the Act. Once this is the position, we fail to appreciate as to how any additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me-tax Act, 1961 (hereinafter called the Act ) on 13-03-2007. In the course of survey, statement of the partner was recorded. In response to question nos.7, 8, and 10, he made a declaration of income to the tune of ₹ 56.00 lakh, comprising of ₹ 26.00 lakh towards unexplained business promotion expenses; ₹ 25.00 lakh towards unaccounted receipts; and ₹ 5.00 lakh towards other omissions and errors. However, the return was filed with the additional income of ₹ 17.00 lakh. The Assessing Officer (AO) made addition of ₹ 39.00 lakh (₹ 56.00 lakh ₹ 17.00 lakh) on the ground that the assessee ought to have declared the income offered during the course of survey. The ld. CIT(A) sustained the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total 36,71,000 Less : Unaccounted receipts utilized for aforesaid payments 25,00,000 Balance (shortfall) 11,71,000 Additional income offered to cover all omissions commissions to avoid any possible litigation to buy peace of mind 5,00,000 Total 16,71,000 Income offered (rounded off to the nearest ₹ 1,00,000/-) 17,00,000 6. It can be seen f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if some undisclosed income is earned and for earning that income some undisclosed expenditure is also incurred, then it is the net of income vis-a-vis expenditure, which will be added. It is so because the unexplained expenditure for earning the undisclosed income would be met out of such undisclosed income. In the instant case, we are confronted with the facts which are germane to the second situation, in which some undisclosed business income was admitted to have been earned and simultaneously some undisclosed expenditure was also incurred for the incurring of income. In such a scenario, it is only the excess of one over the other, which can be charged to tax. Adverting to the facts of the instant case, it is seen that there is net outf ..... X X X X Extracts X X X X X X X X Extracts X X X X
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