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2014 (11) TMI 289 - ITAT DELHIExpenses claimed in trading and P&L account disallowed – bills/vouchers for verification produced by assessee or not - Held that:- CIT(A) sustain the rejection of books of account by the AO and the CIT(A) further proceeded to estimate the income of the assessee by taking G.P. rate of 11.22% of the assessee for immediately preceding year i.e. 1996-97 which was also accepted by the Department - CIT(A) rightly held that the assessee has shown gross profit on the total sales leading to G.P. rate of 9.47% - CIT(A) noticed decline in G.P. rate of 1.75% of the total sales during the year under consideration - the FAA estimated the income of the assessee by taking G.P. rate of 11.20% which was worked out to 70,98,512/- as against the declared G.P. of ₹ 59,98,881/- declared by the assessee in the return of income - Thus the CIT(A) was quite justified in making the addition, thus, the order of the CIT(A) is upheld – Decided against revenue. Disallowance of interest deleted – Held that:- The AO has made disallowance of interest but the AO has not brought out any adverse material or fact to support the disallowance of interest and the addition has been made without establishing the nexus of borrowed funds with the funds advanced as interest free loan - the AO has picked up interest free loan an advance given to Ms. Salini Saxena and to Pythen Mines P. and has made disallowance of entire amount of interest claimed by the assessee in P& L A/c but we are unable to see any nexus of borrowed funds with the funds advanced to the debtors as interest free loan – the order of the CIT(A) is upheld – Decided against revenue.
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