TaxTMI 
TaxTMI 
2024 (3) TMI 722
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....enience and without any basis and without any fact & finding, which is against the principle of nature justice, hence whole addition is liable to be deleted. 2. The Ld. CIT (Appeals-2), Udaipur has grossly erred in facts and in law in confirming the addition amounting to Rs. 9,66,212/- made on account of interest against interest free loans by ignoring the fact that the assessee has sufficient non-interest bearing fund available in the books of accounts. Thus, the action of the Ld. CIT (Appeals-2), Udaipur is unwarranted, without any basis and without any fact & finding, which is against the principle of natural justice, hence whole addition is liable to be deleted. 3. That the appellant reserves his rights to add, to alter or to modify any grounds of the appeal on or before hearing of the same." 3. Succinctly, the fact as culled out from the records is that the assessee has e-filed his Return of Income on 28/11/2014 declaring total income at Rs. 5,03,350/-. The case was selected for limited scrutiny and notice u/s. 143(2) issued on 31/08/2015 was duly served. Due to change of incumbents' fresh notices u/s. 143(2) were also issued and duly served. In response t....
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.... AR of the assessee has stated that advances of Rs. 17.51Cr was wholly & exclusively for the business purposes which includes Rs. 16.50 Cr paid to the mining department and Rs 1 Cr advanced to the members of the AOP. The submission of the assessee not found acceptable, because the assessee has not any business relation to these persons, not made any sale purchases from these persons. the issue has been discussed with the AR of the assessee. Considering above proportionate interest expenses Rs. 9,66,210/- disallowed out of Rs. 59,38,425/- claimed. 4. Aggrieved with the above two adjustment made by the ld. AO, the assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds so raised the relevant finding of the ld. CIT(A) is reiterated here in below: Finding of ld. CIT(A) on lump sum addition "4.3 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order of the Income tax act, 1961 for the year under consideration. The AO has disallowed Rs. 5,00,000/- out of expenditure of Rs. 129,76,39,335/- made by the appellant on account of non-verifiable nature of the ....
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....olly and exclusively for business purpose The appellant also argued that the addition made is out of same expenses which are already considered while making disallowance of Rs. 5,00,000/- the AO. The argument by the appellant is not found justifiable as both the additions are made on entirely different reasons. The appellant has also relied upon some decisions which are on different facts and not found applicable on the facts of the present case. This ground of appeal is treated as dismissed." 5. As the assessee did not find any favour from the order of the ld. CIT(A) and felling dissatisfied from the finding so recorded by the ld. CIT(A), the assessee has preferred the present appeal before this Tribunal on the ground as reproduced hereinabove. To support the various grounds so raised by the ld. AR of the assessee, has filed the written submissions and the same is reproduced herein below: 1. The assessee is royalty and toll plaza contractor. It is the first year of its operations. It filed the return declaring total income of Rs. 5,03,351/-. 2. The AO in course of assessment proceedings observed that n.p. rate declared by the assessee at 0.04% is very low. Ass....
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....n on account of expenses under various heads. AO found that some of the expenses were unverifiable for want of complete bills and vouchers and accordingly disallowed the same on estimate basis to cover any leakages. CIT(A) deleted the said disallowance on the ground that AO had not properly examined the books of account and not demonstrated as to how the expenses were not admissible to assessee. On revenue's appeal, it was held that the scheme of the Act doesn't authorize the AO to make a disallowance according to his wishes, rather it provides that AO should first point out the defects in the accounts of assessee. The findings extracted nowhere reveals what was the total amount of expenditure claimed by assessee, which specific voucher was not in accordance with law. In a just sweeping statement, AO observed that on verification, some of the expenses were found to be unverifiable, but what were those expenses, he should make out in the assessment order, only then he can disallow them. Therefore, the said disallowance was to be deleted. CIT Vs. Oracle India (P) Ltd. 199 Taxman 181 (Del) (HC) (Mag.) It is well settled that it is not open to the department to adopt ....
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....eted. Ground No.2 The Ld. CIT(A), Udaipur has grossly erred on facts and in law in confirming the addition of Rs. 9,66,212/- made on account of interest against interest free loans by ignoring the fact that assessee has sufficient non-interest bearing fund available in the books of accounts. Thus the action of the Ld. CIT(A) is unwarranted, without any basis and without any facts and findings, which is against the principal of natural justice, hence whole addition is liable to be deleted. Facts &Submission:- 1. The AO at Page 4 of the assessment order observed that the secured loan as per balance sheet is Rs. 6,18,91,190/- and the interest free advance given to AOP members is Rs. 1,00,70,000/-. The assessee has claimed bank interest and charges of Rs. 59,38,425/-. Accordingly he made proportionate disallowance of bank interest at Rs. 9,66,210/- 2. The Ld. CIT(A) at Para 5.3 of the order observed that the contention of assessee that it received interest free capital contribution from the members of the AOP is not supported by the evidences and assessee did not provide evidence to prove that advance was made wholly and exclusively for business p....
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.... to make advance and in fact in net there is interest income. 7. The ld. DR is heard who has relied on the findings of the lower authorities. The ld. DR vehemently argued that the assessee has paid the expenditure in cash and the same are merely self made kaccha bill and the genuiness of these bills are cannot be compared with the registered dealer when paid with cheque. As regards the disallowance of the interest he relied upon the detailed finding recorded in the orders of the lower authority. 8. We have heard the rival contentions and perused the material placed on record. The brief fact of the case is that the assessee is partnership firm and is engaged in the business of royalty and toll plaza contractor. It is the first year of its operations. It filed the return declaring total income of Rs. 5,03,351/-. The ld. AO in course of assessment proceedings observed that net profit rate declared by the assessee at 0.04% which is very low and the assessee explained reasons for low net profit. The ld. AO also noted that the bills and vouchers produced for verification were and from that he found some vouchers of expenses are supported only by self-made slips or kaccha bills issu....
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....upport of these observation from the various decision cited by the ld. AR of the assessee and in particular the decision in the case of ACIT Vs. Ganpati Enterprises Ltd. (2013) 142 ITD 118 (Delhi)( Trib.), where in the coordinate bench held that "The findings extracted nowhere reveals what was the total amount of expenditure claimed by assessee, which specific voucher was not in accordance with law. In a just sweeping statement, AO observed that on verification, some of the expenses were found to be unverifiable, but what were those expenses, he should make out in the assessment order, only then he can disallow them. Therefore, the said disallowance was to be deleted." Respectfully following that finding and based on the discussion so recorded herein above the ground no. 1 raised by the assessee is allowed. 8.2 The brief fact in relation to the ground no. 2 raised by the assessee is that the ld. AO observed that the secured loan as per balance sheet is Rs. 6,18,91,190/- and the interest free advance given to AOP members is Rs. 1,00,70,000/-. The assessee has claimed bank interest and charges of Rs. 59,38,425/-. Accordingly, he made proportionate disallowance of bank interest at ....