TaxTMI 
TaxTMI 
2017 (11) TMI 1547
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....d in deleting the addition of Rs. 60,49,000/- made by the A.O. U/s 68 of the I.T. Act, 1961 without appreciating the material facts of the case. (ii) On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the disallowance of Rs. 50,000/- made by the A.O. U/s 80C of the I.T. Act, 1961." Grounds in assessee's Cross Objection "(i) The ld. CIT(A) has erred on facts and in law in confirming the disallowance of Rs. 3,47,600/- being 25% of the commission paid to three persons. (ii) The ld. CIT(A) has erred on facts and in law in confirming the rejection of books of account and trading addition of Rs. 3,99,167/-." 4. In the ground No. 1 of revenue's appeal, the issue involved is deleting the addition of Rs. 60,49,000/- made by the Assessing Officer U/s 68 of the Act. The ld. CIT(A) has granted relief to the assessee by holding as under: "6.5 I have gone through the assessment order as well as submissions made by the appellant. The appellant has filed additional evidences and cited the reasons for not been able to file before the A.O. The reasons given are taken into consideration and the additional eviden....
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.... (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory: Provided further that nothing contained in the first proviso shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB) of section 10." Thus, the provision of the section confers upon the assessee to give nature and source of the credit. In this case the appellant had provided following documents to the A.O during assessment proceedings; 1. Name and address of the persons. 2. Copies of income Tax returns. 3. Copy of bank accounts. That the factual position of the amounts of loan raised during the year have been tabulated as under; Name of the person (S/Sh.) Amount of loan(in Rs.) Whether THROUGH A/C PAYEE CHEQUE Whether Income tax assessee Confirmations Filed Amit 5,00,000/- YES ....
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....has also discussed the parameters set by the Hon'ble Supreme Court in the case of CIT Vs Lovely exports Ltd. It has observed as under; Division Bench of Delhi high Court by judgment rendered on 31.01.2011 reported as CIT v. Oasis Hospitalities Pvt. Ltd. (2011) 333 ITR 119 (Del.) = 2011-TIQL-69- HC-DEL-IT. Taking note of the jurisprudential development on the subject as culminating in judgment of Supreme Court in CIT v. Lovely Exports Pvt. Ltd.(supra), it was held that the initial burden is upon the assessee to explain the nature and source of the share application money and in order to discharge this onus, the assessee should prove (a) the identity of shareholder: (b) genuineness of the transaction; and (c) creditworthiness of shareholders. It was further observed that for discharging the above burden, the assessee must file some documents or produce the shareholder to prove his identity. In the case of subscriber being a company details in the form of registered address or PAN identity, etc. would suffice. The genuineness of the transaction may be demonstrated by showing that the assessee had, in fact, received money from the applicant shareholder and that it had come not....
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....T Vs. Orissa Corporation Pvt. Ltd. 159 ITR 78 (SC) 2. CIT vs. Shiv Dhooti Pearls & Investment Ltd. (2016) 237 Taxman 104 (Del.) (HC) 3. CIT vs. Jai Kumar Bakliwal (2014) 366 ITR 217/ 101 DTR 377 (Raj.) (HC) 4. CIT vs. H.S. Builders (P.) Ltd. (2012) 78 DTR 169 (Raj.) (HC) 5. Labh Chand Bohra vs. ITO 189 Taxman 141/ 219 CTR 571 (Raj.) (HC) 6. Kanhaialal Jangid vs. ACIT 217 CTR 354 (Raj.) (HC) 7. Aravali Trading Co. vs. ITO 187 Taxman 338 (Raj.) (HC) In view of above, the addition made by the AO is rightly deleted by the Ld. CIT(A) and therefore, the ground of the department be dismissed. 7. We have heard the rival contentions of both the parties and perused the material available on the record. We have also gone through the various case laws relied upon by the ld AR and also the factual matrix of the issue under consideration. We have noticed that Shri Amit had advanced Rs. 5.00 lacs to the assessee and the ld. CIT(A) has simply accepted the PAN as establishing the creditworthiness of this creditor. In our considered view, simply PAN card can not establish the capacity of the lender. The PAN card in itself is not a cer....
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....dence filed in support of claim made for payment of insurance premium amounting to Rs. 50,000/- under Section 80C paid to Max Life Insurance dated 18/09/2011. The appellant has submitted that during the assessment proceedings he could file proof for payment of Rs. 50,000/- insurance premium only and could not file proof for the balance amount claimed. I have considered the appellant submission and the evidence of payment of Rs. 50,000/- towards insurance premium. Accordingly, the deduction of Rs. 50,000/- is allowed under section 80C of the Act. However, in absence of proof for payment of Rs. 15,000/- to qualify for deduction U/s 80D of the Act, the same is rejected. Accordingly, the appellant's ground of appeal on the issue is partly allowed." 9. The ld. DR has relied on the order of the Assessing Officer. 10. While pleading on behalf of the assessee, the ld AR has submitted as under: 1. The assessee claimed deduction of Rs. 50,000/- u/s 80C and Rs. 15,000/- u/s 80D of the IT Act. In assessment proceedings, assessee filed the proof of payment of insurance premium of Rs. 50,000/- but AO disallowed the entire claim of deduction for want of evidence. 2. The Ld....
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....income. Assessee has deducted tax at source on the amount so credited. Only because payment is made to the relatives cannot be a reason to hold that the expenses are not wholly and exclusively for the purpose of business or to invoke section 40A(2)(b) without giving a finding that payment so made is excessive or unreasonable. In view of above, the disallowance confirmed by CIT(A) be directed to be deleted. 14. On the other hand, the ld DR has relied on the orders of the authorities below. 15. After hearing both the sides on this issue, we find that the disallowance was made only 25% of the expenses debited under the head 'Commission Paid' by invoking the provisions of Section 40A((2)(b) of the Act and also that the entire expenses were not wholly and exclusively for the purpose of business of the assessee. It is noticed that all the three persons were regularly assessed to tax and necessary TDS was also deducted. It was paid to the persons, who were relatives of the assessee. It was not wholly and exclusively for the purpose of business. It was excessive payment in view of the provisions of Section 40A of the Act. Thus, there is no clear cut finding that on what basis this pa....
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....test check basis. Another reason given by the lower authorities for rejecting the books of accounts is the non-reconciliation of TDS/TCS as shown in the ITR and as appearing in Form 26AS. It is submitted that from the chart showing difference in TCS as per return and Form 26AS (PB 37), it can be noted that there is difference of only Rs. 2,682/-. TCS credit as per return is Rs. 11,85,939/- (PB 38-49) and as per Form 26AS is Rs. 11,88,621/- (PB 50-61). The assessee has claimed less credit of Rs. 2,682/-. Thus, purchases are fully reconcilable. Hence, the observations given by the lower authorities for rejecting the books of accounts and confirming the trading addition is incorrect. 2. Otherwise also, it is submitted that there is a slight decline of 0.70% in g.p. rate as compared to previous year on increased turnover by Rs. 8,59,94,849/-. It is normal business practice that assessee is mainly interested in volume of the profit earned instead of the rate. This volume can be achieved only by increasing the sales by reducing the margin. In the various cases it has been held that simply because there is decline in the G.P. rate due to substantial increase in the turnover, the ....