TaxTMI 
TaxTMI 
2023 (8) TMI 758
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.... "1. That on the facts and circumstances of the case the order of the Ld. AO is bad in law. 2. That the Ld. CIT(A) has erred in confirming the disallowance of finance charges of Rs. 1262678/- u/s. 40(a)(ia). 3. The Ld. CIT(A) has erred in confirming addition u/s. 68 of Rs. 12000000/- on suspicious basis and without any concrete evidence. 4. That the Ld. CIT(A) has erred in confirming addition of notional interest of Rs. 286300/- u/s. 14A of the I.T Act, 1961. 5. The Ld. CIT(A) has erred in confirming addition of Rs. 86795/- on account of unexplained credit of Rs. 86795/- on account of bank interest. 6. The Ld. CIT(A) has erred in confirming addition of Rs. 982649/- on account of maturity of LIC. 7. The CIT(A) has erred in confirming addition of Rs. 500000/- on account of notional rental income. 8. The Ld. CIT(Appeals) has erred in confirming the addition of Rs. 200000/- on account of law household expenses. 9. The Ld. CIT(A) has erred in confirming addition of Rs. 142000/- on account of interest free loan given by the assessee. 10. The interest charged u/s. 234B is bad in law and unjustified. ....
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.... viz. (i). M/s. MRA Global Private Limited; and (ii). M/s Maa Samleshwari Steels Pvt. Ltd., thus sustained the addition of Rs. 90 lac [Rs. 60 lac (+) Rs. 30 lac]. Adverting to the balance addition of Rs. 30 lac [Rs. 8 lac + Rs. 12 lac + Rs. 10 lac] the CIT(Appeals) observed that not only the summons issued by the A.O to the said respective parties were returned back unserved but also the assessee had failed to produce either of the said parties for examination before the A.O. It was further observed by him that though the A.O in the course of the assessment proceedings in order to verify the authenticity of the loan transactions had issued a commission the Joint Director (Inv.), Bhubaneswar for conducting an enquiry, however, the said respective lenders had failed to comply with the summons that were issued to them. Considering the aforesaid facts, the A.O was of the view that the assessee in guise of the above mentioned loan transactions had in fact routed his unaccounted income in his books of accounts. Accordingly the CIT(Appeals) on the basis of his aforesaid observations sustained the addition of Rs. 1.20 crore made by the A.O under Sec. 68 of the Act. 7. Apropos the disall....
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....after considering the location and value of the respective properties determined their Annual Lettable Value (ALV), thus, upheld the addition of Rs. 5 lac made by the A.O. 11. Apropos the addition of Rs. 2 lac made by the A.O on account of low house hold withdrawals, it was observed by the CIT(Appeals) that as the assessee had failed to establish that withdrawals of an amount even less than Rs. 1 lac were sufficient for his household expenses, therefore, the A.O on an estimate basis had rightly made an addition of Rs. 2 lac on the said count. 12. Apropos the disallowance of interest expenditure of Rs. 1,42,000/- relatable to interest free loans advanced by the assessee the CIT(Appeals) finding no infirmity in the view taken by the A.O upheld the disallowance made by him. 13. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. 14. The Ld. Authorized Representative (for short "A.R") for the assessee at the very outset of the hearing of the appeal submitted that he is not pressing the ground of appeal No. 1. Considering the concession of the Ld. AR the Ground of appeal No. 1 raised by the assessee is dismissed as not ....
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.... aside proceedings, then, the disallowance u/s 40(a)(ia) to the said extent shall be vacated by him. 17. Adverting to the balance disallowance aggregating to an amount of Rs. 11,58,169/-, viz. (i). finance charges paid to Magma Sarachi Ltd.: Rs. 4,63,177/-; (ii) finance charges paid to Tata Motors Finance Ltd.: Rs. 4,95,684/-; and (iii) finance charges paid to other contractors parties: Rs. 1,99,344/-, it was submitted by the Ld. AR that as per the amendment that was made available on the statute by the Finance Act, (No.2) 2014 w.e.f 01.04.2015 the disallowance under Sec. 40(a)(ia) was liable to be restricted to 30% of the amount of expenditure that was claimed as a deduction by the assessee. It was submitted by the Ld. AR that as the assessee could not produce the certificates from the recipient companies, viz. (i) M/s Magma Sarachi Ltd; (ii) M/s Tata Motors Finance Ltd.; and (iii) other parties, therefore, the disallowance in the said respective cases be restricted to 30% of the expenditure which was claimed as a deduction. In support of his aforesaid contention the Ld. AR had relied on the following judicial pronouncements: (i) Muradul Haque Vs. ITO, ITA No. 114/Del/....
