2021 (12) TMI 436

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....r of two wheelers, filed his return of income for the assessment year under consideration declaring total income of Rs. 13,72,845/-. Since the case was selected for scrutiny, AO passed assessment order u/s 143(3) of Act and determined the total income of the assessee at Rs. 22,27,598/- after making addition of Rs. 3,30,305/- on account of low GP rate, Rs. 2,36,452/- on account of disallowance of interest, Rs. 2,46,150/- on account of interest on capital contribution and interest free loan advanced and Rs. 41,347/- on account of disallowance of expenses claimed. In the first appeal, the Ld. CIT(A) restricted the addition made on account of low GP rate to Rs. 1,50,000/-, restricted the disallowance to 10% from 1/5th of the total expenses, however, confirmed the remaining additions. Still aggrieved, the assessee is in appeal before this Tribunal. 4. Assessee has challenged the impugned order passed by the CIT(A) on the following grounds: - l. That the Ld. CIT(A) has grossly erred in sustaining addition of Rs. 1,50,000/-, Rs. 2,36,452/- and Rs. 2,46,150/- which is absolutely illegal, uncalled for and legally not sustainable as the Ld. CIT(A) had no material in his possessio....

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....ther pointed out that in the past much lower gross profits have been accepted in scrutiny assessment. The Ld. counsel further contended that since AO had made addition on estimation basis without pointing out any defect in the books of account of the assessee, The Ld. CIT(A) ought to have deleted the entire addition made by the AO. The Ld. counsel placing reliance on the judgment of the Hon'ble Rajasthan High Court in the case of Pr. CIT vs. Bhiwani Silicate Industries 268 Taxman 0596, submitted that the action of the Ld. CIT(A) is contrary to the law laid down by the Hon'ble High Court, therefore liable to be set aside. 7. On the other hand, the Ld. departmental representative (DR) supporting the findings of the Ld. CIT(A) submitted that since the Ld. CIT(A) has considerably reduced the addition, there is no infirmity in the said order to interfere with. 8. We have heard the rival submissions and perused the material on record including the case law relied upon by the Ld. counsel. As pointed out by the Ld. counsel, in the assessment year 2011-12 GP ratio shown by the assessee was 2.02%. AO passed the assessment order u/s 143(3) of the Act and no trading addition was ....

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....td. 231 Taxman 0784 (Delhi), 2. ITO vs. Usha Commercial Pvt. Ltd. ITA No 1469/Kol/2008 AY 2005-06 ITAT Kolkata, 2. ITO vs. Usha Commercial Pvt. Ltd. ITA No 1469/Kol/2008 AY 2005-06 ITAT Kolkata and 3.ITO Bhatinda vs. Euro Infrastructure & Power Limited ITA No 457/Asr/2013 (Amritsar). 10. On the other hand, the Ld. DR supporting the order of the Ld. CIT(A) submitted that since the assessee had claimed a substantial amount as interest expenditure, The Ld. CIT(A) has rightly sustained the disallowance made by AO holding that these funds were not utilized by the assessee for the purpose of business. 11. We have considered the rival submissions in the light of the material on record including the cases relied upon by the Ld. counsel for the assessee. As pointed out by the Ld. counsel the Ld. CIT(A) has deleted the identical addition in assessee's appeal against the assessment order for the assessment year 2011-12 following the decision of the Amritsar Bench of the Tribunal in the case of ITO vs. Euro Infrastructure & Power Ltd. (supra). The department has not challenged the findings of the Ld. CIT(A). Since, the authorities below have not assigned any co....

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....ount of disallowance of interest on debit opening balance of proprietor's capital, addition of Rs. 10,96,758/- on account of disallowance of interest on advances given to M/s Orchid Resorts and addition of Rs. 1,44,507/- made on account of disallowance of staff welfare expenses, telephone expenses, car and travelling expenses, miscellaneous expenses, repair and maintenance and deprescription expenses. The Ld. CIT(A) after hearing the assessee confirmed the addition of Rs. 6,94,761/- on the opening debit balance of capital account, confirmed the addition of Rs. 10,96,758 on account of interest u/s 36(1)(iii) of the Act, however, restricted the disallowance to 10% of the total amount of the expenses claimed by the assessee. Still aggrieved, the assessee is in appeal before this Tribunal. 14. Assessee has challenged the impugned order passed by the Ld. CIT(A) for the assessment year 2013-14 on the following grounds: - "l. That the Ld. CIT(A) has grossly erred in sustaining additions of Rs. 18,63,772/- which is absolutely illegal, uncalled for and legally not sustainable. 2. That the Ld. CIT(A) has wrongly sustained addition of Rs. 6,94,761/- on account of disallow....