CIT vs. M/s Golani Brothers (Bombay High Court)

S. 69C “On Money”: If the unaccounted expenditure incurred is from the ‘on money’ received by the assessee, then, the question of making any addition u/s 69C does not arise because the source of the expenditure is duly explained. It is only the ‘on money’ which can be considered for the purpose of taxation. Once the ‘on money’ is considered as a revenue receipt, then any expenditure out of such money cannot be treated as unexplained expenditure, for that would amount to double addition in respect of the same amount

If the unaccounted expenditure is determined, then, necessarily the question which would arise for consideration before the Tribunal is whether the Assessing Officer was justified in making addition under Section 69C for the years under consideration. The Tribunal, in para 39 of the order under challenge, found that the explanation as derived from the records and placed by both can be traced to the ‘on money’ received at the time of booking/sale of shops. The statement of the senior partner is referred. The senior partner admitted that the sums have been received as ‘on money’ and at the stage aforesaid. Therefore, both the amounts, namely the ‘on money’ as well as the unexplained expenditure cannot be brought to tax, according to the Tribunal. If the unaccounted expenditure so incurred was from the ‘on money’ received by the assessee, then, the question of making any addition under Section 69C does not arise because the source of the expenditure is duly explained. It is only the ‘on money’ which can be considered for the purpose of taxation. That is what the Tribunal therefore concluded and once the ‘on money’ is considered as revenue receipt, then any expenditure out of such money cannot be treated as unexplained expenditure, for that would amount to double addition in respect of the same amount

CIT vs. Golani Brothers (Bombay High Court)

 

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