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....nt has been grafted with reference to the decision in Calcutta Export Company (supra) wherein, another amendment of Section 40(a)(ia) by the Finance Act of 2010 was held by this Court to be retrospective in operation. The submission so made is not only baseless but is bereft of any logic. Neither the amendment made by the Finance (No.2) Act, 2014 could be stretched anterior the date of its substitution so as to reach the assessment year 2005-2006 nor the said decision in Calcutta Export Company has any correlation with the case at hand or with the amendment made by the Finance (No.2) Act of 2014. 19.1. By the amendment brought about in the year 2014, the legislature reduced the extent of disallowance under Section 40(a)(ia) of the Act and limited it to 30% of the sum payable. On the other hand, by the Finance Act of 2010, which was considered in the case of Calcutta Export Company (supra), the proviso to Section 40(a)(ia) of the Act was amended so as to provide relief to a bonafide assessee who could not make deposit of deducted tax within prescribed time. In fact, even before the year 2010, the said proviso was amended by the Finance Act 2008 and that amendment of the yea....
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.... services payable to a resident, or amounts payable to a contractor or sub-contractor, being resident, for carrying out any work (including supply of labour for carrying out any work), on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, has not been paid on or before the due date specified in sub-section (1) of section 139: Provided that where in respect of any such sum, tax has been deducted in any subsequent year, or has been deducted during the previous year but paid after the due date specified in sub-section (1) of section 139, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid: *** *** ***" (iii) After the amendment by Finance (No. 2) Act, 2014 "40. Amounts not deductible. - Notwithstanding anything to the contrary in sections 30 to 38, the following amounts shall not be deducted in computing the income chargeable under the head "Profits and gains of business or profession",- (a) in the case of any assessee- *** *** *** (ia) thirty per cent. of any sum payable to a resident, on which tax is deductible at ....
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....retrospective operation, this Court delved into the position obtaining after 2008, where still remained one class of assessees who could not claim deduction for the TDS amount in the previous year in which the tax was deducted and who could claim benefit of such deduction in the next year only; and, after finding that the amendment of the year 2010 was intended to remedy this position, held that the said amendment, being curative in nature, is required to be given retrospective operation that is, from the date of insertion of Section 40(a)(ia). 19.4. Learned counsel for the appellant has only referred to the concluding part of the decision in Calcutta Export Company but, a look at the entire synthesis by this Court, of the reasons for the amendments of 2008 and 2010, makes it clear as to why this Court held that the amendment of the year 2010 would be retrospective in operation. We may usefully reproduce the relevant discussion and exposition of this Court in Calcutta Export Company as under:- (at pp. 663-666 of ITR):- "19. The above amendments made by the Finance Act, 2008 thus provided that no disallowance under section 40(a)(ia) of the Income-tax Act shall be m....
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....o the assessees belonging to such second category, amendments have been made in the provisions of section 40(a) (ia) by the Finance Act, 2010. *** *** *** 24. Thus, the Finance Act, 2010 further relaxed the rigors of section 40(a)(ia) of the Income-tax Act to provide that all TDS made during the previous year can be deposited with the Government by the due date of filing the return of income. The idea was to allow additional time to the deductors to deposit the TDS so made. However, the Memorandum Explaining the Provisions of the Finance Bill, 2010 expressly mentioned as follows: "This amendment is proposed to take effect retrospectively from April 1, 2010 and will, accordingly, apply in relation to the assessment year 2010-11 and subsequent years." 25. The controversy surrounding the above amendment was whether the amendment being curative in nature should be applied retrospectively, i.e., from the date of insertion of the provisions of section 40(a)(ia) or to be applicable from the date of enforcement. *** *** *** 27. A proviso which is inserted to remedy unintended consequences and to make the provision workable, a proviso which suppl....
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....0/- would provide him escape from the rigour of the provisions of the Act providing for disallowance. In either event, the appellant had not been a bonafide assessee who had made the deduction and deposited it subsequently. Obviously, the appellant could not have derived the benefits that were otherwise available by the curative amendments of 2008 and 2010. Having defaulted at every stage, the attempt on the part of assessee-appellant to seek some succor in the amendment of Section 40(a)(ia) of the Act by the Finance (No.2) Act, 2014 could only be rejected as entirely baseless, rather preposterous. 19.7. Hence, Question No.3 is also answered in the negative, i.e., against the assessee-appellant and in favour of the revenue." On the basis of the aforesaid settled position of law as had been laid down by the Hon'ble Apex Court in the case of Shree Choudhary Transport Co. Vs. ITO (supra), we are of the considered view that the issue in hand is no more res-integra and the amendment made vide the Finance (No.2) Act, 2014 restricting the disallowance to 30% of the sum payable could not be given a retrospective effect. We, thus, in terms of our aforesaid observations reject th....
