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2016 (3) TMI 116 - AT - Income TaxAddition on cessation of liability u/s 41 - Held that:- The assessee had claimed to sold PP/HDPE sacks to M/s. A One Chemicals, Ankleshwar and M/s. Anmol Chemicals, Gandhinagar through M/s. Dharini Packaging which aggregated to ₹ 2,15,994/-. These parties had not cleared the dues on the ground that the money had been paid to M/s. Dharini Packaging. The assessee was thus not required to pay anything to M/s. Dharini Packaging and therefore, the liability actually ceased to exist and the same was rightly added to the income by resorting to the provisions of section 41(1) of the Act. Same is the situation in the case of M/s. Swiss Polyplast in whose case the outstanding amount was ₹ 61,410/- and these purchases were made through M/s. Dharini Packaging and this amount was also must have been adjusted by M/s. Dharini Packaging against its outstanding and nothing was payable to M/s. Dharini Packaging to this extent. In this case also no proof of purchase or the amount paid was given by the assessee and therefore, the Assessing Officer was justified in disallowing the liability and adding the same u/s. 41(1) of the Act. - Decided against assessee Addition of cash credit u/s 68 - Held that:- There was no evidence of personal saving of ₹ 17,000/- made by withdrawal of earlier years. This amount was also clearly unexplained. There was no justification for the cash gifts of ₹ 25,000/- from maternal uncle Shri Suresh K. Doshi, ₹ 75,000/- from mother Smt Rita Rajendra Shah, ₹ 75,000/- from sister Ruchi and ₹ 50,000/- from maternal uncle Shri Dilip K. Doshi. Therefore, the CIT(A) held that the assessee could not establish the identity of the donors, the genuineness of the transactions and the creditworthiness of the donors. The CIT(A) also found that no confirmation for the gifted amount was furnished either before the Assessing Officer or before him. He accordingly held that so called gifted amount of cash of ₹ 25,000/-, ₹ 75,000/-, ₹ 75,000/- and ₹ 50,000/- were thus correctly treated as unexplained cash introduced in the books of account and the Assessing Officer was justified in treating the same as unexplained cash creditors. The CIT(A) also rejected the claim of assessee with regard to the amount of ₹ 30,000/- deposited in the bank account on the ground that the same was an altogether new story cooked up which was not before the Assessing Officer; and accordingly, treated the same as unexplained cash credit. Accordingly, the CIT(A) held that the assessee could not establish the genuineness of the above referred cash credits and thus the Assessing Officer was justified in making the addition of ₹ 2,73,874/- u/s. 68 - Decided against assessee Ad-hoc disallowance of expenditure - Held that:- Assessing Officer made ad-hoc disallowance of 20% out of telephone, vehicle, depreciation on vehicle, travelling and conveyance expenses, amounting to ₹ 96,253/-, which works out to ₹ 19,250/-. On appeal, CIT(A) restricted the same to 10%, i.e. ₹ 9,625/-. Considering all the facts and circumstances, it is of the view that the disallowance seems to be on higher side and therefore, the same is restricted to ₹ 5000/-.- Decided partly in favour of assessee
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