AI Drafter - (New and Powerful) 
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter. 
TaxTMI 
TaxTMI 
2018 (11) TMI 339
X X X X Extracts X X X X
X X X X Extracts X X X X
....s and trainees. 3 The Ld. Commissioner of Income Tax (Appeals) has erred in law as well as on facts in deleting the addition of Rs. 40,25,735/- made by AO on account of bogus purchase of fixed assets._ 4 The Ld. Commissioner of Income Tax (Appeals) has erred in law as well as on facts in deleting the addition of Rs. 30,76,879/- made by AO on account of advertisement and business promotion expenses. 5 The Ld Commissioner of Income Tax (Appeals) has erred m law as well as on facts in deleting the addition of Rs. 1,53,80,453/- made by AO on account of unaccounted income being loan repayment. 6 The Ld. Commissioner of Income Tax (Appeals) has erred in law as well as on facts in deleting the addition of Rs. 5,62,725/- made by AO on account of unaccounted income being credit appearing in the name of M/s Piron Design (P) Ltd. 7 The Ld Commissioner of Income Tax (Appeals) has erred m law as well as on facts in deleting the addition of Rs. 1,13,87,296/- made by AO on account of unexplained administrative expenses. 8. (a) The order of the CIT (A) is erroneous and not tenable in law and on facts. (b) The appellant craves leave to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mission of the assessee has restricted the addition to 50% of the amount of the services billed to the above entity. It was contended by the Ld. AR that both the AO as well as Ld. CIT(A) have not appreciated the facts in the right perspective. In the present case, the assessee has received the above amount and has included the same in the profit and loss account and paid taxes thereon. The assessee having already offered the amount to taxation, the addition of the same amount again is per-se untenable. The Ld. AR further submitted that there were no incriminating material was found during the survey and no independent enquiry has been carried out by the AO. The AO has got carried away with the Shunglu Committee report, ignoring the fact that there is no connection with the assessee. In reply, the Ld. DR placed reliance on the order passed by the AO. She contended that the addition has been rightly made by the AO. 5. We have heard both the parties and perused the records especially the impugned order and the paper book. Ongoing through the facts, it is evident that the assessee has received a sum of Rs. 79,41,600/- as consultancy income. The said amount has been included in the c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ddition. 7. We have heard both the parties and perused the records especially eh impugned order. After perusing the same, we note that the cash deposited in the bank account is duly accounted for. The assessee is maintaining regular books of accounts and the cash deposited in the bank account is duly reflected in the cash book maintained by the assessee. It is not the case of the AO that such cash deposited in bank account is not accounted for in the books of accounts of the assessee. Thus, the cash deposited in bank account is accounted for cash and we uphold the order of the CIT(A) in deleting the above said addition by holding that the cash deposited in the bank is fully accounted for and the addition made by the AO is ex-facie bad. Accordingly, Ground no. 2 of Revenue's appeal is dismissed. 8. Ground no. 3 of Revenue's appeal is regarding deletion of addition of Rs. 40,25,735/- made by the AO on account of bogus purchase of fixed assets. As per the assessment order the assessee company is engaged in the business of only providing e-learning. It has been alleged that during the course of the survey not evidence of any business activity other than elearning was found. Even ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s clearly shows the arbitrariness on the part of the AO. The Ld. CIT(A) has considered the facts in the right perspective and has rightly deleted the addition. Accordingly, we uphold the order of the CIT(A) on this issue and the Ground no. 3 of the Revenue's appeal is dismissed. 10. Ground no. 4 in Revenue's appeal is regarding deletion of addition of Rs. 30,76,879/- made by AO on account of advertisement and business promotional expenses. The Ld. DR placed reliance on the order of the AO and contended that the Ld. CIT(A) was not justified in deleting the addition. As against this the Ld. AR placed reliance on the order of the Ld. CIT(A). It was contended that complete details were submitted before the AO as is evident from the Paper Book and the AO has made the addition arbitrarily ignoring the facts and the provision of Section 37 of the Act. 11. We have heard both the parties and perused the records especially the impugned order. After perusing the assessment order, we note that the AO has made the above addition by holding that there is no necessity for the assessee to incur such expenditure as the assessee company is having a turnover of Rs. 2 crore and imparting trainin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ll the parties have sufficient creditworthiness as can be seen from the financial and other documents available on record. 13.1 Ongoing through the assessment order we note that the AO has made addition in respect of the amount paid back by the assessee to the following parties not the amount received from these parties: S.No. Name of the party from whom loan has been accepted Total amount received during AY 2011-12 Total amount paid back during AY 2011-12 Interest paid Closing balance as on 31.3.2011 1 M/s Dolphin Space Systems Rs. 23,58,400 Rs. 23,58,400 NIL NIL 2 M/s Piron Consulting Pvt. Ltd. Rs. 8,94,100 Rs. 89,41,000 NIL NIL 3 M/s Indo Solutions Pvt. Ltd. Rs. 1,25,52,000 Rs. 85,28,000 NIL Rs. 40,90,000 4 M/s Piron Design Pvt. Ltd. Rs. 42,14,000 Rs. 5,89,000 NIL Rs. 36,25,000 5 Sh. Ashish Aggarwal Rs. 7,64,453 Rs. 7,64,453 NIL NIL 6 Sh. Ankur Aggarwal Rs. 36,63,500 Rs. 22,46,500 NIL Rs. 14,17,000 Total Rs. 2,44,46,453 Rs. 1,53,80,453/- NIL Rs. 54,51,000/- 13.2 In respect of the fir....
