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2015 (10) TMI 2422 - AT - Income TaxAddition on account of “Interest paid to bank” - disallowance u/s 14A - Held that:- is undisputed fact that the assessee has more interest income than interest paid on OD. Besides this he has also disclosed short term capital gain at ₹ 9,07,828/- in the income of the assessee, it is also taxable. The ld Assessing Officer had not established the nexus between the interest bearing borrowings with utilizing the fund in interest free investment. When the assessee has shown income from the short term capital gain, it is evident that he has been in the business of share trading. Further the ld Assessing Officer has not brought on record the amount deployed in shares for investment purposes. The case laws cited by the assessee CIT Vs. Hero Cycles [2009 (11) TMI 33 - PUNJAB AND HARYANA HIGH COURT] are squarely applicable, therefore, the addition confirmed by the ld CIT(A) is reversed and the assessee’s appeal is allowed on this ground Trading addition U/s 68 - credit appearing in the name of Shri Kanha Ram Agarwal - Held that:- It is revealed from the assessment order that Sh. Kanha Ram Agarwal, brother of the assessee has declared additional income U/s 132(4) of the Act on 27/08/2008. IN answer to question No. 22, he has disclosed ₹ 1.5 crores during the search under the various heads. It is also fact that the AR of the assessee submitted different confirmation before both the authorities. Now before us, he has filed different confirmations, therefore, the Assessing Officer is directed to verify the confirmation from the books of account of Shri Kanha Ram Agarwal. Accordingly, this issue is set aside to the Assessing Officer for limited purpose to verify and take decision as per law. - Decided on favour of assessee for statistical purposes only. Trading addition by applying GP rate of 15% as against 12.57% declared by the assessee and invoking the provisions of Section 145(3)- Held that:- The defects pointed out by the Assessing Officer are not specific in nature. He has not brought on record any discrepancy in the books of account produced by the assessee but the compared case with M/s Supreme Carpet and Carpet palace who are in the export business. The assessee was trading goods for local market. The case is audited U/s 44AB of the Act as claimed by the assessee. The case law referred the assessee are squarely applicable. Further during the course of search, no incriminating documents were found and seized, therefore, lump sum addition made by the Assessing Officer and partly confirmed by the ld CIT(A) is not justified. Accordingly we reverse the order of the ld CIT(A) and allow the assessee’s appeal on this ground. - Decided on favour of assessee Trading addition by applying GP rate of 35% as against 26% declared by the assessee and invoking the provisions of Section 145(3) - Held that:- It is admitted fact that the assessee has admitted the difference on the basis of stock found during the course of survey and stock prepared on the basis of books of account at ₹ 1,96,668/-. It is undisputed fact that the books were not complete at the time of survey. The assessee also had not prepared trading account at the time of survey to determine the exact stock as per books of account and any difference on physical verification when purchase and sale bills available with the assessee. The assessee’s argument was that the old stock was also included in the closing stock which has lesser value due to various reasons but in closing stock the ld Assessing Officer has valued the carpet at average rate which neutralize the higher rate of per sq.ft of carpet and lower rate of carpet, therefore, this argument is not acceptable. Further the assessee has not produced any evidence that old stock had been sold by the assessee at lower rate, therefore, keeping in view of the facts and circumstances of the case, we confirm the addition of ₹ 2 lacs in case of assessee. The assessee gets relief of ₹ 7,89,668/- - Decided partly in favour of assessee.
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