TaxTMI 
TaxTMI 
TaxTMI 
2023 (10) TMI 1014
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....the contention of the assessee without conducting independent enquiry. 2. Whether the Ld. CIT(A) has erred in deleting the addition made by AO amounting to Rs. 7.23,982/- on account of interest expense paid to the parties i.e. sundry creditors treated as unexplained. 3. Whether the Ld. CIT(A) has erred in deleting the addition made by AO amounting to Rs. 1,26,91,590/- on account of rejecting the books of account and estimating the GP at 8% of the turnover against 5.34% declared by the assessee." 3. Apropos ground No. 1 the ld Sr. DR submitted that the ld CIT(A) has erred in deleting the addition made by AO amounting to Rs. 13,50,000/- on account of sundry creditor merely accepting the contention of the assessee without conducting in....
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....owledgement of I.T.R. and copies of bank statements to the Assessing Officer. The Assessing Officer doubted the creditworthiness of creditors mainly on the reasoning that certain sums of money got deposited in their accounts few days before advancing of loan to assessee. The Assessing Officer also stated that incomes disclosed by creditors were too less for advancing of loan to assessee. However, on examination of documents filed and contention of written submission, it is seen that assessee had presented credible evidences regarding the source of loan. In the case of Amit Garg (HUF), the balance in bank accounts was supplemented by current year's income of Rs. 2,88,700/-. Hence, before advancement of loan, the creditor was having su....
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....ewise, in the case of Smt Indravati Devi, Nisha Agarwal, Ruby Goel and Santosh Goel the loans were advance mainly on account of interest on old loans paid by the assessee and the same interest was re-invested with the assessee for earning interest income. Therefore, factual finding recorded by the ld CIT(A) do not require any interference as the reinvestment of interest received by creditors goes to show that the creditworthiness of the creditors is not in doubt and same cannot be doubted without any adverse positive material. The ld CIT(A) rightly noted that it is not the case of AO that the old balances standing in the names of the creditors were money belonging to the assessee. Therefore, we are unable to see any valid reason to interfer....
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....ee at 5.34% loss same was less in comparison to immediately preceding Assessment Years 2017-18 and 2016-17 wherein, the GP rate was 6.49% and 10.54% respectively. The ld Sr. DR therefore, submitted that the relief granted by the ld CIT(A) is not sustainable therefore, the order of the ld AO may kindly be restored. 10. The ld AR supporting the first appellate order submitted that the AO was not correct in rejecting the books of account on the reasoning that GP rate and NP rate have gone down compared to earlier two assessment years. The ld AR further submitted that during the FY 2015-16 and 2016-17 the contracts were awarded and due to escalation of material cost and GP and NP rates were reduced in the present AY 2018-19. The ld AR submitte....
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....receipt or bogus claim of expenses. In the assessment order, the Assessing Officer mentioned major expenses like electricity, job work and bank charges have increased. In this regard, it may be stated that if the Assessing Officer have suspicion regarding over-billing of those expenses, he should have made some basic inquiry before resorting to drastic step of rejecting assessee's books and going ahead with estimation of income. Unless the Assessing Officer had facts showing incorrect disclosure of receipts or bogus claim of expenses or inconsistencies in accounts maintained, it is not proper to reject the books of accounts. Low rate of GP or NP can be basis of starting investigation. But per se, it cannot be the foundation for makin....