2014 (10) TMI 709

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....l questions of law would arise for determination of this Court:- "(i) In the facts and circumstances of the case, whether the ITAT was right in law in not sustaining the addition of Rs. 85,45,077/- made on account of disallowance u/s 40A(3) of the Income Tax Act, 1961, even when the assessee has violated the provisions of Section 40A(3) and failed to furnish information and produce accounts? (ii) In the facts and circumstances of the case, whether the ITAT was right in deleting the addition of Rs. 85,45,077/- without appreciating the fact that there is no correlation between the estimated G.P.rate and the disallowance u/s 40A (3)? (iii) In the facts and circumstances of the case, whether the ITAT was right in law in deleting the addition....

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....ooks of accounts and estimated the income of the assessee by applying the net profit rate of 10% as against 5.05% declared by the assessee, thus, an addition on account of the low gross profit rate to the tune of Rs. 7,32,336/- was added and the net profit was calculated at Rs. 14,79,256/.-. Besides this, Assessing Officer, after verifying the accounts of the assessee, found that the cash withdrawals allegedly made by the assessee for incurring various expenses was not justifiable for want of bills and vouchers, as the assessee failed to produce, much less proof thereof, thus, held the assessee liable to deduct the tax at source as required under Section 194(c) of the Act. Accordingly, the Assessing Officer disallowed the said expenses/cas....

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....the other additions ordered by the Assessing Officer, Commissioner of Income Tax (Appeals) maintained the said additions. The revenue challenged the said finding before the Income Tax Appellate Tribunal vide appeal No.256-Chandigarh/2013, whereas, on the other hand, the assessee also filed the cross-objections bearing No.16/Chandigarh/2013 in the aforementioned ITAT. That the ITAT relying upon the judgment in the case of Santosh Jain (supra), which followed the decision of Allahabad Court in CIT Vs. Banwari Lal case (1999) 229 vide order dated 18.10.2013 dismissed the appeal and permitted the assessee to withdraw the cross-objections. Counsel for revenue submitted that ITAT has not appreciated that there was violation of Section 40A(3) of....