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2015 (5) TMI 435 - HC - Income TaxDisallowance of transport expenses - Held that:- Considering the totality of the expenditure which was about ₹ 7,21,16,088/-, the cash expenditure of ₹ 36,84,500/-, could not be said to be of such magnitude as to have led to the startling result of rejecting the entire books of account. Furthermore, the AO does not indicate any reason why he accepted 1.75% of the entire transaction as permissible cash transportation expenditure. We, therefore, agree with the findings of the ITAT and held that the expense claimed for transportation could not have been a valid ground for rejecting the books of account. GP Addition - rejection of books and the imposition of 12% GP rate - ITAT deleted addition - Held that:- Reason for rejection of the books of account was not sound given that the assessee was maintaining the consistent accounting method which had been accepted during all previous years. So far as the irregularities with respect to “bardana” was concerned ITAT held that the assessee during the course of hearing drew our attention towards the balance sheet and the accounts and shown us the opening stock, purchases and sale of bardana. In view of these findings which are entirely based on fact, this Court is of the opinion that unless the Revenue points out something fundamentally wrong or unreasonable in the ITAT’s approach, the question urged by it with regard to addition on this score, is inadmissible. In view of the above conclusion, the further finding of the ITAT that the imposing of GP rate of 12% - later reduced to 11.6% was entirely unwarranted. Notional interest accruing from other sources - ITAT deleted the addition - Held that:- This Court agrees with the findings of the ITAT that the entire basis of this addition was hypothetical and not based upon any material evidence except the cheques found in the premises during the search. The assessee’s explanation was that these amounts had been returned. So far as the addition on account of interest which ought to have accrued is concerned, both the CIT(A) and ITAT were in unanimity in holding that such additions could not have been made. ITAT based its decision on the judgment of Commissioner of Income Tax v. Shoorji Vallabhdas and Co. (1962 (3) TMI 6 - SUPREME Court ). Having regard to these facts, this Court is of the opinion that there was no “real income” in the facts and circumstances of this case. In view of the concurrent findings, the Court will not interfere in this aspect. - Decided in favour of assessee.
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