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2016 (5) TMI 758 - ITAT DELHIRevision u/s 263 - disallowance of expenses - Held that:- AO, after duly examining written submissions, audited copies of balance sheet, trading and profit & loss account, books of account, bills and vouchers, applied his mind and proceeded to make the disallowance of ₹ 35,000/- out of expenses. Whereas, on the other hand, ld. CIT, without examining the books of accounts and bills/vouchers, during the proceedings u/s 263, returned the findings on the basis of assumptions. It is un-understandable that from the cash book, ledger, day book, stock register, audited balance sheet, profit & loss account and details of all schedules mentioned therein, it is not ascertainable as to how from the final account, the true profit could be deduced, ascertained or verified, when the position would have been otherwise had the ld. CIT herself examined the aforesaid documents to reach at the logical conclusion. Also CIT, on the other hand, has directed the AO to enquire into the actual profits earned by the assessee and on the other hand, asked him to reject the books of accounts in case the same are incorrect or incomplete so as to ascertain the correct profits and applied the reasonable rate of profit on the turnover. When the books of accounts have initially been examined by the AO on the test check basis and then have been duly produced before ld. CIT during proceedings u/s 263 who got an opportunity to scrutinize the same, it would not be fair to put the assessee in the initial stage of assessment again and again without any of his fault. So, we are of the considered opinion that on merits, order u/s 263 is also not sustainable - Decided in favour of assessee Non charging of interest on advances - interest disallowed on proportionate basis - Held that:- When the assessee has categorically claimed to have not paid any interest on any of his unsecured loan during the assessment year under consideration, no disallowance needs to be made on this issue. So, we are of the considered view that ld. CIT has hurriedly decided this issue without controverting submissions made by the assessee during proceedings u/s 263 of the Act nor has conducted any independent enquiry. - Decided in favour of assessee Addition of sundry creditors - Held that:- When the assessee had already paid balance due to the various sundry creditors in the subsequent year which has been duly accepted by the revenue, an addition u/s 68 of the Act is not sustainable. Moreover, on the one hand, ld. CIT has directed the AO to reject the books of account in case the same are incorrect and incomplete and on the other hand, made an addition u/s 68 of the Act. It is settled principle of law that in case, books of accounts were rejected, no addition can be made u/s 68 of the Act. Even otherwise, when the assessee has duly discharged the onus to prove the sundry creditors, the impugned addition made by the ld. CIT without conducting any enquiry is not sustainable. So far as question of making addition on account of unsecured loan amounting to ₹ 28,30,711/- by the ld. CIT by impugned order is concerned, it is categoric case of the assessee that it has raised fresh loan of only ₹ 1,10,500/- from Mohit and ₹ 50,000/- from Rahul during the year under assessment and the balance unsecured loans were old loans raised in the earlier years. It is proved from Schedule - 3 of the audited balance sheet explaining break-up of the unsecured loans lying. Hon’ble Rajasthan High Court in the judgment cited as CIT vs. Parmeshwar Bohra [2007 (1) TMI 105 - RAJASTHAN HIGH COURT] while deciding the identical issue held that carry forward amount of the previous years did not become an investment or cash credit generated from the relevant assessment year and as such, advantage of carry forward unsecured loan cannot be made u/s 68 of the Act - Decided in favour of assessee
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