Case Law Details
Narsinga RAO Vs ACIT (Telangana High Court)
Conclusion: Revenue had placed no material on record to show that the loose papers were in the hand-writing of assessee and there was no corroborative material on record to prove that the expenditure recorded in the said loose papers was incurred by assessee. Therefore, no addition could be made on account of undisclosed expenses.
Held: Appellant was engaged in distribution of ‘Four Square’ cigarettes in Hyderabad city. During the course of search, certain incriminating material in the form of loose papers/slips was found and seized, which indicated huge expenses made by asessee for purchase of jewellery etc. On examination of capital account of assessee, it was found that assessee did not make any drawings from the firm for household expenses. Assessee admitted the undisclosed income of Rs.8,65,000/- towards on-accounted household expenditure and Rs.2,00,000/- towards expenses incurred on the marriages of his two children. However, despite admission, assessee filed return for block period without admitting the income towards undisclosed expenditure incurred by him. A notice under Section 158BC was issued to the appellant and assessee filed the block period return in Form-2B admitting a sum of Rs.3,23,584/- as undisclosed income of the block period. AO did not satisfy with the explanation filed by assessee and came to conclusion that entire amount of Rs.10.65 lakhs, out of which sum of Rs.2,59,280/- was admitted by assessee as undisclosed income and balance amount of Rs.8,05,720/- was added by AO, as undisclosed income. CIT(A) held that expenditure incurred by the appellant amounting to Rs.10,65,000/- was explained only to the extent of Rs. 1,00,000/- and the remaining amount of Rs.9,65,000/- represented unaccounted expenditure of the appellant, out of which, Rs.2,59,280/- had been admitted, as such in the block return. Hence, the addition of Rs.8,05,720/- made by the AO, was restricted to Rs.7,05,720/- and the addition of Rs .3,07,942 / – representing unaccounted expenses towards medical expenses, purchase of jewellery and other purchases assessed by the AO, was confirmed and accordingly, allowed the the appeal partly. It was held that assessee had contended that the loose papers did not belong to him, therefore, the quantum of expenditure noted therein be not taken cognizance thereof inasmuch as, the medical expenses incurred on his daughter’s delivery were met by her husband and father in law and not by assessee. Revenue had placed no material on record to show that the loose papers were in the hand-writing of assessee or the notings made therein were belonging to assessee. There was no corroborative material on record to prove that the expenditure recorded in the said loose papers was incurred by assessee. Appellate Tribunal had considered the grounds raised as well as submissions made on behalf of the appellant and recorded the detailed reasons for its conclusion. Question of law on which the present appeal was filed was factual in nature and finding of facts, which was already considered by the Appellate Tribunal. Therefore, the Appeal thus failed and was accordingly dismissed.
FULL TEXT OF THE JUDGMENT/ORDER OF TELANGANA HIGH COURT
The present appeal has been filed under Section 260-A of Income Tax Act, 1961 (for short, the “Act”) assailing the order passed by Income Tax Appellate Tribunal, Bench-A, Hyderabad (for short “Tribunal”) in I.T. (SS) .No.8/ Hyd/ 2002, dated 31.05.2007 for the block period between 01.04.1987 to 11.02.1999.
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