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TMI Blog2009 (2) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... mounts had already been accounted for in the earlier years’ books of account leaving a balance of Rs. 39,68,999 and towards this the assessee offered a sum of Rs. 40 lakhs as undisclosed income. AO proceeded to estimate the cost of construction and arrived at an additional sum of Rs. 30,79,298 for the block period being illegal expenses accounted for in the books as construction expenses. – HC did not find any merit in appeal and dismissed the appeal - 1967 and 1968 of 2008 and 1 of 2008 - - - Dated:- 10-2-2009 - K. RAVIRAJA PANDIAN and P. P. S. JANARTHANA RAJA JJ. Tax Case (Appeal) Nos. 1967 and 1968 of 2008 and M. P. No. 1 of 2008 J. Balachandran for the appellant. Pushya Sitaraman for the respondent. JUDGMENT The j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aged in the construction of residential flats at Bangalore. There was a search under section 132 on September 26, 2000, at the assessee's business premises and the residence of the senior partner at Chennai. The search revealed that the assessees received unaccounted money towards the sale of flats in Krishnanagar projects apart from certain illegal payments such as bribes debited as construction expenses, which are disallowable against gross receipts. Certain unexplained investments in the property made by the senior partner were also detected. During the course of search, cash of Rs. 2.10 lakhs was found in excess of cash balance recorded in the books. During the enquiry, it was found that a sum of Rs. 93,23,261 was received from the flat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he fact that the quantum of inflation has been arrived at by the Assessing Officer with reference to the average cost per sq. ft. of construction. There was also no answer from the assessee's counsel before the Tribunal to contradict the fact that while accounting for the expenses, they were, camouflaged as labour expenses or other construction expenses. Further, the Tribunal has also taken into consideration the Explanation to section 37(1) of the Income-tax Act, wherein it is stated that any expenditure incurred by the assessee for any purpose which is an offence or which is prohibited shall not be deemed to have been incurred for the purpose of business or profession and no deduction or allowance shall be made in respect of such expendit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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