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....ies in response to which Shri Mahendra Goenka (supra) had appeared and in his statement recorded by the A.O under oath admitted the loan transactions. It was submitted by the ld. A.R that the A.O had accepted the loans advanced by the aforementioned companies while framing the assessment for the succeeding year i.e A.Y 2011-12. It was further submitted by the Ld. AR that the assessee had filed PAN cards of the lenders in order to substantiate their identity; confirmations from the lenders a/w. their bank statements to justify the genuineness of transactions; and copies of the returns of income of the lenders to justify their creditworthiness. The Ld. A.R in support of his contention that now when the assessee had discharged the primary onus that was cast upon him as regards proving the authenticity of the loan transactions then the A.O without dislodging the same could not have drawn adverse inferences as regards the said transactions, relied on the following judicial pronouncements: (i) G.M Overseas Vs. ACIT, ITA No. 1891/Del/2020 dated 21.03.2022 (ii) CIT Vs. Ayachi Chandrashekhar Narsangi, 42 Taxmann. Com ( Guj. HC) (iii) Pr. CIT Vs. Sky Lark Build, TI....
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....e been raised from the aforesaid companies, viz. (i) M/s. MRA Global Pvt. Ltd.; and (ii). M/s. Maa Samleshwari Steels Pvt. Ltd. had issued to them notice(s) u/s 131 and u/s 133(6) of the Act, which however had remained uncomplied with. Ostensibly, the A.O in the backdrop of the aforesaid fact had held both the loans as fictitious and added the same as an unexplained cash credit u/s 68 of the Act. On appeal the CIT(Appeals) had upheld the view taken by the A.O for the reason that despite the summons issued by the A.O u/s 131(1)(d) no one had preferred to appear before him. (ii). The ld. A.R explaining the reasons for non-compliance of the aforesaid notice(s) u/s 131 and u/s 133(6) by the aforementioned companies, had submitted that the same was for the reason that the director of the said companies, viz. Shri. Mahendra Goenka (supra) at the relevant point of time was out of station and the notice(s) were served upon his staff member. It is the claim of the ld. A.R that Shri. Mahendra Goenka (supra) on returning back had forwarded the requisite information as was called for by the A.O as regards the transactions of both the companies with the assessee concern i.e M/s Shrikishan & ....
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....his statement Shri. Mahendra Goenka (supra) had in his reply to Query No. 9 on being queried as to whether the aforesaid companies had in the past advanced any loans, answered in the affirmative. It was categorically stated by Shri. Mahendra Goenka (supra) that both the aforesaid companies had in the F.Y 2009-10 through cheques advanced loans to the assessee concern. It was stated by him that M/s Maa Samleshwar Steels Pvt. Ltd had in the aforesaid preceding year advanced a loan of Rs. 30 lac to the assessee, while for M/s MRA Global Pvt. Ltd during the said preceding year had in two tranches of Rs. 30 lac each advanced a loan aggregating to Rs. 60 lac to the assessee out of which an amount of Rs. 30 lac was received back during the said year itself. Relevant extract of the statement of Shri. Mahendra Goenka (supra) as was recorded by the A.O in the course of the assessment proceedings for A.Y 2011-12 is culled out as under : On a perusal of the records to which our attention was drawn by the ld. A.R, it transpires that the authenticity of both the loans received by the assessee during the said succeeding year i.e AY 2011-12 was accepted by the A.O while framing the assessment fo....
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....necessary enquiry as regards the identity and creditworthiness of the lenders as well as the genuineness of the loan transactions under consideration. The ADIT(Inv.), Unit-1(1), Bhubaneswar vide his report dated 26.03.2013 informed the A.O that though notice(s) u/s 131 of the Act were served on all the aforementioned parties but neither of them had complied with the same. On the basis of the aforesaid fact the A.O held the loans aggregating to Rs. 30 lac (supra) that were claimed by the assessee to have been raised from the aforementioned three parties as bogus and treating the same as his undisclosed income made an addition of the same to his returned income. On appeal the CIT(Appeals) finding no infirmity in the view taken by the A.O upheld the same. (ii). It is the claim of the ld. A.R that as at the relevant point of time when notice(s) u/s 131 were issued by the Jt. DIT (Inv.), Bhubaneswar all the three parties were out of station to attend a family function, therefore, for the said reason they could not make a necessary compliance to the same. Apart from that, it is the claim of the ld. A.R that now when all the aforementioned three parties were residing at Rourkela where ....
