IT: Where appellant failed to explain purpose and nature of expenditure disclosed in search and same was also not recorded in books of account, addition was to be made under section 69C
■■■
[2013] 38 taxmann.com 261 (Delhi)
HIGH COURT OF DELHI
Kahan Udyog
v.
Commissioner of Income-tax*
SANJIV KHANNA AND SANJEEV SACHDEVA, JJ.
IT APPEAL NO. 56 OF 2000†
AUGUST 14, 2013
Section 69C of the Income-tax Act, 1961 - Unexplained expenditure [Unrecorded expenditure] - Incriminating documents relating to unrecorded expenditure were found and seized by revenue - Assessing Officer made addition under section 69C and taxed unaccounted expenditure - Appellant had neither furnished details of expenditure nor established that impugned expenses were personal in nature but related to or was pertaining to unaccounted business and, further, transactions were not recorded in books of account - Whether addition made by Assessing Officer was justified - Held, yes [Para 3][In favour of revenue]
FACTS
| ■ | The revenue found and seized various papers of unaccounted expenditure of inventories at business premises of assessee. These expenses were not recorded in books of account. | |
| ■ | The Assessing Officer made additions of Rs. 7.63 lakhs under section 69C and taxed it as unaccounted expenditure. | |
| ■ | In appeal before the Tribunal, the assessee contended that the difference between the excess of expenditure over receipts, should be taxed and both those amounts should not be separately taxed. However, the Tribunal rejected the assessee's appeal. | |
| ■ | On appeal: |
HELD
| ■ | In the present case, the Tribunal has given relief to the extent of Rs. 1,50,000 and the Assessing Officer has not made any separate addition on account of profits from unaccounted sales. The appellant has not, in the present case, furnished details or explained nature and purpose behind the 'expenditure'. Some expenses have been incurred towards kabadi, etc. Names of persons do find mention but the nature of activities undertaken, why and for what purpose the payment was made, are not known. It was for the appellant assessee to produce relevant material or produce the said person to justify the payment and show and establish that the expense was not personal in nature but related to or was pertaining to unaccounted business. No one mentioned in the list had appeared before the Assessing Officer to testify and explain the nature and character of the said payments. The appellant has accepted that these transactions were not recorded in the books. The appellant ran and took the risk when he entered into these transactions and, therefore, should face the consequences prescribed and mandated under section 69C. [Para 3] | |
| ■ | Thus, the findings of fact recorded by the Tribunal can be categorized as perverse and justify inference or reversal. [Para 4] |
CASES REFERRED TO
Siddhartha Woolen Mills [IT Appeal No. 59 of 2000, dated 25-7-2013] (para 3).
Prakash Kumar for the Appellant. Sanjeev Rajpal for the Respondent.
ORDER
Sanjiv Khanna, J. - This appeal by the assessee-M/s Kahan Udyog relates to block period 1st April, 1985 to 16th November, 1995 and arises out of the order of the Income Tax Appellate Tribunal dated 31st December, 1999 in IT(SS) A. No. 32/Del/96. The appeal was admitted vide order dated 9th May, 2001 and the following substantial question of law was framed:—
"Whether the Tribunal's conclusions as regards the additions under Section 69C of the Income-Tax Act, 1961 are sustainable?"
2. On 16th November, 1995 search operations under Section 132 of the Income Tax Act, 1961 (Act, for short) were conducted at business premises of Mahavir Woolen Mills, including the present appellant. Incriminating documents were found and seized. Relying upon the incriminating documents, addition of Rs.7,63,055/- was made in the block assessment order for unrecorded/unaccounted transactions under Section 69C. The said addition was reduced to Rs.6,13,000/- by the tribunal. The appellant claims that no addition is justified and same is contrary to facts and law.
3. In the block assessment order dated 29th November, 1996, the Assessing Officer has referred to various seized papers in respect of unaccounted sales and unaccounted expenditure. These were inventorised. It was found that these transactions were not reflected in the regular books of accounts. Before the Assessing Officer, the appellant had submitted that the difference between the excess of expenditure over receipts, should be brought to tax and treated as undisclosed income and the two amounts should not be separately taxed. Assessing Officer in the present case did not tax the unaccounted sales and has only taxed unaccounted expenses/expenditure/withdrawals. Before the tribunal, similar plea was raised, but was rejected after making reference to the order of the tribunal in the case of Siddhartha Woolen Mills [IT Appeal No. 59 of 2000, dated 25-7-2013]. We have dismissed the appeal of the assessee in the case of Siddhartha Woolen Mills (supra). In the present case, we notice that the tribunal has given relief to the extent of Rs.1,50,000/- and the Assessing Officer has not made any separate addition on account of profits from unaccounted sales. It is recorded in our order dated 25th July, 2013 in the case of Siddhartha Woolen Mills (supra) that the expenditure incurred was on account of electricity, petrol, tea pool, etc. and the names of the persons and details why the expenditure was incurred had not disclosed and furnished. The appellant has not, in the present case, furnished details or explained nature and purpose behind the "expenditure". Some expenses have been incurred towards kabadi etc. Names of persons do find mention but the nature of activities undertaken why and for what purpose the payment was made, are not known. It was for the appellant assessee to produce relevant material or produce the said person to justify the payment and show and establish that the expense was not personal in nature but related to or was pertaining to unaccounted business. No one mentioned in the list had appeared before the Assessing Officer to testify and explain the nature and character of the said payments. The appellant has accepted that these transactions were not recorded in the books. The appellant ran and took the risk when he entered into these transactions and, therefore, should face the consequences prescribed and mandated under Section 69C of the Act.
4. In view of the aforesaid factual position, we do not think the findings of fact recorded by the tribunal can be categorised as perverse and justify inference or reversal in this appeal under Section 260A of the Act. The question of law is accordingly answered against the appellant assessee and in favour of the Revenue. The appeal is dismissed. No order as to costs.
SBRegards
Prarthana Jalan
__._,_.___
No comments:
Post a Comment