TaxTMI 
TaxTMI 
2020 (12) TMI 72
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....sed u/s 143 (3) of the Income Tax Act (for short the 'Act'). 2. Brief facts of the case are that the assessee company engaged in the business of Hotel and Restaurant, filed its return of income for the assessment year under consideration declaring nil income. Since the case was selected for scrutiny, the AO issued notice u/s 143 (2) and 142 (1) of the Act, 1961. In response thereof, the authorized representative (AR) of the assessee appeared and furnished some of the details. Since the assessee did not file the complete details called for despite several opportunities given for this purpose, AO passed assessment order u/s 143 (3) of the Act on the basis of material available on record and determined the total income of the assessee at Rs....
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....20/- on account of salary expenses and Rs. 6,814,695/- on account of purchase expenses. The CIT (A) has erred in confirming disallowance of vehicle expenses, salary and purchase expenses on an arbitrary ad hoc basis." 4. During pendency of this appeal, the assessee raised additional grounds without prejudice to the grounds raised in the appeal. The additional grounds raised by the assessee are as under: 1. Without prejudice to the other grounds, the Ld. AO has erred in not setting off the unabsorbed depreciation and brought forward business loss against the income assessed u/s 68 of the Act. 2. Without prejudice to the other grounds, the Ld. AO ought to set off brought forward business loss first in preference ....
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....nts could not be submitted during assessment proceedings. Accordingly, the Ld. CIT (A) obtained report from AO and on the basis of the said report, additional evidence were taken into consideration while deciding the appeal. The Ld. counsel further invited our attention to page 75 to 79 of the paper book, which is the copy of report submitted by the AO wherein the Dy. Commissioner of Income Tax has admitted that the assessee has taken loan of Rs. 1,22,34,110/- from Director Mr. Cyrus Nallaseth and that he has furnished the documents called for by u/s 133(6) of the Act. In view of the aforesaid facts, the Ld. counsel for the assessee submitted that the findings of the Ld. CIT (A) are contrary to the evidence on record. Hence, the same is lia....
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....the assessee amounting to Rs. 1,22,34,110/-, there is no justification in making addition of Rs. 1,30,18,510/- on account of unexplained cash credit u/s 68 of the Act. Hence, in our considered view, the assessee has established the genuineness of the transaction by discharging the burden of proving identity and creditworthiness of the lender. We therefore, allow this ground of the appeal of the assessee and set aside the findings of the Ld. CIT(A). Accordingly, we direct the AO to delete the addition. 8. So far as ground No.2 of the appeal is concerned, the Ld. counsel submitted that the assessee does not want to press this ground of appeal. Hence, we dismiss Ground No. 2 of the appeal as not pressed. 9. Vide Ground No. 3 the as....
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.... of the assessee. 11. We have heard the rival submissions of the parties and perused the material on record. We notice that during appellate proceedings, the assessee filed an application for admission of additional evidence on the ground that due to change in management it could not produce some of the documents during assessment proceedings. Further, as contended by the assessee since the assessee was carrying on its business from 19 outlets, the vouchers were produced on sample basis. We notice that the In the case of CIT vs. Walchand & Company Pvt. Ltd (supra) the Hon'ble Supreme Court upheld the findings of the High Court whereby the High court had set aside the order of the Tribunal confirming similar disallowance, holding as under....
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.... adequate increase in the earnings of the assessee, for the increase in remuneration was not reflected in the increase in profits of the assessee and that it appeared that, as compared to the previous years, the business profits disclosed by the assessee had fallen by Rs. 2 lakhs and, therefore the increase in expenditure could not be justified as laid out wholly and necessarily for the purposes of the business. But an employer in fixing the remuneration of his employees is entitled to consider the extent of his business, the nature of the duties to be performed, and the special aptitude of the employee, future prospects of extension of the business and a host of other related circumstances. The rule that increased remuneration can only be ....