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of <h1>Tribunal modifies car depreciation disallowance but upholds CIT(A)'s decisions on unexplained deposits, unsecured loans, and TDS interest.</h1> <h3>Asstt. CIT, Range V, Lucknow Versus Abhishek Agarwal</h3> Asstt. CIT, Range V, Lucknow Versus Abhishek Agarwal - TMI Issues Involved:1. Deletion of addition of Rs. 42,40,000/- under Section 69A/68 for unexplained deposits in the capital account.2. Deletion of addition of Rs. 2,00,50,000/- for unverifiable unsecured loans.3. Deletion of addition of Rs. 17,000/- for disallowable interest on delayed payment of TDS.4. Deletion of addition of Rs. 25,384/- for disallowed depreciation on a car used for personal purposes.Detailed Analysis:1. Deletion of Addition under Section 69A/68 for Unexplained Deposits in Capital Account:The Assessing Officer (AO) noted an addition of Rs. 59.20 lakhs in the capital account of the proprietor and questioned the credit entries. The AO was not convinced with the explanation for Rs. 42.40 lakhs and added the same to the income. The Commissioner of Income-tax (Appeals) [CIT(A)] deleted this addition after the assessee provided confirmations, bank statements, PAN, ITRs, and other relevant documents. Despite being given sufficient time, the AO did not submit a remand report and objected to the admission of evidence. The CIT(A) examined the evidence and concluded that the assessee had explained the identity, creditworthiness, and genuineness of the lenders/depositors. The Tribunal upheld the CIT(A)'s decision, finding no infirmity in the order.2. Deletion of Addition for Unverifiable Unsecured Loans:The AO added Rs. 2,00,50,000/- to the income, questioning the credit entries of unsecured loans. The assessee provided detailed evidence, including confirmations, PAN, ITRs, and bank statements, which were examined by the CIT(A). The AO failed to submit a remand report and did not produce the assessment record. The CIT(A) found the evidence satisfactory and deleted the addition. The Tribunal confirmed the CIT(A)'s decision, noting that the AO did not make efforts to verify the evidence and that the assessee had proved the genuineness of the transactions and the creditworthiness of the creditors.3. Deletion of Addition for Disallowable Interest on Delayed Payment of TDS:The AO disallowed Rs. 17,000/- as interest on delayed payment of TDS, treating it as penal in nature. The CIT(A) allowed the deduction, considering the interest to be compensatory. The Tribunal upheld the CIT(A)'s decision, as the Revenue could not demonstrate how the interest was penal in nature.4. Deletion of Addition for Disallowed Depreciation on Car:The AO disallowed Rs. 25,384/- from the depreciation claimed on the car, suspecting personal use. The CIT(A) deleted this addition. The Tribunal acknowledged the possibility of personal use in a proprietorship concern but found the disallowance excessive. It reduced the disallowance to 10% of the total claim, modifying the CIT(A)'s order.Conclusion:The Tribunal partly allowed the Revenue's appeal, modifying the disallowance on car depreciation but upheld the CIT(A)'s decisions on the other issues. The order was pronounced in the open court.
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