TaxTMI 
TaxTMI 
2024 (12) TMI 494
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....come for A.Y. 2010-11. 2. Ld. CIT(A) has erred in upholding the additions at Rs.7,00,000/- as unexplained credit in Bank on account of sale of immovable Property in AY 2009-10. 3. Ld. CIT(A) has erred in upholding the business expenditure which are as per Audited profit and Loss Account for the relevant assessment year to the extent of Rs.18,11,296." ITA No. 1734/Del/2019, A.Y. 2011-12 "1. Ld. CIT(A) has erred in upholding the additions of Rs.9,41,013/- made on account of salary received during the relevant assessment year. 2. Ld. CIT(A) has erred in upholding the additions of amount credited in the bank account to the extent of Rs.15,00,000/- during assessment year 2011-12. 3. Ld. CIT(A) has erred in upholding the additions of business expenditure in nature of direct and indirect which are as per Audited Profit and Loss Account in the relevant assessment year amounting Rs.8,41,586/-." 4. Facts of these cases giving rise to these appeals are that the appellant/assessee, Director of D-Art Furniture System Pvt. Ltd. was searched on 19.10.2010 under section 132 of the Income Tax Act, 1961 (hereinafter, the 'Act') along with Supp....
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....e debited to the extent of 50% i.e. Rs. 8,66,626/- are disallowed and the trading results are recomputed. By this the gross profit will rise to the extent of 8,66,626/- under the proviso of I.T.Act, 1961 and the G.P. will comes to Rs. 36,45,006/-. In the profit and loss account the assessee has debited expense to the extent of Rs. 19,21,342/-. The assessee has not produced the evidence in support of the revenue expenditure. Expenditure is what is "paid out" or "away" and is something which is gone irretrievably as decided in the case of Indian Molasses Co (P) Ltd. v. CIT 37 ITR (SC). In the absence of any evidence, the expenses to the extent of 50% i.e. 9,60,671/- are disallowed which comes to G.P. as discussed above Rs. 36,45,006/- under the proviso of I.T.Act, 1961. Computation of Net Profit during the year as under: Gross Profit: Rs. 36,45,006/- Less: Expenses as discussed above Rs. 9,60,671/- Net profit from business Rs. 26,84,335/- (Addition: 18,11,296/-)" Besides the above, certain other additions were also made by the AO. 5.1 In appeal of AY 2010-11, the Ld. CIT(A) upheld the finding of the AO assessing salary income shown in the ITR as in....
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....thereof. Besides the above in para-5, certain other additions were also made. 6.1 In appeal of AY 2011-12, the Ld. CIT(A) upheld the finding of the AO assessing salary shown in the ITR under the head income from other sources and also the addition of salary of Rs.9,41,013/- on accrual basis. The Ld. CIT(A) also upheld the addition of Rs.15,00,000/- out of bank deposits of Rs.40,64,626/- taxed as unexplained deposits on the reasoning that the appellant/assessee failed to explain the same. The disallowance of business expenditure of Rs.8,41,586/- was upheld by the Ld. CIT(A) on the reasoning that the appellant/assessee failed to produce not only the bill & voucher of these expenses but also failed to establish genuineness of such expenditure. Besides, all-other additions /disallowances made by the AO were knocked off by the Ld. CIT(A). 6.2 The assessment of (i) salary income of Rs.31,50,000/- (Rs.22,08,987/- shown in the ITR + accrued salary of Rs.9,41,013/-) under the head income from other sources, (ii) unexplained bank deposit of Rs.15,00,000/- and (iii) disallowance of business expenditure of Rs.8,41,586/- are in dispute in AY 2010-11. 7. The Ld. Authorized Representativ....
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....s against the principle of natural justice. In support of the claim, the Ld. AR submitted copy of the office note where in the AO had admitted that the books of account of the assessee were called for and verified for on test check basis. In such circumstances the disallowances were not justified and hence, prayed for relief on this score. 10. The Ld. CIT-DR with the help of facts mentioned in the assessment order and appellate order submitted that reasonable opportunities of being heard were provided to the appellant/assessee by the AO and Ld. CIT(A) but the appellant/assessee tactfully ensured non-compliance. Reiterating the finding of the Ld. CIT(A), he prayed for upholding of orders of the lower authorities. Our attention was drawn to the fact that the Ld. AR did not bring any material on the record to explain the creditworthiness of Shri Radhey Intermediaries Pvt. Ltd. and Kanha Enterprises Pvt. Ltd. From whom loans aggregating to Rs.15,00,000/- was received in AY 2011-12. It was argued that the subsequent repayment of the said loans did not explain loans in the relevant year. The Ld. AR further contended that the Ld. AR had failed to explain the genuineness of loans aggreg....
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....me from other sources is very minimal than that of the litigation cost. Admittedly, the company is a juristic person and it is governed by the board of directors and is altogether an independent entity other than the directors. The appellant/assessee had 13.8% shares of D-Art Furniture System Pvt. Ltd. and supervises sales only. He received fixed remuneration for that. The said remuneration is not linked with the profit of D-Art Furniture System Pvt. Ltd. The director involved certain kind of responsibility to be carried out in terms of his appointment whether specified or not. The Board of Directors has a right to appoint. It has right to determine the nature of the duties to be performed by the whole-time directors. It has right to determine the salary to be paid. Therefore, the company could be an employer while appointing one of its directors as whole-time director on a particular remuneration and prescribing the terms and conditions of his appointment. In common parlance, the whole-time director may not be an employee but even then the character of the receipt or remuneration having come within the definition of salary under section 17(1)(iv) being a fee or remuneration by wha....