KASHMIRI LAL CONSTRUCTIONS PVTLTD,UTTARAKHAND vs. DCIT CENTRAL CIRCLE HALDWANI, HALDWANI AT MRT

Before us, both the parties have admitted that the facts involved in both the captioned appeals are common, therefore, they are taken together and decided by a common order.

First we take up the assessee’s appeal for Assessment Year 2016-17 in ITA No. 70/DDN/2026.

Brief facts of the case that a search and seizure operation u/s 132 of the Act was carried out at the business and residential premises of Shri Kashmiri Lal Agarwal & Others Group of cases on 25.04.2018. During the course of search, various documents in the form of loose papers, registers and Hard Disc etc. were found and seized. Based on the documents so seized, it was alleged that the assessee has made cash expenses of 6% of the total bill values which were not recorded in the books of accounts maintained in regular course. The assessee was engaged in the business of contractor and return of income in response to notice u/s 153A of the Act was filed, declaring total income of INR 2,89,84,880/-. The assessment was completed u/s 153A of the Act wherein based on the loose papers found and seized it was observed that the assessee has made cash expenditure of INR 35,28,247/- for which no explanation was given and therefore the same was treated as unexplained expenditure u/s 69C of the Act and additions were made. In the first appeal, ld. CIT(A) appreciated the nature of part of the expenses and has reduced the addition of INR 23,81,247/-.

Aggrieved by the order of ld. CIT(A), assessee is in appeal before the Tribunal by taking various Grounds of appeal mentioned in the appeal memo.

Before us, it was the submission of ld.AR that during the course of search, certain loose papers were found having rough scribblings having no real transactions. Ld. AR further submits that the cheque amount noted in the said papers were duly recorded in the books of accounts and certain calculation done in percentage was possibly the tax calculation and other deductions made out of the running bills and thus have no financial implications. Ld. AR further submits that the assessee has already declared a sum of INR 18.00 Lakhs in AY 2013-14 and INR 15.00 Lakhs in AY 2014-15 on account of unaccounted income. Thus it is alternatively claimed that in case, the alleged expenditure are held as unexplained the benefit of the telescoping out of the additional income offered in preceding years be given as the utilization of such additional income elsewhere was not established. He thus prayed that total addition sustained of INR 23,81,247/- being less than the income offered in preceding year therefore, addition so sustained by ld. CIT(A) be deleted. He prayed accordingly.

On the other hand, ld. CIT DR for the Revenue vehemently supported the orders of the lower authorities and submits that ld. CIT(A) has already allowed the deduction on account of expenses which are verifiable from the books of accounts and therefore, the remaining addition as sustained deserves to be upheld.

Heard the contentions of both parties at length and perused the material available on record. From the perusal of the copy of the documents relied upon for alleging that the assessee has made unexplained expenditure as reproduced at page 3 of the assessment order, it is observed that certain amounts were noted and certain figures were written against %. These documents do not speak about the nature of the entries contained therein nor any statements etc. were brought on record to substantiate the entries contained therein. The allegation of the Revenue is that as per these documents, total 6% expenditure were incurred on the work completed by the assessee in cash which was not recorded in the books of accounts and accordingly, the figures noted for AY 2015-16 relevant to AY 2016-17 to the tune of INR 35,28,247/- has been held as unexplained expenditure. Ld. CIT(A) after verifying the expenses, had deleted the addition of INR 11.47 Lakhs being found recorded in the books of accounts and sustained the remaining addition however, nowhere in the assessment order nor in the appellate order, it was observed that the said figures represent the expenses and made out of undisclosed sources so as to invoke the provision of section 69C of the Act. In the instant case, from the perusal of the paper, it could not be determined that the calculation given at the lower part of the paper was income or expenditure. Moreover, it is observed that in preceding assessment years, the assessee has offered additional undisclosed income of more than INR 31.00 Lakhs and utilization of which elsewhere was neither claimed not established by the revenue and if the said figures are treated as source for these expenditure alleged as unexplained no addition is required to be made. In view of these facts,

In the result, appeal of the assessee is allowed.

Now we take appeal of the assessee in ITA No.137/DDN/2026 for Assessment Year 2017-18.

In the result, appeal of the assessee is partly allowed.