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28-02-2019, Amarsingh Narayansingh, Section 69C, 40A(3), Tribunal Mumbai

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2 months 2 weeks ago #8715 by amit
Section - 69C, 40A(3), 133A
Order Date - 28-02-2019
Favouring - Assessee Partly
Court - Tribunal Mumbai
Appellant - Amarsingh Narayansingh Thakur
Respondent - DCIT
Citation - 219Taxpundit145
Appeal No. - ITA No. 908/Mum/2018
Asstt. Year - 2013-14



This appeal filed by the assessee is arising out of the same orders of Commissioner of Income Tax (Appeals)-3, Nasik [in short CIT(A)], in Appeal No. 74/17-18/Nsk (old 10142/16-17/THN) vide order dated 22.12.2017. The Assessment was framed by the Dy. Commissioner of Income Tax, Circle-1, Thane (in short ‘ACIT’/‘ITO’/ AO’) for the A.Y. 2013- 14 vide order dated 29.03.2016 under section 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’).

2. The only issue in this appeal of assessee is against the order of CIT(A) confirming the addition made by the AO under section 69C of the Act in respect to the expenditure surrender or disclosed during the course of survey. For this assessee has raised the following five effective grounds: -

“1. On the Facts and Circumstances of the case First Appellate Authority (FAA) i.e The Ld. CIT (A) erred in confirming the addition u/s 69C of Income Tax Act. 1961 made by the Income Tax Officer in his assessment order.

2. On the Facts and Circumstances of the case First Appellate Authority (FAA) i.e. The Ld. CIT(A) erred in confirming the same addition (u/s 69C as per the Ground I) and also u/s 40A(3) of Income Tax Act, 1961 made by the Income Tax Officer in his assessment order.

3. The Id. CIT (A) as well as Id. AO had been absolutely confused that addition of preOperative Expenses either should be made under section 69C or under section 40A(3) or under both as the Assessment Order as well as CIT(A) Order had explained the addition been made under both the section simultaneously.

4. CIT(A) while confirming addition made by the Id. AO in the assessment order 'ignored the facts that the appellant is in the real estate development business and the expenditure are incurred prior to the commencement of commercial activities hence capitalized in the Work-in-Progress Account.

5. The Id. CIT(A) while confirming the additions made by the Id. AO in the assessment order has failed to appreciate that the expenditure can be incurred eithe from disclosed source of income or from un-disclosed source of income.”

3. Briefly stated facts are that the assessee is in the business of builder and developer and his books of accounts are duly audited. A survey under section 133A of the Act was conducted on the business premises of the assessee on 29 09.2012. The project Naikwadi had been received the commencement certificate during the AY 2013-14 and hence, the entire expenditure pertaining to this project was transferred to work-in-progress account. As per survey declaration, the assessee has voluntary offer a sum of ₹. 62.33 lacs as additional income for FY 2012- 13 relevant to AY 2013-14 on the basis of cash expenses not recorded in the books of account. During the survey the pocket diary was found from where the cash entries amounting to ₹ 62.33 lacs related to Naikwadi project was impounded by the Department. The assessee vide question No. 17 during the course of survey replied as under: -

“I have gone through the entries and as stated earlier the entries pertain to our Naikwadi Project. We are in the process of clearing various impediments in starting the project & have incurred the above expense. All the above

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