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2014 (1) TMI 394 - AT - Income TaxDisallowance of telephone and travelling expenses - Held that:- The Assessing Officer while making the disallowance @ 20% of the expenses claimed had not given any specific instance where the expenses were incurred for personal purposes - The ld. CIT(A) while restricting the disallowance @ 10% had also not given any cogent reason - In such type of cases, the personal use on account of telephone and vehicle, cannot be ruled out - It is justified in the eyes of court that to cover the leakage if any and to meet the ends of justice, the disallowance to Rs. 5,000/- is restricted - Partly allowed in favour of assessee. Addition on account of household expenses - Held that:- The assessee explained that a sum of Rs. 1,12,000/- was withdrawn for house hold expenses, however, the Assessing Officer considered only Rs. 87,000/- for the purposes of house hold expenses and excluded the expenses of Rs. 25,000./-, which were incurred by the assessee for the education of the children - The Assessing Officer while estimating monthly expenses @ Rs. 12,000/- has not given any basis - The withdrawal of Rs. 1,12,000/- shown by the assessee for the purposes of house hold expenses, appears to be reasonable considering the size of the family - The Assessing Officer was not justified in making the addition on account of house hold expenses and the ld. CIT(A) was not justified in confirming the action of the Assessing Officer - Decided in favour of assessee. Low G.P. rate declared - Held that:- Ld. CIT(A) directed the Assessing Officer to apply the G.P. rate on the basis of the G.P. rate of immediately two assessment years and the maximum G.P. rate i.e. 7.19% declared by the assessee and accepted by the department in the assessment year 2007-08 was directed to be applied - The view taken by the Ld. CIT(A) was justified - Decided against Revenue. Unexplained cash credit - Held that:- The assessee not only filed the confirmation from the cash creditors, whose accounts were squared up but also produced them before the Assessing Officer who recorded their statement - The Assessing Officer could not bring any material on record to substantiate that the credits were from undisclosed income of the assessee - Following Kanhaiyalal Jangid Vs. ACIT [2007 (1) TMI 496 - HIGH COURT OF RAJASTHAN] - Assessee having filed confirmation from the creditor and having produced the creditor before the A.O. where the creditor affirmed advancement of loan to assessee, no addition u/s 68 could be made in the hands of assessee on the ground that the creditor could not satisfactorily explain the source of loan. Credit balance in account of trade creditors - Held that:- The purchases made from those parties were accepted and even the payments made through banking channel were not doubted, therefore, it cannot be said that the trade creditors were not traceable because the payments were made through banking channel to those parties, which had been accepted - The Assessing Officer had no where established that those were the bogus parties or the amount shown in their names, were bogus. The Ld. CIT(A) was of the view that the provisions of Section 68 of the Act were not attracted to the amounts representing purchases made on credit - In respect of difference in balances of parties the Ld. CIT(A) was of the view that the assessee by showing the higher credit balances had also inflated the purchases which resulted in the reduction of profit - The disallowance has been restricted to this amount - Decided against Revenue.
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