Tribunal allows Revenue's appeal on depreciation but upholds deletions on cash credits, repair expenses, and deposits.

The ACIT, Circle-2, Alwar Versus Smt. Kamla Lamba Prop. M/s Kamal Wires

The ACIT, Circle-2, Alwar Versus Smt. Kamla Lamba Prop. M/s Kamal Wires - Tmi Issues Involved:
1. Deletion of addition on account of unexplained cash credits (Rs. 55,94,288).
2. Deletion of disallowance out of depreciation on air conditioners.
3. Deletion of disallowance on account of building repair expenses (Rs. 5,97,825).
4. Deletion of disallowance on account of unexplained cash deposits (Rs. 14,85,000).

Issue-wise Detailed Analysis:

1. Deletion of Addition on Account of Unexplained Cash Credits (Rs. 55,94,288):

The Revenue contested the deletion of the addition made by the Assessing Officer (AO) concerning unexplained cash credits. The AO had added Rs. 55,94,288 as unexplained cash credits due to the assessee's failure to provide necessary documentation to verify the unsecured loans. The AO noted that the assessee did not file account statements or bank details for loans from Shri Gaurav, K.C. Industries, and Bank of Baroda. However, the assessee provided complete details, including confirmations from creditors, bank account copies, and ledger accounts during the appellate proceedings. The CIT(A) found that the loans were substantiated with adequate documentation and there was no justification for the AO's addition. The Tribunal upheld the CIT(A)'s decision as the Revenue failed to provide contrary material, thereby dismissing the Revenue's appeal on this ground.

2. Deletion of Disallowance Out of Depreciation on Air Conditioners:

The AO disallowed depreciation on air conditioners, arguing they were not used for business purposes and were installed at the assessee's residence. The CIT(A) deleted the disallowance based on the assessee's submission of purchase bills for computers and televisions. However, the Tribunal reversed the CIT(A)'s finding, emphasizing that mere submission of purchase bills without evidence of business use is insufficient for claiming depreciation. The Tribunal restored the AO's disallowance, allowing the Revenue's appeal on this ground.

3. Deletion of Disallowance on Account of Building Repair Expenses (Rs. 5,97,825):

The AO disallowed Rs. 5,97,825 claimed as building repair expenses due to the absence of bills and the disproportionate amount relative to the asset's value. The CIT(A) deleted the disallowance, accepting the assessee's submission of bills, bank payment proofs, and TDS challans. The Tribunal affirmed the CIT(A)'s decision, noting that the Revenue did not provide contrary evidence to dispute the findings. Consequently, the Tribunal dismissed the Revenue's appeal on this ground.

4. Deletion of Disallowance on Account of Unexplained Cash Deposits (Rs. 14,85,000):

The AO added Rs. 14,85,000 as unexplained cash deposits, citing discrepancies between the cash book and the income tax return. The CIT(A) deleted the addition, accepting the assessee's explanation that the cash deposits were from the available cash in hand, supported by ledger entries and bank records. The Tribunal upheld the CIT(A)'s decision, stating that the Revenue did not rebut the findings with contrary material. Thus, the Tribunal dismissed the Revenue's appeal on this ground.

Conclusion:

The Tribunal partly allowed the Revenue's appeal, reversing the CIT(A)'s decision on the depreciation disallowance while upholding the deletions related to unexplained cash credits, building repair expenses, and unexplained cash deposits. The order was pronounced in the open court on September 15, 2017.