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....edings, inter alia, submitted confirmations of the lenders and copies of the returns of income a/w PAN Nos. of the lenders, therefore, the primary onus that was cast upon him as regards proving the authenticity of the loan transactions stood duly discharged. On a perusal of the paper book to which our attention was drawn by the ld. AR, it transpires that the assessee had in the course of the assessment proceedings placed on record documentary evidences to substantiate the authenticity of the aforesaid loan transactions, viz. confirmations of the lenders, copies of returns of income and PAN no(s) of the respective lenders, and had discharged the primary onus that was cast upon him as regards proving the authenticity of the loan transactions in question, Page 111-119 of APB. Apart from that it transpires that the assessee in his attempt to dispel all doubts as regards the veracity of the loan transactions had filed before us the "affidavits", dated 18.07.2022 of the respective lenders wherein they had admitted of having advanced the interest bearing loans to the assessee a/w the reasons for doing so, Page 50-57 of APB. (iv). Although the assessee by filing the aforesaid supporting....
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....the assessee in order to fortify his claim of having raised genuine loans from the aforementioned parties, nor had the occasion to taken cognizance of the respective "affidavits" of the lenders that have been filed for the very first time before us, therefore, the matter in all fairness requires to be restored to the file of the A.O. We, thus, in terms of our aforesaid observations restore the matter to the file of the A.O for re-adjudication after considering the aforesaid supporting documents that have been filed by the asssssee in order to drive home his claim of having raised genuine loans from the aforementioned three parties. Needless to say, the A.O shall in the course of the set-aside proceedings afford a reasonable opportunity of being heard to the assessee who shall remain at a liberty to substantiate his claim of having raised genuine loans from the aforementioned three persons, viz. (i). Shri. Pawan Garg; (ii). Smt. Sharda Devi; and (iii). Smt. Mohini Garg. The Ground of appeal No.3 is allowed/allowed for statistical purposes in terms of our aforesaid observations. 22. Apropos the disallowance of expenditure made by the A.O u/s 14A of the Act of Rs. 2.86 lac the same....
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....s considered the judicial pronouncements that have been pressed into service by the ld. A.R to drive home his aforesaid contentions. Admittedly, it is a matter of fact borne from the record that though the assessee who had made investments of Rs. 20,42,426/- in exempt dividend income yielding shares of different companies had earned some tax free dividend income during the year under consideration, however, he had not on a suo moto basis disallowed any part of the expenditure towards earning of the said exempt income. It was, thus, the claim of the assessee that as no expenditure was claimed by him with respect to the activity of making investments in shares, therefore, no disallowance was warranted u/s 14A of the Act. On the other hand, the A.O after exhaustively discussing Sec. 14A of the Act a/w the mechanism for working out the disallowance as contemplated in Rule 8D of the Income Tax Act, Rules 1963, and the law pertaining to the said statutory provision as had developed over the time, therein, without recording his satisfaction as to why the assessee's claim that no expenditure could be attributed for earning of the exempt dividend income had in a mechanical manner worked out....
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....ble to generate the requisite satisfaction with regard to the correctness of the claim of the assessee. It is only thereafter that the provisions of Section 14A(2) and (3) read with Rule 8D of the Rules or a best judgment determination, as earlier prevailing, would become applicable." Also, a similar view have been taken by the Hon'ble Supreme Court in the case of Maxopp Investment Ltd. Vs CIT (2018) 402 ITR 640 (SC). In the case before us it is a matter of fact borne from the record that though the A.O had discussed at length the rationale behind introduction of Sec.14A and Rule 8D that contemplates the mechanism for computing the disallowance under the aforementioned statutory provision, as well as had exhaustively dealt with the aspect as to how the law in so far the aforementioned statutory provision had developed over the time, but there is no whisper on his part that having regard to the accounts of the assessee, it was not possible for him to generate the requisite satisfaction with regard to the correctness of the assessee's claim that no part of expenditure pertaining to his proprietary business could be attributed to earning of exempt dividend income. As observed by us....
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....re placed before him, therefore, disallowance so made by him u/s. 14A could not be sustained and was liable to be quashed. Thus, the Ground of appeal No.4 raised by the assessee is allowed in terms of our aforesaid observations. 25. We shall now deal with the grievance of the assessee that the lower authorities had erred in making/sustaining an addition of Rs. 86,795/- by treating the same as an unexplained credit of bank interest. Taking us to the genesis of the controversy, it was submitted by the Ld. AR that the assessee had maintained two sets of books of accounts, viz. (i) one representing account of M/s. Shrikishan & Co., a concern in which the assessee was a proprietor; and (ii) the second represent the personal capital account and balance sheet of the assessee in his individual capacity. It was submitted by the Ld. AR that the assessee had made few FDR's with the banks wherein some were held by him in the books of accounts of the proprietary concern, viz. M/s. Shrikishan & Co., while for the remaining were held by him in his individual account. It was stated by him that as both the set of FDRs were held under the same PAN i.e. of the assessee, therefore, the bank had joi....
