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2012 (8) TMI 363 - AT - Income TaxUnexplained cash credit - gifts from three parties - Held that:- Out of three gifts totaling Rs.5 lacs, one gift of Rs.2 lacs is received by the assessee from his father who is income tax assessee and the gift given by him is duly shown in his capital account copy, hence cannot be proved as bogus - gifts form renaming two parties were not satisfactorily explained by the assessee as the parties are not the relatives of assessee and gifts of such huge amount form unknown person is always subject to doubt - partly in favour of assessee. Disallowance of telephone expense - used for personal use - Held that:- As out of telephone expenses disallowance of 20% has been made as assessee is not maintaining any personal telephone this disallowance is not excessive - against assessee. Disallowance of excess interest paid - assessee had paid interest @ 24% to this concern as against the rate of 18% paid to other entities - Held that:- No evidence have been brought on record except that this party is a financier and other financiers were also charging similar rate of interest as compared to other ordinary lenders - against assessee. Addition on unexplained purchases - Held that:- Addition made by A.O. u/s 69C is not warranted as the source of incurring the expenditure is not in doubt because the source of expenditure is from book but as per the ledger account of the party sales of Rs.4,51,989/- has been shown but the assessee is showing purchases of Rs.5,35,392/- and difference of Rs.83,403/- could not be reconciled by the assessee before the A.O. or before Ld. CIT(A)- proved to be a case of bogus purchases - against assessee. Disallowance of unverifiable purchases - CIT(A) deleted the addition - Held that:- The used tyres by the transporter is generally not having any resale value and whatever nominal amounts are receivable against the said tyres is adjusted by the truck driver against minor repair/puncture and other miscellaneous repairs - against revenue. Restricting the disallowance of expenditure to Rs.25,964/- Held that:- Disallowance on account of these petty expenditure cannot be made on the basis that expenses are not fully verifiable and there is no allegation of the A.O. that the expenditure are personal in nature - against revenue. Disallowance of interest expenses - Held that:- Going through the Opening and Closing balances of assessee's balance sheet it depicts that the sufficient own interest free funds were available with the assessee and, therefore, no disallowance of interest is justified in respect of these interest free advances - against revenue. Disallowance u/s.40A(2)(b) - Held that:- It was erroneous on the part of the AO to seek comparison with the payment made to other supervisors instead of asking the Assessee to furnish evidence in support, once the Assessee had discharged the initial burden of furnishing the relevant evidences along with the other details, the onus had shifted on to the AO to make inquiries and to bring relevant evidence on record to disprove the Assessee's claim - no justification on the part of the A.O. in making any disallowance under the provisions of section 40A(2)(b)- against revenue. Disallowance of messing & truck-trip expenses - Held that:- making such disallowance of expenses on suspicion alone cannot be sustained - when expenditure are incurred locally, it can be accounted for under specific heads of expenditure but when truck driver goes on a long trip and incur petty expenses during the trip, he is not expected to maintain head wise details of such expenditure being illiterate or semi literate - if such claim of the driver regarding expenses is near about to such reasonable limit as accepted by the business man then the payment of such expenditure to the driver cannot be questioned even if the same is not supported by proper evidence - against revenue. Disallowance of freight expenses - Held that:- Disallowance was made by the A.O. on ad hoc basis without bringing any adverse material on record - against revenue. Disallowance of claim of insurance payment - Held that:- Not satisfied on this aspect with CIT(A)because the liability neither accrues on the basis of receipt of notice nor on payment if the insurance premium is paid for a subsequent period, the same is not allowable in the present year and, therefore, on this issue,the order of CIT(A)is reversed and restore back to the A.O. - in favour of Revenue. Addition on account of ingenuine purchases - Held that:- On taking into account both the ledger accounts of assessee and other in the name seller and if both the accounts are considered together, the entire expenses get reconciled - against Revenue. Addition on account of low household expenses - Held that:- CIT(A) on this basis that the assessee’s wife has shown withdrawal of Rs.36,000/- and therefore, the addition has to be restricted to Rs.14,000/- only after reducing this amount of Rs.36,000/- from the addition made by the A.O. of Rs.50,000/- - no controvert finding against CIT(A) - against revenue.
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