Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2015 (11) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (11) TMI 789 - AT - Income TaxRejection of books of account - trading addition - Held that:- Firstly, it is noted that while rejecting the books of account of the assessee, the show cause was issued to the assessee on 28-12-2010. Thereafter, there is entry in the order sheet by the assessee on the same date and the assessment order has also been passed on the same date which shows that the matter has not been given considered thought by the AO. It is a clear case of lack of opportunity to the assessee to submit its submissions and relevant documents. Secondly, in terms of the observations of the AO as well as submissions of the assessee, it is noted that the AO wanted to examine the fall in gross profit rate i.e. quantity wise as well as quality wise and the corresponding margins in the sales effected during the year as well as corresponding purchases made during the year besides opening stock. The assessee has mentioned that it has maintained day to day books of account which are duly supported by bills and vouchers. Further monthwise quantitative details are also maintained. It is, therefore, important that the AO should examine both quantitative as well as qualitative details as maintained by the assessee in order to determine the reasons for fall in gross profit rate as compared to past years. Thirdly, the assessee has mentioned that the gross profit has increased in absolute terms from ₹ 18,26,910/- (A.Y. 2007-08) to ₹ 41,78,691/- (A.Y. 2008-09) but there is only marginal decline in gross profit rate i.e. 0.39% on account of increase in turnover. The assessee has further stated that he was interested in volume of the profit and not in rate of profit. To our mind, this justification on stand alone basis cannot stand the test of judiciary without any corroborative evidence. What is really required to be demonstrated by the assessee as a prudent businessman is that what are the key business circumstances in context of the prevailing market conditions which led to the fall in gross profit rate. In the light of above discussions and especially the fact that the assessee has been denied a reasonable opportunity of being heard, the mater is set aside to the file of the AO to determine afresh whether the assessee has declared correct gross profit or not. Disallowance of car & conveyance, shop expenses, mobile and telephone expenses,transportation expenses - these expenses pertain to 20% of total expenses which have been incurred by the assessee - Held that:- From the perusal of the order of the AO, we do not find any specific finding which has been given while disallowing these expenses. It is thus an adhoc disallowance made by the AO which is not justified. Thus we delete the adhoc disallowance of expenses of 20% on the above heads and do not sustain the order of the ld. CIT(A) on these issues. Disallowance of salary and wages expenses it is claimed by the assessee that part of the wages expenses were shown under direct expenses which have already suffered disallowance by application of adhoc gross profit rate by the AO. The AO is directed to verify the same Addition on account of house hold expenses, the assessee has submitted detailed submission in respect of house hold withdrawal in his name as well as in the name of his wife. The AO is directed to verify the same and allow the same after due verification. Disallowance of penalty expenses, the assessee has submitted that the restoration charges have been debited to the account of the assessee and has not been claimed as expenditure in the profit and loss account. The AO is thus directed to verify the same and if the claim of the assessee is supported by the treatment done in the financial statement as claimed by the assessee, the same should be allowed. Addition u/s 68 - Held that:- Considering assessee's submission that the confirmation from Shri Ratan Chand and Smt. Rashmi Jain during the course of assessment proceedings. Further the Income Tax Returns were also filed and both the creditors are assessed to tax. Both these persons have confirmed the loan transactions made with the assessee and the transactions are duly verifiable and the creditors have been duly identified. Thus in view of these facts, the addition made u/s 68 is deleted. Hence, the order of the ld. CIT(A) is not sustainable on this point and addition sustained by the ld. CIT(A) is deleted. - Decided in favour of assessee. Non deduction of TDS on commission expenses - The assessee has taken the legal plea that in the light of decision of the Jaipur Bench in the case of ACIT vs Girdhari Lal Bagroti [2015 (11) TMI 746 - ITAT JAIPUR] no disallowance u/s 40(a)(ia) is to be made if the amount is not outstanding at the end of the year. Thus in the light of decision taken earlier we delete the addition. - Decided in favour of assessee.
|