INCOME TAX ACT, 1961

Section 133A

Search and seizure under section 133A - Undisclosed business income - Additional income disclosed by assessee -

Assessee was subjected to survey action under section 133A and in the course of survey, statement of the partner was recorded. He made a declaration of income to the tune of Rs. 56.00 lakh, (comprising of Rs. 26.00 lakh towards unexplained business promotion expenses; Rs. 25.00 lakh towards unaccounted receipts; and Rs. 5.00 lakh towards other omissions and errors). However, return was filed with the additional income of Rs. 17.00 lakh. AO made addition of difference amount on the ground that assessee ought to have declared the income offered during the course of survey. CIT(A) sustained the addition thereby deleting the addition of Rs. 25.00 lakh on account of undisclosed income. Held: Adverting to facts of instant case, it was seen that there was net outflow of Rs. 1.00 lakh which calls for addition, in as much as assessee received business receipt of Rs. 25.00 lakh outside the books of account and also incurred business expenses of Rs. 26.00 lakh outside the books of account. The payment of commission to certain persons for fetching customers had direct relation with the running of hotel business from which unaccounted receipts of Rs. 25.00 lakh were earned. Further, the payment of commission was a normal incidence of business and was not hit by Explanation 1 to section 37(1). Assessee offered Rs. 17.00 lakh as additional income and there was no reason for making or sustaining any addition.

REFERRED :

FAVOUR : In assessee's favour

A.Y. :

SUBSCRIBE FOR FULL CONTENT