Law:

Section:

Section 254, read with section 69C of the Income-tax Act, 1961 - Appellate Tribunal - Order of - Assessment years 1987-88 and 1988-89 - Assessee-company, doing business of construction, did not show certain expenditure incurred in books of account - Assessing Officer and appellate authority added said amount to assessee's income under section 69C - Tribunal concurred with finding of appellate authority to extent that no addition could be made if same was negated by payment - However, since amount had not been shown in regular books of account in context of construction work, Tribunal remanded matter for reassessment to Assessing Officer - Thereupon, assessee filed application under section 254(2) which was allowed and, as a consequence, order of remand was recalled - Whether, on facts, earlier order of remand passed by Tribunal was correct and, therefore, Tribunal was not justified in recalling said order - Held, yes Section 69C of the Income-tax Act, 1961 - Unexplained expenditure - Assessment years 1987-88 and 1988-89 - Whether failure to explain source of expenditure would result in a legal fiction under which expenditure would be deemed to be an income and liable to be added - Held, yes - Whether question of addition depends on satisfactory explanation of source and it cannot be negated simply because expenditure was actually incurred - Held, yes FACTS The assessee-company was doing business of construction. On scrutiny of documents found during course of search in premises of assessee-company, it was noticed that some expenditure incurred by it was not recorded in books of account produced. The Assessing Officer and the appellate authority added the amount under section 69C on account of failure of the assessee to satisfactorily explain the said expenditure. The Tribunal concurred with the finding of the appellate authority to the extent that no addition could be made if the same was negated by payment. But it was to be examined, since the amount had not been shown in the regular books of account, in the context of the construction work as to whether this amount was reasonably spent or not. Therefore, the matter was remanded for reassessment to the…

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