TaxTMI 
TaxTMI 
TaxTMI 
2015 (12) TMI 765
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....Hence, the same kindly be deleted in full. 3. Rs. 32,725/-:- The ld CIT(A) erred in law as well as on the facts of the case in confirming the disallowances of Rs. 30,000/- on account of repair and maintenance of video camera and further erred in enhancing the disallowance to Rs. 2,7,25/-. The disallowance so confirmed and further enhanced by the ld CIT(A) is contrary to the provisions of law and facts of the case. Hence, the same kindly be deleted in full. Alternatively and without prejudice to above, the ld CIT(A) erred in law as well as on the facts of the case in not even allowing depreciation despite holding the expenditure of capital nature. Hence, the depreciation @ 15% kindly be directed to be allowed. 4. Rs. 2,26,805/-:- The ld CIT(A) erred in law as well as on the facts of the case in partly confirming the disallowances made U/s 40A(3) of the Act of Rs. 2,88,000/-. The disallowance so made and partly allowed is totally contrary to the provisions of law and facts on the record and hence the same kindly be deleted in full. 5. Rs. 51,744/-:- The ld CIT(A) erred in law as well as on the facts of the case in confirming the disallowance of the expenditure incurred on....
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....were made by the Directors later on it was reimbursed to them but entered in books on the date of payment. As far as negative balance on other days, the submission of assessee is not acceptable, since each and every narration was given in the entries in the cash book at the time of payment i.e. months for which paid, rate at which paid etc. Therefore, he held that shortage appearing in the cash book of assessee was on account of excess expenses in comparison to availability of cash. This shortage might be met by the assessee out of their undisclosed income. Thus he made addition of Rs. 62,327.90. 4. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the ld CIT(A), who had confirmed the addition by observing that the ld Assessing Officer had examined the cash book during the course of assessment proceedings. He has confronted the shortage of cash with the assessee. Bill of Rs. 1754/- against the telephone expenses by the Director, which was reimbursed by the firm on 23/07/2008 and same was clerical mistake committed by the Accountant, who made entries in the cash book. Similarly, the cash shortage of Rs. 61,195/- was also clerical mistake ....
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....nd of assessee's appeal is dismissed. 8. The 3rd ground of the assessee's appeal is against confirming the disallowance of Rs. 30,000/- and enhancing the disallowance of Rs. 2,725/- on account of repair and maintenance. The ld Assessing Officer observed that the assessee had debited Rs. 15,000/- on 01/08/2007 and Rs. 15,000/- on 10/08/2007 under the head repair and maintenance of video camera. He further observed that the assessee did not own any camera, therefore, these expenses incurred on maintenance of camera owned by the Director. The ld Assessing Officer gave reasonable opportunity of being heard on this issue but the assessee did not furnish any reply before him. Thus, he made addition of Rs. 30,000/ in the income of the assessee. 9. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the ld CIT(A), who had confirmed the addition by observing that on perusal of bill of Shubham Electronics dated 11/5/2007 for purchase of CCTV camera amounting to Rs. 40,500/- which was ultimately settled for Rs. 38,500/-. Out of this, the amounts of Rs. 30,000/- and Rs. 8,500/- were paid in cash. The Accountant of appellant company had charged these ....
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.... explained that no single payment in cash exceeding Rs. 20,000/- was made by it. The appellant submitted that payments were made on different dates however the accountant had inadvertently posted these entries on single day. The appellant also produced the vouchers of different dates but these were rejected by the A.O. as complete narration was available in the cash book itself. The narration of various entries in the cash book which are enumerated on page 3 of the assessment order showed that the entire payment of salary for four months was made on 07/09/2007. Further, only a single voucher bearing specific number was mentioned against each cash payment. This fact itself proved that the appellant had violated the provisions of Section 40A(3) of the IT Act. The subsequent vouchers were allegedly fabricated by the appellant. Hence these self made vouchers prepared afterwards are being rejected. The counsel of appellant has argued that addition of Rs. 61,195/- had already been made on account of shortage in cash balance. Therefore, the addition to this extent tantamounted to double addition. This contention of the appellant is found to be correct. I therefore direct the A.O. to restr....
