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2017 (11) TMI 1547 - ITAT JAIPURAddition u/s 68 - Held that:- In all the creditors’ case, the reliance of the ld. CIT(A) was only on the PAN card or the ITR, was not sufficient to establish the creditworthiness of these people. Further, it is also noticed that the Assessing Officer was asked to submit the remand report and he has noted that the assessee has not filed copy of bank statement of the persons from whom the loans were taken by the assessee. However, the Assessing Officer has not asked the assessee to submit such documents in the remand proceedings. Considering the totality of the facts and circumstances of the case, we find it appropriate to restore the issue to the file of the Assessing Officer wherein the assessee shall be at liberty to file necessary documents to establish the creditworthiness of all the creditors and the Assessing Officer shall decide the issue afresh Disallowance U/s 80C - Held that:- Assessee has paid life insurance premium of ₹ 50,000/- to Max New York Life Insurance Co. Ltd. on 18.09.2011. Copy of insurance premium receipt and policy owner data is at PB 23-24. These documents were also produced during assessment proceedings but AO incorrectly held that assessee has not filed any proof of payment and disallowed the deduction. Thus we are of the view that the ld. CIT(A) was justified in deleting the addition. Addition u/s 40A((2)(b)- Disallowance being 25% of the commission paid to three persons - Held that:- It is noticed that all the three persons were regularly assessed to tax and necessary TDS was also deducted. It was paid to the persons, who were relatives of the assessee. It was not wholly and exclusively for the purpose of business. It was excessive payment in view of the provisions of Section 40A of the Act. Thus, there is no clear cut finding that on what basis this payment was held to be excessive or unreasonable. Therefore, we direct to delete the addition. Rejection of books of account - trading addition - Held that:- We find that there was discrepancy in the reconciliation of TDS/TCS as per Income tax Return and as per Form 26AS. Further there was decline in the gross profit. The reason provided by the assessee are not convincing, therefore, we are of the view that the Assessing Officer has rightly rejected the books of account, which has been sustained by the ld. CIT(A). Assessing Officer and the ld. CIT(A) were quite reasonable in making and sustaining the gross profit rate @ 3.5% while it was 3.91% in the immediate preceding year and 4.99% in the year prior to the immediate preceding year. The Hon’ble Rajasthan High Court has ruled that average of the past years G.P. is good criteria to estimate the G.P. rate. When the books of account do not reflect the true affairs of income of the assessee then estimate based in past years gross profit is justified. In assessee’s case, it was even estimated less in comparison to immediate preceding year. The estimate @ 3.5% instead of 3.91% shall take care of fall in g.p. if any on account of increase in turnover and other factors as pleaded by the ld AR. Therefore we sustain the order of the ld. CIT(A). - Decided against assessee.
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