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TMI Blog2021 (5) TMI 513X X X X Extracts X X X X X X X X Extracts X X X X ..... parately in the computation of income under the head business income without claiming proportionate expenses. As per assessee the said undisclosed income of ₹ 7,25,03,689/-( ₹ 7,20,00,000 by sale of shops and ₹ 5,03,689 excess cash found during survey) is net of expenses, therefore the said income would be assessable under the head business income without deducting any expenses from it, however, as noted by us above, that assessee has claimed proportionate expenses, which is not acceptable. Therefore, we remit this issue back to the file of the assessing officer to exclude the proportionate expenses from the said undisclosed income and allow the assessee the benefit of set off of business loss/depreciation in accordance with law. The assessee is directed to file the detail of proportionate expenses claimed by him in profit and loss account in relation to undisclosed income. Appeal filed by the assessee is allowed for statistical purposes. - ITA No.271/SRT/2018 - - - Dated:- 3-5-2021 - Shri Pawan Singh, JM And Dr. A. L. Saini, AM For the Assessee : Shri Hiren Vepari, CA For the Respondent : Shri Ritesh Mishra, CIT(DR) ORDER PER DR. A. L. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 27,19,08,689/- with a Net profit of ₹ 6,48,93,444/- which works out at 23.86%. The survey under section 133(A) of the Act was carried out at the business premises of the assessee on 18.02.2010. Statement of Shri Vasantbhai Haribhai Gajera, partner of the firm was recorded under section 133(A) of the Act on 18.02.2010. In question No.8 of the said statement, the assessee was asked to explain regarding the excess cash found of ₹ 5,03,689/-. In answer to the above said question the partner Shri Vasantbhai Gajera has stated that the excess cash found is unaccounted income of M/s. Shanti Enterprises earned during the F.Y.2009-10 and he disclosed this unaccounted income for taxation during the previous year relevant to A.Y.2010-11. As such in answer to question No.9, he stated that 7 small diaries found from the basement of the business premises and impounded in Annexure BF-1 to BF-7 are related to the On money receipts received from the sale of shops and it includes transactions of unaccounted income of ₹ 7,20,00,000/-. This amount of ₹ 7,20,00,000/-, is disclosed unaccounted income of the said firm and the same is disclosed during the previous year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oss and depreciation. Learned Counsel for the assessee took us through paper book page no.14 wherein answer to question no.9 clearly states that during the survey proceedings, the assessee has admitted stating that the amount of ₹ 7,20,00,000/- was net unaccounted income of the firm, M/s. Shanti Enterprises. The said net income of ₹ 7,25,03,689/- ( ₹ 7,20,00,000 by sale of shops and ₹ 5,03,689 excess cash found during survey) is a net income and no any expense to be claimed), that is, the said income is over and above the income which had already been disclosed by the assessee in his firm, M/s. Shanti Enterprises. During the survey proceedings, the assessee has agreed to pay tax on net undisclosed income of ₹ 7,25,03,689/-, which should be treated business income of the assessee and therefore, the assessee should be allowed set off of business loss and depreciation also. 8. On the other hand, Shri Ritesh Mishra, Ld. CIT-DR for the Revenue submits that assessee has misrepresented the facts before the Tribunal. He took us through paper book page No.28 where the assessee`s Profit and Loss account for the year ended March 31, 2010 is located. He argued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther material brought on record. We note that in statement on oath taken by the Department of Shri Vasant Haribhai Gajera vide paper book page nos.13 and 14 wherein he stated in response to questions nos.8 and 9 that income of ₹ 7,25,03,689/- ( ₹ 7,20,00,000 by sale of shops and ₹ 5,03,689 excess cash found during survey) is a net income from undisclosed business sources and no any expense to be claimed, that is, the said income is over and above the income which had already been disclosed by the assessee in his firm, M/s. Shanti Enterprises, therefore, now the assessee should not claim expenses against the undisclosed income of ₹ 7,25,03,689/-. However, we find that assessee has claimed the expenses against the undisclosed income of ₹ 7,25,03,689/- in the audited profit and loss account which is placed at paper book page No.28 and the same is reproduced below for ready reference: PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2010. Sch Rs. Income 199,405,000 Sale of Shops ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Having gone through the above audited profit and loss account, we find merit in the propositions canvassed by ld DR for the Revenue. The ld DR for the Revenue has rightly pointed out that income side the assessee has included ₹ 7,25,03,689/- as part of undisclosed income along with income from sale of shops to the tune of ₹ 19,94,05,000/- and other income to the tune of ₹ 1,35,82,093/-. Total of these three incomes come to ₹ 28,54,90,782/-. Against these three incomes, the assessee has claimed the combined expenditure viz: cost of construction ₹ 21,88,50,070/-, Administrative and other expenses ₹ 15,72,114/-, Selling and distribution expenses ₹ 1,50,000/- and Financial charges ₹ 25,154/-. Total of these expenses come to ₹ 22,05,97,338/-. Therefore, assessee has claimed the proportionate expenses against the undisclosed income of ₹ 7,25,03,689/-, hence assessee has distorted the facts and presented a false profit and loss account. Hence, it is abundantly clear that assessee has claimed proportionate expenses against the undisclosed income of ₹ 7,25,03,689/- and thus deviated from his statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Enterprises through sale of shops FY 2009-10 (AY 2010-11) is written in this diary which is total ₹ 7,20,00,000 We disclose this net profit in our firm Shanti Enterprise as income during the FY 2009-10 and offer it for income tax. This is our net income and no expenditure has remained to be claimed. This income of ₹ 7,20,00,000 is over and above regular business income of our firm for F Y 2009-10 and tax thereon as per rules will be paid before 15th March 2010........ From the above statement, it is clear that the partner has admitted to ₹ 7,20,00,000 as net income which is over and above regular business income of the firm FY 2009-10, relevant to assessment year 2010-11 . In view of the above admission, the amount of ₹ 7,20,00,000/- must have been offered separately in the computation of income under the head business income without claiming proportionate expenses. As per assessee the said undisclosed income of ₹ 7,25,03,689/-( ₹ 7,20,00,000 by sale of shops and ₹ 5,03,689 excess cash found during survey) is net of expenses, therefore the said income would be assessable under the head business income without deducting any expenses fr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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