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2013 (6) TMI 358 - AT - Income TaxCessation of liability appearing in the name of Shri Amit Kumar, Prop Singla Trading Co. - CIT(A) deleted the addition made u/s 41(1) - assessment was completed u/s 144 - Held that:- CIT(A) has adjudicated the issue correctly because some legal heirs may later on make the claim against the receivables by Singla Trading Co. Moreover the assessee may be liable to pay to the bank and in any case the assessee has not written off the amount during the year, therefore, the liability cannot be said to have ceased. Thus nothing wrong in the order of the CIT(A). Against revenue. Addition in the income on account of gross profit by increasing gross profit ratio by CIT(A) - Held that:- Nothing wrong with the order of the CIT(A) though it was claimed that the assessee had loss in basmati paddy but in the details submitted before CIT(A) the assessee has himself shown gross profit @ 21.35% on trading of basmati. Further gross profit in the immediately preceding year was 7.76%. In case no books of account are produced and the AO is required to estimate the profit, he is duty bound to estimate such profits in a judicial fashion. No better yard stick can be available to the AO then the trading results of the assessee shown in the earlier years. AO has been more than reasonable to estimate the gross profit at 5% despite the fact that in the immediately preceding year the gross profit declared by the assessee was 7.76%. No infirmity in the order of the CIT(A) and confirm the same. Against assessee. Addition on account of cessation of liability towards M/s Lachhi Ram Ramesh Chand by CIT(A) - Held that:- Nothing wrong with the order of the CIT(A) as nobody would show the receipt of cash because that would mean that such party is forgoing the claim, therefore, it is clear that the assessee himself has paid the cash and liability ceased to exist. Against assessee.
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