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....h crunch. He further relied on the decision in the case of Anupam Tele Services Vs. ITO (2014) 88 CCH 35 (Guj) wherein the Hon'ble High Court followed the decision in the case of Attar Singh Gurumukh Singh Vs. ITO (1991) 191 ITR 667 (SC) on business expediencies wherein it has been held that there were peculiar facts wherein the payee insisted upon cash payment only and following the decision in the case of Harshila Chordia Vs. ITO (2008) 298 ITR 349 (Raj.) wherein the Hon'ble High Court has held that the exceptions contained in rule 6DD are not exhaustive and that the said rule must be interpreted liberally. In the present case also, the payees insisted upon cash payment only being employees of the assessee firm, therefore, he prayed that no disallowance should be made. 14. At the outset, the ld DR has vehemently supported the order of the Assessing Officer. 15. We have heard the rival contentions of both the parties and perused the material available on the record. Prima facie it appears that the assessee has paid salary in excess to Rs. 20,000/- and violated the provisions of Section 40A(3) of the Act but it is also revealed that these payments were pertained to salary....
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.... Assessing Officer. He has drawn our attention on page No. 74 to 79 of the paper book. The appellant was having complete address of the fabricator however, the Assessing Officer never asked to produce him. It is clear from the vouchers that these expenses pertained to repair and maintenance, which is revenue in nature. Therefore, the same is to be allowed. 18. At the outset, the ld DR supported the order of the ld CIT(A). 19. We have heard the rival contentions of both the parties and perused the material available on the record. After examining page No. 74 to 79 of the paper book, it appears that the assessee has fabricated the evidence at the time of photo copying. Original vouchers were not produced before the ld CIT(A). The genuineness of the expenses has been doubted by the lower authority, therefore, we confirm the order of the ld CIT(A) on this ground. Accordingly, this ground of the assessee's appeal is dismissed. 20. The 6th ground of the assessee's appeal is against confirm the addition on account of cessation of liability U/s 41(1) of the Act at Rs. 31,06,354/-. The ld Assessing Officer observed that the assessee had shown number of outstanding since long, therefore, ....
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.... Outstanding since May 2005 Copy of account of written off in year 2008-09 enclosed for verification. As regards to other parties for whom confirmation required, we submit that these has to pay but due to financial crisis in the company, it could not paid however are paying later on. We are also trying to got confirmation and as soon as could be obtained, we shall submit before your goodself." After considering the assessee's reply the ld Assessing Officer held that he issued notice U/s 133(6) of the Act to M/s Healmen Pharmaceuticals, which has been returned back with postal remark "Firm Closed hence returned". Therefore, the claim of the assessee was not verifiable. The entries subsequently written off during F.Y. 2008-09 has been excluded. As far as other creditors are concerned the assessee had failed to submit confirmation from these persons, even their addresses were not provided by the assessee so that verification could be made by the Assessing Officer himself. To verify whether the amount was outstanding as on date or not. These parties had been shown creditors to the tune of Rs. 9,41,353.99. The amount changes its character when the amount becomes the asses....
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....ainst supply of medicines. The assessee had not furnished name and address of the cash creditors during the assessment proceedings. The audit report filed by the assessee as on 31/3/2010 in Schedule-4, unsecured loan from Directors and relatives had been shown at Rs. 32,18,318.66 and from others NIL. He held that these persons were neither Director of the company nor the relatives and loan from others was shown at NIL. The assessee failed to furnish confirmation from these persons. The assessee had not paid any interest on these amounts. Therefore, he presumed that these amounts were received by the assessee for supply of medicines but no medicine was supplied by the assessee. Hence, money became assessee's own money. Therefore, he made addition of Rs. 18,05,000/- U/s 41(1)(a) of the Act. Thus, total addition of was made at Rs. 31,06,335.99 under this Section. 21. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the ld CIT(A), who had confirmed the addition after considering the assessee's reply by observing that the assessee could file confirmation from Vijaydeep Agencies, Healmen Pharmaceuticals and Sh. Amit only. The Assessing Office....