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....the profit & loss account of his proprietary concern, viz. M/s. Shrikishan & Co., then no separate addition would be called for in his hands. In our considered view the aforesaid aspect can be verified by the A.O by calling for the requisite details from the bank as regards the total amount of interest on FDRs received/accrued in the account of the assessee during the year under consideration. As observed by us hereinabove, in case the aggregate amount of FDRs interest as reported by the bank had been credited by the assessee in his profit and loss account of the proprietary concern, viz. M/s. Shrikishan & Co., then the addition of Rs. 86,795/- (supra) made by the A.O would stand vacated. We, thus, in terms of our aforesaid observations for the said limited purpose restore the matter to the file of the A.O. Thus, the Ground of appeal No.5 is allowed for statistical purpose in terms of our aforesaid observations. 28. We shall now deal with the grievance of the assessee that both the lower authorities had erred in making/sustaining an addition Rs. 9,82,649/- on account of LIC maturity proceeds. It is the claim of the Ld. AR that the A.O had grossly erred in law and facts of the ca....
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....s claim that the amount of Rs. 9,82,649/- (supra) was the LIC maturity proceeds exempt u/s. 10(10D) of the Act. Although it is stated by the Ld. AR that the A.O had grossly erred in not making any verifications as regards the veracity of the aforesaid claim of the assessee but we find that he had at no stage in the course of the assessment proceedings or even before the CIT(Appeals) made any request that the requisite details be called for from the LIC. As it was for the assessee to substantiate his aforesaid claim that the amount in question was non-taxable which he had failed to do, therefore, no infirmity could be attributed to the A.O who had held the same as the unexplained income of the assessee. In so far the claim of the assessee that the A.O ought to have carried out necessary verifications, from LIC before rejecting his aforesaid claim, we are of the considered view that as no such request was made by the assessee in the course of the assessment proceedings, therefore, on the said count also the order passed by the A.O does not suffer from any infirmity. At the same time, we are of the considered view that in all fairness and interest of justice in order to avoid any exem....
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....the Ld. AR before us that the bifurcated details of the properties were filed by the assessee in the course of the assessment proceedings. In support of his aforesaid contention reference was made to a letter dated 11.03.2013 that was filed by the assessee in the course of the assessment proceedings with the A.O i.e. JCIT, Range-Korba, Page 103 of APB. We find on a perusal of the aforesaid letter dated 11.03.2012 (supra) that the assessee had therein stated that he owned three houses, viz. (i) house situated at Darri Road, Korba; (ii) HIG-101, at M.P Nagar, Korba, Page 104 of APB; and (iii) Jal vihar Colony, Raipur. It is further stated by the assessee in the aforesaid letter dated 11.03.2013 (supra) that the house at Darri Road, Korba was being used by him for his residential purpose, while for the other house i.e. HIG-101, M.P Nagar, Korba was being used as a godown to store hardware items, technical instruments, spare parts etc. As regards the residential house at Jal vihar Colony, Raipur it was the claim of the assessee that the same during the year under consideration was under construction. It was the case of the assessee that on the one hand the annual value of the house whi....
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....hat was raised in the thin air cannot be accepted. Also the claim of the assessee that his another residential house at Jal vihar Colony, Raipur was under construction during the year under consideration cannot be summarily accepted and would require to be verified. At the same time, we find substance in the claim of the Ld. AR that the determination of the ALV of the aforesaid residential properties could not have been arrived at by the A.O on an estimation basis. As the methodology for determining the ALV of a property is provided in section 23(1) of the Act, therefore, we herein direct the A.O to determine the same strictly as per the mandate of law. Accordingly, the matter is restored to the file of the A.O for giving effect to our aforesaid observations. The Ground of appeal No. 7 is allowed for statistical purposes in terms of our aforesaid observations. 36. We shall now take up the grievance of the assessee that both the lower authorities had erred in making/sustaining an addition of Rs. 2 lac on account of low house hold withdrawals. Succinctly stated, the assessee had during the year under consideration made a withdrawal of Rs. 1.7 lac towards house hold expenses. On be....