X X X X Extracts X X X X
X X X X Extracts X X X X
....this account before the AO are placed at PB. Pg. 315 to 388 which include confirmation, ledger account, bank statement, ITR and audited Balance sheet. This is also a sister concern of the assessee. This account is also a running account. The AO in this case also has simply added the entire aggregate credit without even considering the fact that this is a current account between the two related concerns. All the payment have been made and received through the running bank account. This company has filed its ITR for the year under consideration of Rs. 41,60,505/-. It has a gross income from operation of 18,52,99,273/-. There is nothing abnormal in the transacitons entered in to by the assessee with this company and also in the bank account of this company. 13.5 The fourth case is that of Piron Design Pvt. Ltd. which again is a group company. The assessee has received a sum of Rs. 14,42,000/- and has paid back Rs. 5,89,000/- with the result that there is a closing credit balance of Rs. 36,25,000/-. Interestingly the AO has made addition of Rs. 5,89,000/- only being the amount paid back by the assessee during the year. The documents filed in respect of this account before the AO are....
X X X X Extracts X X X X
X X X X Extracts X X X X
....regular bank account and there is nothing adverse about the transactions entered into by the assessee. 13.8 The above analysis of each of the creditors shows that assessee has filed sufficient evidences so as to establish identity, creditworthiness and genuineness of the transactions. As discussed above, there is nothing abnormal so as to draw any adverse inference against the assessee. It may be relevant to point out that he AO has made addition without application of mind. This fact gets established that AO has made addition of the amount paid back and not that of the amount received by the assessee. In fact, the above analysis clearly demonstrate that the assessee has discharged its onus fully in respect of the credit. The observation made by the AO in the assessment order are factually incorrect. The AO has not brought any material so as to draw any adverse inference. He has indulged into surmises. The CIT(A) has rightly deleted the addition and accordingly we uphold the order of the CIT(A) deleting the addition. In the result the ground no 5 is dismissed. 14. Ground no. 6 is regarding deletion of addition of Rs. 5,62,725/- made by the AO in respect of the credit appearin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g the addition. We uphold the order of the CIT(A) and this ground no. 6 of the Revenue is dismissed. 16. Ground no. 7 in Revenue's appeal is regarding deletion of addition of Rs. 1,13,87,296/- made by the AO on account of unexplained administrative expenses. The Ld. DR supported the order passed by the AO and contended that ld. CIT(A) has gone wrong in deleting the addition. In reply, the Ld. AR submitted that the addition has been made by the AO in most arbitrary manner ignoring the facts of the case. He submitted that assessee is engaged in the business of imparting education and training and all these expenses have been incurred for this business as is evident from the details submitted before the AO. The assessee has maintained regular books of accounts which have been audited. The AO has not rejected the books of accounts. The Ld. AR thus contended that Ld. CIT(A)'s order need to be upheld. 17. We have heard both the parties and perused the records, especially the order of the Ld. CIT(A). We find that the AO has made the above addition by holding that at the time of the survey no evidence of any business activity other than e-training was found. On this basis he has held....