Disallowance u/s 69C not sustainable where all purchases recorded in books of account accepted by AO

Brief of the Case

ITAT Delhi held In the case of ACIT vs. M/s Command Detective & Securities Pvt. Ltd. that when all the purchases are accounted in the regular books of accounts, it means the source is explained and the provisions of section 69C are not applicable, as there was no unaccounted expenditure.The complete books of accounts were also produced before the AO and the same were examined and the AO has not pointed out any defect in the books of accounts produced by the assessee. Thus, the same stood accepted by the AO. The books of account maintained in the normal course of business are evidence under the ‘Evidence Act’ and ‘Income Tax Act’.

Facts of the Case

A search and seizure action u/s 132 was carried out in the cases of B.K. Dhingra, Smt. Poonam Dhingra & M/s Madhusudan Buildcon Pvt. Ltd. on 20.10.2008 and during the course Search & seizure action was carried out on the parties on 20/10/2008 and during the course of search at their residential premises certain documents belonging to the assessee were seized. On the basis of documents so found belonging to the assessee company, proceedings were initiated in the case of the assessee company u/s 153C read with section 153A . The case of assessee was initially centralized with ACIT, Central Circie-17 u/s 127 of the I.T. Act by Commissioner of Income Tax, Delhi-I, New Delhi. Notice u/s I53C was issued to the assessee by the then DCIT, Central Circle-17 on 08.07.20 1O, requiring the assessee company to file return within I5 days of the service of the notice. It was also stated in the letter. attached to the notice that earlier notice u/s I53A issued on 06.07.2010 to the assessee company requiring it to file returns for the A.Y s. 2003-04 to 2008-09 within 15 days of the service of the notices, may be treated as withdrawn as it was inadvertently issued. In response to notice u/s 153C, the assessee filed a return for assessment year 2003-04 on 06/09/2010 declaring nil income.

Notices u/s 142(1 )/143(2) dated 03/11/2010 along with the detailed questionnaire were issued and served upon the assessee. Thereafter AO examined all the details, and completed the assessment vide order dated 31.12.2010 passed u/s. 153C r.w.s. 143(3) of the I.T. Act, 1961 and made the various additions.

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