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TMI Blog2022 (10) TMI 847X X X X Extracts X X X X X X X X Extracts X X X X ..... e to claim any expenses against the same. Once the position is admitted that the assessee has offered the undisclosed sum in the return of income, and during the course of detailed assessment, the assessing Officer has not doubted the genuineness of expenses claimed in the return of income, then such expenses should be allowed against the undisclosed income offered by the assessee in the return of income. Accordingly, in our considered view, Ld. CIT(Appeals) has not erred in facts and in law in granting relief to the assessee in respect of this addition referred to above. Addition towards interest expenditure incurred - Since the Ld. CIT(Appeals) in the immediately preceding year has accepted the deposits from five companies as genuine and further in the present year, Ld. CIT(Appeals) has also allowed the assessee s claim of expenditure under section 36(1)(iii) of the Act, with respect to the above interest expenditure, we find no infirmity in the order of the Ld. CIT(Appeals), while granting relief the assessee. - ITA No. 2239/Ahd/2017 - - - Dated:- 19-10-2022 - Shri P.M. Jagtap, Vice President And Shri Siddhartha Nautiyal, Judicial Member For the Assessee : Shri Sun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be allowed as deduction. (6) On the facts and circumstances of the case, the Ld.CIT(A) ought to have upheld the additions Rs.11,00,00,000/- and Rs.44,80,634/- made by the AO to the returned income of the assessee. (7) It is, therefore, prayed that the order of the Ld.CIT(A)-12, Ahmedabad may be set aside and that of the A.O. may be restored to the above extent. (8) The appellant craves leave to add, amend, alter, edit delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal. 3. The brief facts of the case are that the search was carried out under section 132 of the Act in the Bafna Panchal group of cases 07-01-2014. The assessee firm had come into existence in August, 2012. The assessee had constructed a commercial scheme consisting of shops/offices in the name of Trivia at Race Course, Baroda. During the course of survey, statement was recorded of one of the partners, Shri Snehal Patel in which he declared approximately 11 crores as undisclosed/unaccounted income of the assessee firm M/s Shreeji Enterprises for assessment year 2014-15. The AO observed that in the return of income, the assessee has disclos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sits are not explained, as per the provisions of section 68 of the Act, the interest expenses on such unexplained loans/ deposits are also not allowable as deduction. Accordingly, the AO made addition of ₹ 44,80,634/-to the total income of the assessee on account of disallowance of interest expenses of the unexplained cash credits. 5. In appeal before Ld. CIT(Appeals), with respect to the disallowance of interest of ₹ 44,80,634/- paid on unexplained deposits of ₹ 4.10 crores, Ld. CIT(Appeals) allowed relief to the assessee on the ground that the issue of cash credit has already been decided by him in favour of the assessee, by way of order dated 27-07-2017 for assessment of 2013-14.Accordingly, Ld. CIT(Appeals) directed the AO to allow the interest expenditure incurred of ₹ 44, 80, 634/-, with the following directions: 3.3 I have already dealt with issue of cash credit in the order dated 27/7/2017 for A.Y. 2013-14, I have held that the deposits received by appellant of Rs.4,10,00,000/- from the five companies are fully explained and there is no case for making additions u/s 68. Once these deposits are held to be genuine and received from outside part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounts even after detailed scrutiny. The AO could not identify any item of expenditure being excessive, unreasonable or bogus. The assessee therefore submitted that when the assessee has disclosed all the receipts truly and correctly and claimed all the expenses also truly and correctly and wholly and exclusively for the purpose of business, particularly when the AO has accepted the book result by not rejecting them under section 145A of the Act, the repetitive addition of ₹ 11 crores cannot be made. 7. In light of the submissions made by the assessee, Ld. CIT(Appeals) allowed the assessee s appeal in respect of this addition of ₹ 11 crores, with the following observations: 6.3 I have carefully gone through the assessment order, all written submissions and details filed and have perused the chart and annexure. The first and foremost factual aspect is that assessee has disclosed a sum of Rs. 11,00,00,000/- during the course of survey in the statement recorded on 25/10/2013. In reply to Question No. 7, the partner of the appellant firm Shri Snehal K. Patel has admitted Rs.10,68,00,000/- as cash receipts pertaining to hold status and bookings as worked out from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oresaid reliefs provided by the Ld. CIT(Appeals) to the assessee. The Department has taken various grounds of appeal, but largely the same can be divided into two grounds raised by the Department. The same are being dealt with in the succeeding paragraphs. Deletion of addition of ₹ 11 crore made to the returned income on account of undisclosed income: 9. Before us, the Department relied upon the observations made by the AO in the assessment order. The Department submitted that the Partner in their statement has categorically stated that ₹ 11 crores declared by him is unaccounted income in addition to regular income of the firm for assessment a 2014-15. The DR submitted that the Ld. CIT(Appeals) ignored the fact that the disclosure of the net income was made and not the gross receipts by the Partner of the assessee firm. Therefore, no deduction on account of expenses towards the net income disclosed during the survey is allowable. 10. In response, the counsel for the assessee submitted that this amount of ₹ 11 crores represents undisclosed booking money/other contract receipts, received by the assessee outside the books of accounts. The counsel f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be brought to tax as gross receipts in the hands of the assessee company again, since the same would amount to double taxation of the same receipts. The second issue for consideration is whether the expenses against the same are to be allowed, or whether it can be inferred from the statement of the Partner of the assessee firm that the said amount represents net income of the assessee firm, and accordingly no further expenses my be allowed against the same. In our view, Ld. CIT(Appeals) has correctly observed that from the statement recorded of the Partner of the firm, it cannot be inferred that the said amount of ₹ 11 crores represents net income of the assessee firm, and therefore, the assessee is not eligible to claim any expenses against the same. Once the position is admitted that the assessee has offered the undisclosed sum of ₹ 11 crores in the return of income, and during the course of detailed assessment, the assessing Officer has not doubted the genuineness of expenses claimed in the return of income, then such expenses should be allowed against the undisclosed income of ₹ 11 crores offered by the assessee in the return of income. Accordingly, in o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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