Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2016 (4) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (4) TMI 351 - AT - Income TaxEarnest money received - addition u/s 68 - Held that:- We find that an FIR was filed on 30. 7. 2008, in pursuance of the order of the Metropolitan Magistrate dt. 27. 5. 2008 with regard to monetary transaction taken place between the assessee and MDC, that in the order of the Metropolitan Magistrate it has been observed that the assessee had received token money ₹ 73. 21 from MDC, that those papers with regard to the FIR were filed during the course of appeal proceedings in the penalty matter. As per the established principles of taxation jurisprudence, provisions of Section 68 can be invoked if the identity and creditworthiness of the creditor is not established and that the transaction is not genuine. In the case under consideration, the genuineness of the transaction stands proved because the money has come from a known source-through banking channels. As far as identity and credit worthiness is concerned, same cannot be doubted. Proprietor of the MDC and the assessee are fighting legal battle in the Court and the order of the Magistrate clearly states that payment of ₹ 23. 00 lacs was made by MDC to the assessee during the under appeal. Therefore, in absence of existence of basic ingredients of Section 68, the FAA was not justified in upholding the order of the AO, who had made the addition of ₹ 23 lakhs. - Decided in favour of the assessee. Disallowance of administrative expenses, employees expenses and depreciation - Held that:- We find that assessee had shown income of ₹ 8. 53 lacs for the year under appeal. (Pg-8 of the paper book), that income from business centre had been shown at ₹ 2. 70 lacs as against the income of ₹ 4. 85 lacs for the previous year, under the head Business-income, that the assessee had shown expenditure of ₹ 29. 80 lacs for the year under consideration as against expenditure of ₹ 48. 13 lacs for the earlier year. In these circumstances, it cannot be stated that assessee was not carrying out any business activity. It is a fact that assessee has closed down its manufacturing unit long back, but it does not mean that he was not carrying out any business activities. We find that while finalising the assessment of the assessee for the AY. 2005-06, the AO had allowed 75% of the identical expenses. On a query by the Bench the AR conceded that assessee had not agitated the issue before the FAA in that matter. Considering the peculiar facts and circumstances of the case, we want to restrict the disallowance to 25% of the expenses disallowed. Effective ground of appeal is decided in favour of the assessee in part.
|