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....assessee before the lower authorities that the same was in order to secure his family in case of any casualty. Apropos the availability of funds for household expenses it is the claim of the assessee that both his wife and his mother, viz. S/Smt. Sarita Devi Agrawal and Murti Devi Agrawal were also contributing towards the same and the said fact was brought to the notice of the A.O vide rely dated 11.03.2013, Page 103 of APB. It is the claim of the Ld. AR that both the lower authorities brushing aside the aforesaid facts had most arbitrarily not only worked out the household expenses at a high pitched amount but had also lost sight of the material fact which were duly brought to his notice i.e. S/Smt. Sarita Devi Agrawal (wife) and Murti Devi Agarwal (mother) who were regular income tax payees had duly contributed towards the household expenses. 40. Per contra the Ld. DR relied on the orders of the lower authorities. 41. We have given a thoughtful consideration to the aforesaid issue in hand and find no substance at all in the claim of the Ld. AR that the quantification of the household expenses in the case of the assessee who has a family comprising og five members (includin....
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....42 lac (supra) so made him. 44. The assessee being aggrieved with the upholding of the disallowance of his claim for deduction of interest expenditure of Rs. 1.42 lac (supra) has carried the matter in appeal before us. 45. We have heard the ld. Authorized Representatives of both the parties in the context of the aforesaid issue. It was, inter alia, submitted by the Ld. AR that as the assessee during the year under consideration had substantial self-owned funds of Rs. 6.63 crore (approx.) reflected as the opening capital of his proprietary business, viz. M/s. Shrikishan & Co., therefore, no disallowance of any part of the interest expenditure pertaining to the aforesaid interest free loans advanced to the aforementioned persons was called for in his hands. In order to buttress his aforesaid claim the Ld. AR had taken us through the 'balance sheet' of the assessee concern, viz. M/s. Shrikishan & Co. for the year under consideration, Page 138-140 of APB. It was, thus, the claim of the Ld. AR that now when the assessee was having sufficient interest free self-owned funds, therefore, no disallowance of interest expenditure as regards the interest free loans advanced by him was lia....
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....n ITA No.93/RPR/2017 for A.Y.2010-11 is partly allowed/partly allowed for statistical purposes in terms of our aforesaid observations. ITA No.94/RPR/2017 A.Y.2011-12 51. We shall now take up the assessee's appeal for A.Y.2011-12 in ITA No.94/RPR/2017. The assessee has assailed the impugned order on the following grounds of appeal before us: "1. That on the facts and circumstances of the case the order of the Ld. A.O. is bad in law. 2. The Ld. CIT(A) has erred in enhancement in gross profit of Rs. 36,77,935/-which is without any concrete evidence. 3. The Ld. CIT(A) has erred in confirming the disallowances of Rs. 10,00,000/-on Adhoc basis. 4. The Ld. CIT (A) has erred on facts and in law while confirming the addition u/s. 40 (a) (ia) of Rs. 7,89,386/-. 5. The learned CIT(A) has erred on facts and in law in confirming addition of Rs. 12,48,617/- on account of so-called short receipt shown by the assessee. 6. The appellant craves leave to add, urge, alter, modify or withdraw any ground/s before or at the time of hearing. Also the assessee has raised additional grounds of appeal before us which reads as under: "....
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....amination of the contentions advanced by the assessee, it was found by the A.O that contract work expenses had increased from 16.38% to 28.20%, while for the sub-contract expenses had gone up from 44.50% to 72.83%. It was observed by the A.O that some of the expenses i.e. bank commission charges, depreciation, interest on unsecured loans had increased in terms of percentage despite the fact that the turnover had considerably declined from 52.20 crore to 32.15 crore. It was observed by the A.O that the expenses like sub-contract work expenses, bank commission and charges, depreciation, interest on unsecured loans were verifiable from the records and supporting material. However, it was observed by the A.O that the payments to the labour which formed part of the contract work expenses were not fully verifiable. Elaborating further, it was observed by the A.O that a verification of the muster rolls revealed that they were poorly maintained and the thumb impressions of the recipient labour against the amounts stated to have been received by them was beyond recognition and verification. Also it was observed by the A.O that some of the expenses which were incurred in cash were not cross-....
