2015 (8) TMI 1281 - AT - Income Tax

Rejection of books of accounts - profit rate estimation of 1.5% - Held that - No opening stock inventory and closing stock inventory in quantity as well as in value was furnished. The assessee did not produce any stock register. The Assessing Officer considered that even if rebate and discount is reduced then GP would work out to 0.29%. Further the last questionnaire issued by the Assessing Officer was not responded to by the assessee therefore it is clear from the findings of the authorities below that assessee did not cooperate in finalization of the assessment and no complete details were furnished.Therefore Assessing Officer was justified in rejecting the book results. Since complete details have not been furnished even before us therefore history of the assessee could not be considered favourably because for the year under assessment as well as for earlier years no details have been produced before us in support of the claim made by the assessee. Considering the conduct of the assessee in not filing complete details we do not find any justification to interfere with the orders of authorities below - Decided against assessee Disallowance of expenses and under section 40A(3) - Held that - Once GP rate is applied no further disallowance could be made out of various expenses as well as under section 40A(3) of the Income Tax Act. We accordingly following the decision in the case of Banwari Lal Banshidhar (1997 (5) TMI 37 - ALLAHABAD High Court ) set aside the orders of authorities below and delete the addition - Decided in favour of assessee Addition on account of cash credit under section 68 - Held that - Since the assessee has failed to furnish any evidence on source of the deposit and credit worthiness of the creditor therefore assessee has failed to prove the credit worthiness of the creditor and genuineness of the transaction in the matter. No submissions were made before ld. CIT(Appeals) and even no evidence have been produced before us to explain the above issue therefore we do not find any error in the orders of the authorities below in making and confirming the addition. - Decided against assessee Addition of deduction claimed under section 80C being the amount of tuition fees paid by the assessee for school going children - Held that - The assessee did not furnish any evidence regarding payment of the tuition fee therefore addition was made. No evidence was furnished before ld. CIT(Appeals). Therefore addition was confirmed. Even before us no evidence of payment of tuition fees has been filed. The ld. counsel for the assessee has shown inability to produce any evidence in this regard. - Decided against assessee

Summary

Issues Involved:
1. Rejection of books of account and application of profit rate.
2. Disallowance of expenses and addition under section 40A(3) of the Income Tax Act.
3. Addition of cash credit under section 68 of the Act.
4. Deduction claimed under section 80C of the Act.

Rejection of Books of Account and Application of Profit Rate:
The appellant challenged the order of rejecting the books of account and applying a profit rate of 1.5%. The Assessing Officer found the declared GP rate of 0.56% to be low and invoked Section 145 of the Act. Despite not challenging the addition made by the Assessing Officer, the appellant argued based on previous years' GP rates. However, since complete details were not furnished, the authorities confirmed the addition. The tribunal upheld the decision, emphasizing the lack of cooperation from the appellant and the absence of supporting details.

Disallowance of Expenses and Addition under Section 40A(3) of the Income Tax Act:
The appellant contested the disallowance of expenses and an addition under section 40A(3) of the Act. The Assessing Officer disallowed 20% of claimed expenses due to insufficient details. Similarly, cash payments made in violation of section 40A(3) led to an addition. The appellant provided evidence belatedly, which was not considered by the authorities. However, citing a High Court judgment, the tribunal ruled in favor of the appellant, overturning the disallowances.

Addition of Cash Credit under Section 68 of the Act:
The appellant challenged an addition of Rs. 25,00,000 as cash credit under section 68. The burden to prove the source of the unsecured loan was on the appellant, but no evidence was furnished. The tribunal upheld the addition, noting the failure to establish the creditworthiness of the creditor and genuineness of the transaction.

Deduction Claimed under Section 80C of the Act:
The appellant disputed an addition of Rs. 24,000 claimed under section 80C for tuition fees paid. Lack of evidence regarding the payment led to the addition, which was confirmed by the authorities. The appellant failed to provide proof even during the tribunal hearing, resulting in the dismissal of this ground of appeal.

This detailed analysis of the judgment highlights the key issues addressed by the tribunal, including the rejection of books of account, disallowance of expenses, addition of cash credit, and deduction claimed under specific sections of the Income Tax Act. The tribunal's decisions were based on the evidence presented, compliance with tax regulations, and the burden of proof on the appellant in each issue.