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2012 (12) TMI 654 - AT - Income TaxUnaccounted sales and purchases – Held that:- AO has estimated the additional purchases at Rs. 9,40,000/ - without bringing any material on record. At the same time, there is no satisfactory explanation on behalf of the assessee regarding the discrepancies pointed out by the AO in the books of account of the assessee. Thus considering the entire facts the addition of Rs. 85,000/ - will meet the ends of justice - addition sustained by the CIT(A) is on higher side - assessee gets a further relief of Rs. 3,85,000/ - on this count - appeals of assessee allowed partly. Addition on account of additional gross profit – Held that:- GP rate shown at Rs. 3,25,400/ - on the total sales of Rs. 50,05,936/ - is slightly on higher side when compared to GP rate of the preceding year . However, the fact remains that the assessee did not produce the books of account thus, the sales affected/shown are not subject to verification - thus considering the entire facts the addition reduced to Rs. 15,000/ - particularly when the sales affected/shown are not subject to verification - assessee gets a further relief of Rs. 15,000/ - on this account -appeals of assessee allowed partly. Addition u/s 68 - unsecured loan as non-genuine – Held that:- As in earlier year, the department has not doubted the credit worthiness of Shri Harbans Singh father of the assessee, who is regularly assessed to tax & considering the contention of the assessee that these funds were used by Shri Harbans Singh for purchasing demand drafts directly from the bank in favour of the supplier of the assessee to meet financial emergency of the assessee there is no merit in the contention of the DR that amount of Rs. 50,000/ - and Rs. 65,000/ - withdrawn by Shri Harbans Singh do not figure in the bank account of the assessee. In view of the above, the addition of Rs. 1,15,000/ - made by the Assessing Officer and confirmed the CIT(A) deserves to be deleted - in favour of assessee. Disallowance of expenses in part incurred for business – Held that:- The expenses in question relate to petrol , salaries, telephone etc. which are necessary for smooth running of a business. However, as per law, the assessee was required to produce supporting evidence to claim these expenses which are absent thus disallowance of certain amount is required to be made - ad hoc disallowance of Rs. 75,000/ - made by the AO is definitely on higher side, thus to meet the ends of justice the disallowance reduced to Rs. 50,000/ - - partly in favour of assessee.
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