AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2014 (1) TMI 394
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....llegal and against the law. 5. That the Commissioner of Income Tax (Appeals) should have accepted the house hold expenses declared by the assessee, the addition sustained by the Commissioner of Income Tax (Appeals) under house hold expenses is illegal and against the law looking to the order of Hon'ble Tribunal in case of Pyarelal. 6. That the Commissioner of Income Tax (Appeals) rightly deleted the addition made by the Income Tax Officer arbitrarily and against the law. 3. At the first instance, the learned counsel for the assessee argued ground No. 4 relating to the sustenance of addition of Rs. 19,353/- out of the expenses. 4. The facts related to this issue in brief are that the Assessing Officer during the course of assessment proceedings, noticed that the assessee had shown following expenses in the profit and loss account:- 1. Telephone Expense Rs. 11,552/- 2. Shop Expense Rs. 08,613/- 3. Refreshment Expense Rs. 26,085/- 4. Petrol Expense Rs. 73,439/- 5. Travelling Expense Rs. 57,922/- 6. Car Wash Rs. 15,922/- Total Expenses Rs. 1,93,533/- The Assessing Officer disallowed 20% of the above expenses by giving a general observation that the said expenses were....
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....e Assessing Officer was not satisfied from the explanation of the assessee and estimated the house hold expenses @ Rs. 12,000/- per month totalling to Rs. 1,44,000/- and proposed to make addition of Rs. 57,000/-. However, no addition was made by stating that it is to be telescoped with the trading addition. 12. Being aggrieved, the assessee carried the matter to the ld. CIT(A), who confirmed the action of the Assessing Officer. Now the assessee has filed the cross objection. 13. The learned counsel for the assessee reiterated the submissions made before the authorities below and in his rival submissions, the learned D.R. supported the orders of the authorities below. 14. We have considered the submissions of both the parties. In the present case, it is noticed that the assessee explained that a sum of Rs. 1,12,000/- was withdrawn for house hold expenses, however, the Assessing Officer considered only Rs. 87,000/- for the purposes of house hold expenses and excluded the expenses of Rs. 25,000./-, which were incurred by the assessee for the education of the children. In the present case, the Assessing Officer while estimating monthly expenses @ Rs. 12,000/- has not given any basis....
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.... the G.P. rate of 17.22%, which was declared by a comparable case of M/s Tarsem Kumar & Company, Sriganganagar. 19. Being aggrieved, the assessee carried the matter to the Ld. CIT(A) and submitted that he had maintained complete quantitative tally of opening and closing stock, copy of the same was furnished to the Ld. CIT(A). As regards to the difference in the balance of the parties from whom goods were purchased, it was submitted that at the time of assessment proceedings, copies of the confirmation could not be received by the assessee and time was sought for filing the same. However, the Assessing Officer passed the assessment order without providing the opportunity even when the case was not getting time barred. The assessee furnished confirmation before the Ld. CIT(A) and explained that the difference was due to different method of accounting of discounts and that the parties made the entries of discount at the time of issuance of bills whereas the assessee entered the discount at the time of payment. The Ld. CIT(A), however, confirmed the action of the Assessing Officer for application of the provisions of Section 145(3) of the Act for rejecting the books of account. 20. A....
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....nstrate against the proposed action. As clear from the fact that even after the specific demand the learned A.O. has supplied the facts only to the extent which goes in his favour and so it cannot be said that the action of the A.O. is covered under the definition of Reasonable Opportunity. In the appeal of R.B. Shreeram Durga Prasad & Fatehchand Nursing Dass Vs. Settlement Commission reported in (1989) 176 ITR 169, Hon'ble Supreme Court have held as under:- "mere opportunity to make a submission is not enough, but it should be a clear opportunity so that the assessee can make an effective representation against the proposed action." In view of the above it is requested that the learned A.O. may please be directed to supply the desired informations to the assessee so that the necessary reply may be filed. Non providing the proper opportunity to the assessee to explain his case is not according to the sentiments of the law and the addition made on the basis of one sided view may please be cancelled. Here I would like to bring to your kind notice that to justify the G.P. declared the assessee has filed a chart showing the purchase and sale rates of some of the items and also produ....