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....ng internal vouchers qua the labour expenses, it was submitted by the ld. AR that the said practice was consistently being followed by the assessee for keeping a complete track and control over the expenses incurred by getting the same acknowledged by the payees on the internal vouchers. It was further submitted by the Ld. AR that the auditors who had conducted the statutory audit had not adversely commented on the assessee's claim for deduction of the labour expenses. The Ld. AR in support of his contention that no ad-hoc disallowance is permitted to be made had relied on certain case laws, as under: (i) ACIT Vs. Shri Sai Vihar (2016) 28 ITJ 158 (ii) ACIT Vs. M/s. MangilalPagaria Raipur, ITA No.54/RPR/2011 dated 16.12.2014 (iii) DCIT 2(1), Raipur Vs. Shri Santosh Jain ITA No. 177/RPR/2014 dated 11.05.2017. On the basis of his aforesaid contentions, it was submitted by the Ld. AR that as there was neither any justification nor basis for making of the impugned ad-hoc disallowance of Rs. 10 lac (supra) by the A.O, therefore, the same could not be sustained and was liable to be struck down. 58. Per contra, the Ld. DR relied on the orders of the lower a....
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....Modi Rubber Ltd. ITA No. 1952/Del/2014, dated 15.05.2018. Also, our aforesaid view that an assessee's claim for deduction of an expenditure u/s.37 of the Act cannot be arbitrarily disallowed by the A.O on a ad-hoc basis is supported by the order of the ITAT, Raipur in the case of M/s. Sunita Finlease Limited Vs. Income Tax Officer, ITA No.244/RPR/2017 dated 30.03.2022. We are of the considered view that a disallowance of an expenditure claimed by the assessee as a deduction as per the mandate of section 37 of the Act can only be disallowed in case of satisfaction of either of the conditions set out in the said section, viz. (i) the expenditure is in the nature of a capital expenditure or personal expenditure of the assessee; or (ii) that the expenditure had been incurred for any purpose which is an offence or which is prohibited by law. As the A.O had failed to place on record any material which would prove to the hilt that the assessee had either raised a bogus claim of expenditure; or that the said expenditure was not incurred wholly and exclusively for the purpose of business; or that the expenditure so claimed as a deduction did not fall within the four parameters of Section 37....
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....as the claim of the Ld. AR that the impugned enhancement of the assessee's gross profit had been carried out by the Ld. CIT(Appeals) in clear contravention of the provisions of sub-section (2) of Section 251 of the Act. On the basis of his aforesaid contention, it was the claim of the Ld. AR that as the impugned enhancement had been made without affording any opportunity to the assessee to put forth an explanation that the same was not called for in his hands, therefore, the same on account of the said serious legal infirmity was liable to be struck down. The Ld. AR in support of his aforesaid contention had relied on the following judicial pronouncements: (i) CIT Vs. Rai Bahadur Hardutroy Motilal Chamaria (1967) 66 ITR 443 (SC) (ii) Gedore Tools Pvt. Ltd. Vs. CIT (1999) 238 ITR 268 (Del.) (iii) C. Anitha Vs. CIT (2017) 88 Taxmann.com 53 (Mad.) (iv) Saheli Synthetics P. Ltd. Vs. CIT (2008) 302 ITR 126 (Guj.) 61. Per contra, the Ld. DR relied on the orders of the CIT(Appeals). It was submitted by the Ld. DR that as the assessee was validly put to notice about the enhancement of his gross profit, therefore, it was incorrect on his part to claim ....
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....onable opportunity to an assessee to show cause as to why enhancement may not be carried out in his case would have a material bearing on the sustainability of the enhancement so made by the said appellate authority. Our aforesaid view is fortified by the judgment of the Hon'ble High Court of Delhi in the case of Gedore Tools Pvt. Ltd. Vs. CIT (1999) 238 ITR 268 (Del.), wherein the following substantial question of law was, inter alia, raised before the Hon'ble High Court: "(6) Whether the Tribunal rightly held that the powers of enhancement by the commission of income tax (Appeals) being subjected to the constraints and limitation as provided under section251(2) of the Income Tax Act, 1961, the question of enhancement could be considered only if a notice was given in that regard?" The Hon'ble High Court by drawing support from the judgment of the Hon'bel Apex Court in CIT Vs. Rai Bahadur Hardutroy Motilal Chamaria (1967) 66 ITR 443 (SC) therein had observed that the power for enhancement by the Commissioner of Income-tax is subject to limitation as provided in sub-section (2) of Section 251 of the Act, and such question would be considered only if a notice was given in....
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....ed to his file for re-adjudication after affording a reasonable opportunity to the assessee to show cause as to why enhancement to the said effect may not be carried out in his hands. We, thus, in terms of our aforesaid observations restore the matter to the file of the CIT(Appeals). Resultantly, the Ground of appeal No. 2 is allowed for statistical purposes in terms of our aforesaid observations. 64. We shall now take up the grievance of the assessee that both the lower authorities had erred in law and facts of the case in confirming the disallowance of Rs.7,89,386/- u/s. 40(a)(ia) of the Act. The assessee had filed before us an application seeking permission for placing on record "additional evidence" under Rule 29 of the ITAT Rules, 1963, i.e., a certificate from a Chartered Accountant in an incomplete format in which it was mentioned that M/s. Religare Finvest Ltd., i.e. the payee, had while computing its taxable income for A.Y.2011-12 taken into account finance charges of Rs. 1,41,751/- that was received from Sushil Kumar Agrawal, Prop. of ShriKishan & Co. Also, the assessee had filed before us as an "additional evidence" certificate from a Chartered Accountant which is not....
