2018 (3) TMI 1094 - AT - Income Tax

Appellate Tribunal ITAT Nagpur Rules in Favor of Appellant on Income Tax Disputes

Shri Manoj Chainsukh Asawa Versus Income Tax Officer, Ward-4 (1), Nagpur

Shri Manoj Chainsukh Asawa Versus Income Tax Officer, Ward-4 (1), Nagpur - TMI Issues:1. Addition of trade creditors as unexplained cash credits and rejection of book results under sections 68 and 145(3) of the Income-tax Act, 1961.2. Disallowance of deduction of LIC under Chapter VIA of the Act.Issue 1: Addition of Trade Creditors and Rejection of Book ResultsThe appellant contested the order of the Assessing Officer and the CIT(A) regarding the addition of trade creditors as unexplained cash credits and the rejection of book results under sections 68 and 145(3) of the Income-tax Act, 1961. The Assessing Officer found discrepancies in the assessee's books of account, leading to the rejection of book results and the addition of gross profit. Additionally, the cash sales made by the assessee were treated as unexplained cash credits due to lack of evidence and confirmation from parties. The appellant argued against these additions, highlighting clerical mistakes and discrepancies in the assessment. The Tribunal analyzed the reasons provided by the Assessing Officer for rejecting the books of account and treating cash sales as unexplained cash credits. The Tribunal acknowledged the Assessing Officer's power to reject book results under section 145(3) but disagreed with the profit rate applied for the addition. The Tribunal directed the Assessing Officer to use a reasonable profit rate of 5% instead of the higher rate applied earlier. Furthermore, the Tribunal deleted the addition of cash credits, considering them as trade creditors related to trading entries. The Tribunal's decision was supported by legal precedents, and the Assessing Officer was instructed to recompute the income accordingly.Issue 2: Disallowance of Deduction under Chapter VIAThe appellant raised an issue regarding the disallowance of the claim for deductions under Chapter VIA of the Income-tax Act, 1961. The lower authorities had not allowed the deduction of LIC and other expenses claimed by the assessee. The Tribunal directed the Assessing Officer to gather evidence from the assessee and make a decision on allowing the claim in accordance with the law. The Tribunal partially allowed the appeal of the assessee for statistical purposes, indicating a favorable stance towards the deduction claim under Chapter VIA.In conclusion, the Appellate Tribunal ITAT Nagpur addressed the issues raised by the appellant concerning the addition of trade creditors as unexplained cash credits, rejection of book results, and the disallowance of deductions under Chapter VIA of the Income-tax Act, 1961. The Tribunal provided detailed analysis and rulings on each issue, ensuring a fair and comprehensive assessment of the appellant's concerns.