2018 (7) TMI 365 - AT - Income Tax

Tribunal Appeal Outcome: Partial Allowance, Disallowances Upheld & Deleted, Addition Partly Approved

The Tribunal partly allowed the appeal, upholding some disallowances while restricting others. The disallowance of Rs. 2,00,000 on account of labour ... Disallowance on account of labour charges, misc. expenses and site expenses - Held that:- The assessee could not provide any satisfactory explanation regarding alleged the double claim of deduction on account of labour charges and also not provided any explanation in respect of other additions made on account of misc. expenses and site expenses. As observed from the record that the assessee claimed the expenses on self made vouchers and failed to substantiate its claim with material evidences. CIT-A was correct in restricting the disallowance to ₹ 2,00,000/-. We uphold the same and it is justified. Ground no. 1 raised by the assessee is dismissed. Addition on account of unexplained money - Held that:- It is noticed that the AO only doubted the creditworthiness of the said loan creditors by observing that all the creditors and donors have only normal balances in their bank accounts and said amount were deposited prior to giving the amount to the assessee. It is also noticed from the assessment order that the AO held that the loan creditors and donors have shown hypothetical income like misc. receipts. We find from record that the loan creditors were appeared before the AO under 131 proceedings and they have stated that they have vegetable and foria business since last 7-8 years. In respect of gift of ₹ 50,000/- we find that the AO did not make any adverse remark in respect of her capital account. In our opinion, the assessee has proved the identity, creditworthiness and genuineness of transaction of loan creditors and donor. The assessee also filed relevant documents in support of the transaction regarding identity, creditworthiness and genuineness of transaction before the AO/CIT-A. Therefore, addition made by the AO and confirmed by the CIT-A on this issue stands deleted. Addition made on account of sundry creditor - Held that:- Taking into consideration the submissions of the ld.AR and in the interest of justice, we deem it fit and proper to remand the issue to the file of AO for the same. The AO shall consider the issue afresh. The assessee is at liberty to file necessary details in respect of his claim and contention. The assessee is also directed to co-operate with the AO in the assessment proceedings for speedy disposal of the case as the A.Y involved in this appeal is very old i.e A.Y 2007-08. Ground of assessee’s appeal is allowed for statistical purpose. Issues Involved:1. Restriction of disallowance of Rs. 2,00,000/- made on account of labour charges, miscellaneous expenses, and site expenses.2. Confirmation of additions of Rs. 27,000/- and Rs. 1,920/- made on account of unexplained money.3. Confirmation of disallowances of Rs. 8,00,000/- and Rs. 50,000/- on account of loan creditors and donors.4. Confirmation of addition made on account of sundry creditor.Issue-wise Detailed Analysis:1. Restriction of Disallowance of Rs. 2,00,000/- on Account of Labour Charges, Miscellaneous Expenses, and Site Expenses:The assessee, engaged in timber and contract business, filed a return declaring a total income of Rs. 1,59,580/-. The AO disallowed Rs. 2,53,530/- on account of labour charges, miscellaneous expenses, and site expenses due to lack of justification and satisfactory explanation. The CIT-A restricted the disallowance to Rs. 2,00,000/-, citing no substantial evidence provided by the assessee to prove the expenses. The Tribunal upheld the CIT-A’s decision, noting that the expenses were claimed on self-made vouchers without material evidence. Thus, the ground raised by the assessee was dismissed.2. Confirmation of Additions of Rs. 27,000/- and Rs. 1,920/- on Account of Unexplained Money:During assessment, the AO found credit entries amounting to Rs. 27,000/-. The assessee claimed these were receipts from Vinayak Industries, but only Rs. 10,000/- was declared. The AO added the entire amount to the total income due to non-explanation of remaining entries. The CIT-A confirmed this addition. Before the Tribunal, the AR showed that Rs. 10,000/- was received via cheque from Vinayak Industries. The Tribunal restricted the addition to Rs. 17,000/- as the AR could not explain the other entries, thereby partly allowing this ground of appeal.3. Confirmation of Disallowances of Rs. 8,00,000/- and Rs. 50,000/- on Account of Loan Creditors and Donors:The AO added Rs. 8,50,000/- as unexplained cash credit, questioning the creditworthiness and genuineness of the loan creditors and donor. The CIT-A upheld this, citing insufficient proof of income sources and creditworthiness. The Tribunal reviewed submissions, including loan confirmations, IT returns, bank statements, and PAN cards, and found that the assessee had proven the identity, creditworthiness, and genuineness of the transactions. Therefore, the Tribunal deleted the addition made by the AO and confirmed by the CIT-A, allowing these grounds of appeal.4. Confirmation of Addition Made on Account of Sundry Creditor:The AO added Rs. 9,48,074/- as unexplained cash credit due to the assessee's failure to produce confirmation from one creditor, Manik Majumdar. The CIT-A confirmed this addition. Before the Tribunal, the AR agreed to provide necessary details if the matter was remanded. The Tribunal remanded the issue to the AO for fresh consideration, directing the assessee to cooperate and provide the required details. This ground was allowed for statistical purposes.Conclusion:The appeal was partly allowed, with the Tribunal upholding some disallowances, restricting others, and remanding one issue for further consideration. The order was pronounced in open court on 04-07-2018.