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....ose reflected in his TDS certificates : S. No. Name of the deductor Amount as per the TDS certificate Amount shown by the assessee Difference (short shown) 1. SEPCO 1,43,65,652/- 1,37,97,207/- 5,68,445 2. SEPCO 1,71,89,222/- 1,65,09,050/ 6,80,172 The A.O called upon the assessee to explain/reconcile the above difference in receipts. However, as the assessee failed to come forth with any explanation, therefore, the A.O added the impugned difference i.e. short receipts of Rs. 12,48,617/- to his returned income. 68. On appeal, the CIT(Appeals) was of the view that as the assessee had failed to reconcile the difference in receipts, thus, he sustained the aforesaid addition. 69. At the time of hearing, it was submitted by the Ld. AR that the difference in turnover was due to the fact that the figures could not be reconciled before the A.O as he had failed to afford a reasonable opportunity to the assessee for doing the needful. The addition made by the A.O was thereafter sustained by the CIT(Appeals). The Ld. AR had filed before us a reconciliation statement to explain/reconcile the impugned difference in turnover which had occasione....
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....tter to the file of the A.O for fresh adjudication, wherein he is directed to re-adjuciate the matter after considering the reconciliation statement of the assessee explaining the impugned discrepancies in the gross receipts shown in his books of accounts as against those reflected in the TDS certificates. Needless to say, the A.O shall adjudicate the aforesaid issue after affording a reasonable opportunity of being heard to the assessee. Thus, the Ground of appeal No.5 raised by the assessee is allowed for statistical purposes. 71. The Ground of appeal No.6 being general in nature is dismissed as not pressed. 72. We shall now take up the additional grounds of appeal raised by the assessee before us. As is discernible from the grounds raised by the assessee, it transpires that the same are inextricably interwoven with the impugned additions made by the A.O while framing the assessment in his case for the immediately preceding year i.e. A.Y.2010-11. As the adjudication of the additional grounds would not require looking any further beyond the facts borne on record, therefore, we have no hesitation in admitting the same. 73. We shall first take up the grievance of the assess....
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....the assessee that the CIT(Appeals) had erred in enhancing his income by an amount of Rs. 1,42,000/- on account of disallowance of the assessee's claim for deduction of interest component corresponding to the interest free loans that were given by him to outsiders. On a perusal of the order of the CIT(Appeals), it transpires that the aforesaid enhancement by way of disallowance of the assessee's claim for deduction of interest expenditure pertaining to interest free loans advanced to two parties, viz. (i) Shri Rohit Kumar Agarwal (friend of the assessee); and (ii) Smt. Sarita Devi Agarwal (wife of the assessee) had been carried out by him only for the reason that the disallowance to the said effect was made by the A.O in the immediately preceding year i.e. A.Y.2010-11. As we have while disposing off the assessee's appeal for the immediately preceding year i.e. A.Y.2010-11 in ITA No.93/RPR/2017 vacated the impugned disallowance of the assessee's claim for deduction of interest expenditure of Rs. 1,42,000/- u/s. 36(1)(iii) of the Act, therefore, the very basis for making of the impugned enhancement by the CIT(Appeals) during the year under consideration does not survive any more and i....
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....e combined result, both the appeals of the assessee are partly allowed/allowed for statistical purposes in terms of our aforesaid observations. Order pronounced under rule 34(4) of the Appellate Tribunal Rules, 1963, by placing the details on the notice board. ============= Document 1 2. कà¥à¤¯à¤¾ आपकी उपरà¥à¤¯à¥à¤•à¥à¤¤ दोनों कमà¥à¤ªà¤¨à¤¿à¤¯à¥‹à¤‚ का वà¥à¤¯à¤¾à¤ªà¤¾à¤°à¤¿à¤• लेन-देन किलो से होता है या अतीत में हà¥à¤† है? उतà¥à¤¤à¤°- à¤à¥€ हो। हमारी उकà¥à¤¤ दोनों कमà¥à¤ªà¤¨à¤¿à¤¯à¥‹à¤‚ से वà¥à¤¯à¤¾à¤ªà¤¾à¤°à¤¿à¤• लेन देन लोगों द होते र....