2021 (6) TMI 303

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....Act'). 2. The brief facts of the case are that the assessee filed its return of income for the assessment year under consideration declaring total income of Rs. 26,75,690/- The case was selected for scrutiny and the AO passed the assessment order u/s. 143(3) of the Act determining the total income of Rs. 71,00,314/- making addition of Rs. 39,04,797/- on account of disallowance u/s. 36(1)(iii) of the Act along with other additions. The assessee challenged the assessment order passed by the AO. The Ld. CIT(A) after hearing the assessee partly allowed the appeal and reduced the disallowance on account of expenses debited under the head Car Expense, Insurance, Telephone expenses and Depreciation from 1/5th to 1/8th and disallowance of expe....

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....nted out that the CIT(A) has affirmed the action of the AO ignoring the contention of the assessee that the debit balances in the books of the assessee firm in respect of Radhy Sham Popli amounting to Rs. 7,13,438, Parvati Textiles amounting to Rs. 29,90,000/- Lovish Arora amounting to Rs. 9,50,000/- and M/s. G.D. Export amounting to Rs. 2,06,48,500/- had been advanced out of the reserve capital of the partners and outstanding since accounting period 2010-11. Further, advance of Rs. 73,00,000 to Sh. FC Goyal was given during the accounting period 2011-12. The Ld. Counsel further submitted that during the relevant period, the capital reserves of the partners were more than the advances made. The Ld. counsel pointed out that these advances/de....

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....e Ld. Departmental Representative supporting the order passed by the Ld. CIT(A) submitted that since the assessee could not substantiate its claim during the assessment proceedings and the appellate proceedings, the Ld. CIT(A) has rightly confirmed the addition made by the AO. 6. We have perused the material on record including the cases relied upon by the Ld. Counsel for the assessee and the authorities below. The assessee has assailed the action of the Ld. CIT(A) on two grounds i.e., that the advances and borrowings do not pertain to the year relevant to the assessment year under consideration but the same were made in the earlier years and since no disallowance was made in the relevant assessment year, the Ld. CIT(A) ought to have delet....