TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
When case Id is present, search is done only for this
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Tribunal Modifies Tax Additions, Removes Rs. 11.6L Unexplained Credits, Upholds Personal Expense Disallowance.</h1> <h3>Nitin Sales Corpn. Versus Income Tax Officer</h3> Nitin Sales Corpn. Versus Income Tax Officer - TMI Issues Involved:1. Sustenance of addition of Rs. 10,60,000 on account of unexplained cash credit.2. Sustenance of disallowance of Rs. 3,00,000 on account of credit from Smt. Chanchal Lamba.3. Sustenance of addition of Rs. 1,00,000 on account of various expenses.4. Disallowance of 1/10th of telephone expenses.5. Disallowance of 1/10th of car expenses and car depreciation.Issue-wise Detailed Analysis:1. Sustenance of Addition of Rs. 10,60,000 on Account of Unexplained Cash Credit:The assessee, a partnership firm engaged in manufacturing hand pumps, declared an income of Rs. 59,130 for the assessment year 2001-02. During scrutiny, the Assessing Officer (AO) found loans amounting to Rs. 25 lacs from three ladies, which were doubted due to the creditors' age and lack of SEBI registration of brokers involved. The AO added Rs. 10,60,000 as unexplained cash credits under section 68, which the Commissioner of Income-tax (Appeals) [CIT(A)] upheld. The assessee provided confirmations, tax returns, and bank statements, proving the identity and genuineness of the transactions. The Tribunal found the documentary evidence sufficient to establish the identity, genuineness, and source of credits, thus deleting the addition of Rs. 10,60,000.2. Sustenance of Disallowance of Rs. 3,00,000 on Account of Credit from Smt. Chanchal Lamba:The AO found a loan of Rs. 3 lacs from Smt. Chanchal Lamba, doubting its genuineness due to non-utilization of GPF loan for the intended purpose and non-appearance of Smt. Lamba. The CIT(A) upheld the AO's decision. The assessee provided confirmation letters, sanction letters for GPF, and bank statements showing sufficient funds. The Tribunal found the documentary evidence sufficient to establish the identity and genuineness of the transaction, thus deleting the addition of Rs. 3,00,000.3. Sustenance of Addition of Rs. 1,00,000 on Account of Various Expenses:The AO disallowed Rs. 1,00,000 due to a disproportionate increase in expenses compared to the previous year, supported by self-made vouchers. The CIT(A) upheld this disallowance. The assessee argued that all expenses were verifiable and supported by vouchers. The Tribunal found that the AO did not provide specific instances of unverifiable expenses, thus deleting the addition of Rs. 1,00,000.4. Disallowance of 1/10th of Telephone Expenses:The AO disallowed 1/6th of telephone expenses for personal use, which the CIT(A) reduced to 1/10th. The Tribunal upheld this disallowance, acknowledging the likelihood of personal use.5. Disallowance of 1/10th of Car Expenses and Car Depreciation:The AO disallowed 1/6th of car expenses for personal use, which the CIT(A) reduced to 1/10th. The Tribunal upheld the disallowance of car expenses but deleted the disallowance of car depreciation, citing that personal use does not justify disallowing depreciation.Conclusion:The appeal was partly allowed, with the Tribunal deleting the additions of Rs. 10,60,000 and Rs. 3,00,000, and the disallowance of Rs. 1,00,000 for various expenses. The disallowance of 1/10th of telephone and car expenses was upheld, but the disallowance of car depreciation was deleted.
TaxTMI 