Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2020 (11) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (11) TMI 467 - AT - Income TaxUnexplained Capital - CIT(A) rejected above source of income as it will not increase cash flow to the assessee - HELD THAT:- We do not agree with Ld CIT(A) but it is one of the source that can increase cash balance of the assessee during this assessment year. We noticed that Ld CIT(A) has sustained addition to the extent of ₹ 1,12,500. Since there is evidence that assessee has encashed the deposit along with interest and there is a established source for the assessee, accordingly we deem it fit to delete the addition sustained by the Ld CIT(A). Accordingly the ground No. 1 raised by the assessee is allowed. Reasonable profit - Additions are relating to business income of proprietary concerns run by the assessee - HELD THAT:- After disallowance made by AO, the total profit determined by AO in travel business is ₹ 3,01,011/– which is equal to 27.45%. In our view, this is too high. We doubt that any travel business can fetch real profit at that level. We observed that even presumption tax (under section 44AD) proposes only 8% as reasonable profit. It clearly indicates that assessing officer has made this assessment in overzealous. The various courts have held that only real and actual income alone can be taxed and unrealistic or highly presumptive income cannot be proper to tax - reasonable profit expected in this line of business could be 8 to 10%. Since assessee has already declared 7.79% as its income, we direct assessing officer to estimate the total income at 10%. Therefore, we direct assessing officer to sustain the profit @ 2.21% of travel business. Addition in respect of sundry creditors and ad hoc disallowance of expenditure - CIT(A) already directed the assessing officer to consider the real and actual expenditure and redo the actual profit after allowing the real expenditure incurred by the assessee for the purpose of business. After verifying the profit and loss account, the expenses claimed by the assessee seems to be reasonable and we do not see any reason to disturb the profit declared by the assessee. Even the sundry creditors was disallowed only due to non availability of information from assessee and otherwise, no business will be carried out without any creditors, as far as in this case, assessee submitted before Ld CIT(A) that he has received the booking advance, which is accounted as creditors. Accordingly, We direct assessing officer to delete addition in respect of sundry creditors and ad hoc disallowance of expenditure. In short we direct assessing officer to estimate 2.21% of travel business only. Marriage gift received in the marriage of the assessee - HELD THAT:- After considering the affidavit, in our view, in the Indian marriages it is common in marriages to receive and give Shagun or marriage gifts. Therefore we do not see any reason to retain this addition. Accordingly we direct assessing officer to delete this addition. Marriage expense - Assessee accepted the estimation of income and submitted that assessee’s parents has incurred the above said expenditure. However they’ve not submitted any new submission before us. However they submitted that assessee’s mother has withdrawn ₹ 50,000 from postal account. In our view, It is common in the Indian marriages to receive gifts from parents and relatives. We do not see any reason to retain this addition. Accordingly we direct assessing officer to delete this addition. Valuation difference determined by the assessing officer after obtaining valuation report from DVO in the year 2006 - HELD THAT:- AO himself confirms that the construction was completed in two years and in this AY, AO makes the addition based on DVO report and whole addition was made only in this AY. He submitted that it amounts to double addition. After considering the Ld AR submission, we are inclined to accept and AO cannot make the difference of valuation from the valuation report and actual cost declared by assessee in his statement of affairs since the construction was carried in two years. Accordingly, the ground raised by the assessee is accordingly allowed.
|