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....hereas the assessee is dealing in the general goods that also in the open market. You will please appreciate that the policy of the assessee is to increase the turnover by charging the lower margin. One more observation is given by the A.O. on page 6 of the assessment order in which the A.O. has written that for earning the more profit the assessee has introduced bogus creditors and unsecured loans. In this regard, it is stated that from the above it appears that the learned A.O. trying to state that actually the profit of the assessee is low but to increase the same the assessee has introduced bogus creditors and unsecured loans. If it is true then at one hand the A.O. is saying that the assessee is declaring lower profit and on the other hand saying that the profit is increased by unfair means. In view of the above, it is requested that the addition made by the A.O. by applying the G.P. rate of 17.22% on the basis of the comparable case is not based properly. The assessee, by item wise details have shown that the G.P. in the goods sold by him are near to the G.P. declared whereas the facts of M/s Tarsem Kumar & Company are not comparable with the case of the assessee." 21. The....
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....essee discharged his burden to prove the credits. The assessee also stated before the Ld. CIT(A) as under:- "By filing the confirmations and presenting the creditors for statement the assessee has discharged his burden and now it was on the A.O. to bring some material on record to prove that these credits are from some undisclosed source of income of the assessee. Without establishing contrary it is not permitted in law to make addition u/s 68. The view of the assessee is supported by the judgment of the Hon'ble Rajasthan High Court in the case of Kanhaiyalal Jangid Vs. ACIT reported in (2008) 217 CTR 354 in which it was held by the Hon'ble court that assessee having filed confirmation from the creditor and having produced the creditor before the A.O. where the creditor affirmed advancement of loan to assessee, no addition u/s 68 could be made in the hands of assessee on the ground that the creditor could not satisfactorily explain the source of loan." 26. The Ld. CIT(A) after considering the submissions of the assessee deleted the impugned addition by observing that the facts of the assessee's case were similar to the facts involved in the case of Kanhaiyalal Jangid Vs. ACIT dec....
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.... assessee has filed the new addresses of the 4 parties and shown his inability to about the address of the 5th party. After that the learned A.O. has completed the assessment on 31.10.2011 but in the meanwhile neither issued the new notice u/s 133(6) to these parties nor asked the assessee to file the confirmed copies of account of these parties. Had the A.O. asked the assessee to file the confirmations of these parties, the assessee would have filed the same. Any how if your goodself think it necessary now then the copies can be supplied by the assessee. Sir, first of all learned A.O. has issued the show cause for 5 parties whereas made additions for 8 parties. Regarding the addition of the rest three parties A.O. has not given any reason in the order. All these parties are the supplier of the assessee and the assessee is purchasing the goods from these parties. The assessee is purchasing the goods on credit basis. The assessee is maintaining the complete bills of the purchases from these parties and the same were produced before the A.O. and now can be produced before your goodself. The payments were made through the bank. Sir simply because the direct confirmation of these par....
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....In response to the same, the assessee filed the copies of accounts from all the parties, which revealed that there were slight difference due to different system of accounting of discounts adopted by the assessee and the parties. 32. Ld. CIT(A) after considering the submissions of the assessee, observed that the addition of total amount outstanding to the credit of all the parties could not be added because the assessee was purchasing the goods from those parties on credit basis and sending the payment through banking channels, so it could not be said that those parties were not traceable or the total amounts shown in the name of those parties were bogus. He further observed that the Assessing Officer had no where established that those were the bogus parties or the amount shown in their names, were bogus. The Ld. CIT(A) was of the view that the provisions of Section 68 of the Act were not attracted to the amounts representing purchases made on credit. Reliance was placed on the judgment of the Hon'ble Allahabad High Court in the case of CIT Vs. Pancham Dass Jain reported in (2006) 205 CTR 444. As regards to the difference in the balances, the Ld. CIT(A) was of the view that the a....