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....ading operations had become richer by the amount transferred to its profit and loss account. He further relied on the decision in the case of CIT Vs. Karam Chand Thapar 222 ITR 112 (SC), Rollatainers Ltd. Vs. CIT 339 ITR 54, Logitronics Pvt. Ltd. Vs. CIT 333 ITR 386 (Del) and Jay Engineering Works Ltd. Vs. CIT 311 ITR 299. Accordingly, he confirmed the addition. 22. Now the assessee is in appeal before us. The ld AR of the assessee has submitted that unsecured loan of Rs. 18,05,000/- was outstanding loan from five parties not four parties mentioned by the ld Assessing Officer. If the amount of Shri Ajit Kumar is included in unsecured loan, the total unsecured loans were Rs. 19.55 lacs. The ld AR has drawn our attention on page No. 9 of the assessment order and balance sheet at page No. 66 of the paper book. He further argued that such type of credit balances does not fall U/s 41(1) of the Act. It is undisputed fact that these amounts were unsecured loan in the nature of cash credit as contemplated U/s 68. A bare reading of Section 41(1) makes it clear that the underlying idea behind introduction of this provision is that the legislature wanted to tax the amount of deductions/allow....
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....ar. 22.2 He further submitted that Rs. 9,41,354/- were received from the customer, which was paid in the later years, which proved that the related liabilities totaling to Rs. 7,91,354/- towards these Sundry creditors did exit in the subjected year. He has further drawn our attention on page No. 122 of the paper book that the assessee had repaid these advances received from these customers in subsequent year. The ld CIT(A) was wrongly held Rs. 9,41,354/- was claimed by the assessee in earlier year. Non-service of notice in the case of M/s Healmen Pharmaceuticals is irrelevant as balance has already paid/adjusted. Latest address available with the assessee was provided to the ld Assessing Officer during the course of assessment proceedings, the ld Assessing Officer has not confronted observation made by the postal authority with the assessee. He further relied on the decision in the case of CIT Vs. Bhawan Path Nirman (Bohra) & co. (2002) 258 ITR 440 (Raj.) on cessation liability U/s 41(1) with regard to sales tax refund which has been held by the Hon'ble Jurisdictional High court that amount of sales tax refund could not deemed to be income merely by drawing inference that it might....
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.... Jain Exports Pvt. Ltd, (2013) 85 CCH 0066 (Del.) (ii) CIT Vs. Sugauli Sugar Works (P) Ltd. (1999) 152 CTR 46 (SC) (iii) ITO Vs. Bansi Lal Gupta (2008) 113 TTJ 898 (Asr) (iv) Thomas Cook (India) Ltd. Vs. D/JCIT (2006) 105 TTJ 317 (Mum) (v) Bindal Duplex Ltd. Vs. ITO (ITA No. 352/Del./2012. Therefore, he prayed to delete the addition. He further argued that the case laws referred by the ld. Assessing Officer and ld CIT(A) are distinguishable fully as in all these cases. There was either unilateral written off or bilateral written off liability, therefore, principle laid down in case of TV Sundaram Iyengar & Sons Ltd. is not applicable in the case of the assessee. 23. At the outset, the ld DR has vehemently supported the order of the lower authorities and argued that the liability already ceased to be existed. Therefore, order of the ld CIT(A) may please be upheld. 24. We have heard the rival contentions of both the parties and perused the material available on the record. It is undisputed fact that the assessee had not written off any liability on account of loan creditor, trade creditor or security creditor during the year under consideration. The assessee had furnished re....
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....f the ld CIT(A). Accordingly, the addition confirmed by the ld CIT(A) is deleted. This ground of assessee's appeal is allowed. 25. The 7th ground of the assessee's appeal is against confirming the disallowance of ESI contribution of Rs. 1,519/- made U/s 36(1)(x) read with Section 2(24)(10) of the Act. The ld Assessing Officer observed that during course of assessment proceedings, it was found that the assessee had deposited employees ESI contribution after due date for the month of June 2007, July 2007, November 2007, January 2008, February and March, 2008. The ld Assessing Officer gave the reasonable opportunity of being heard, which was replied by the assessee. Reply of the assessee has reproduced on page No. 10 of the assessment order. After considering the assessee's reply the ld Assessing Officer observed that the assessee had failed to deposit employees ESI contribution for the month or on or before the due date. ESI employees contribution was not deposited on time for the months above i.e. totaling to Rs. 1,519/-. As per provisions of Section 36(1)(x) read with Section 2(24)(x), the cannot be allowed as deduction from the income of the assessee. Therefore, he disallowed Rs.....