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2021 (10) TMI 1014 - AT - Income TaxAddition u/s 68 - addition in Share Capital only by confirming the reference of RBI Inspection report - assessee submitted that alleged shareholders deposited the fund out of compensation received from Government Authorities for acquisition of the land - HELD THAT:- Addition has been made by the Assessing Officer not merely on the basis of the statement of the alleged shareholders but in view of failure on the part of the assessee in substantiating the ingredient of section 68 - assessee has failed to provide complete address and produce the two alleged shareholders namely Rakesh Kumar and Jagveer. The claim of source of fund in the hands of alleged share holders is also not been found correct as the assessee has not supported any documents in respect of the land compensation received by those alleged shareholders - Assessing Officer duly confronted the statement of two alleged shareholders during the course of the assessment proceeding - no cross-examination was sought by the assessee during the assessment proceeding and for the first time the assessee asked cross-examination before the Ld. CIT(A). Those persons have been claimed by the assessee as shareholders and thus onus was on the assessee to produce before the Assessing Officers. It is only when the assessee failed to produce those persons, the Assessing officers issued summons requesting them to appear before him. When summons were issued to them on the request of the Assessee, the onus was on the assessee to be present during recording of their statement but assessee ignored to present before the AO. The assessee did not ask cross examination even after confronting the statement to the Authorised representative. Thereafter asking cross examination before the Ld First Appellate Authority is not justified. As in preceding year, the assessee itself has admitted the addition made by the Assessing Officer on identical ground, then in view of rule of consistency, the assessee is not justified in raising the grounds without any valid reasons. - Decided against assessee. Disallowance of expenditure in terms of section 37 of the Act on proportionate basis for diversion of the fund - According to AO loans were issued in violation of the norms and hence proportionate cost cannot be allowed because of the illegality involved - HELD THAT:- Assessee has admitted the disallowance in immediately preceding assessment year. In the year under consideration the Assessing Officer made addition relying on his finding in the preceding assessment year. Once the assessee has admitted addition in immediately preceding assessment year, preferring appeal on same issue in the year under consideration is not justified and against the rule of consistency. When the loans have been disbursed in violation of the rules of RBI to give benefit to a few, than expenses corresponding to such loans are not wholly and exclusively for the purpose of the business of the assessee and therefore also such expenses are not allowable as deduction - We uphold the finding of the Leonard CIT(A) on the issue in dispute and dismiss the ground of the appeal of the assessee. Disallowance of expenditure on various heads - AO made disallowance following the finding of his predecessor in the earlier year - CIT(A) allowed part relief on repair maintenance and travelling and conveyance and restricted the disallowance to 20% instead of 30% made by the Assessing Officer - HELD THAT:- We find that disallowance has been made relying on the audit report of the RBI, where specific defects or deficiency of vouchers have been raised. Further, in immediately preceding assessment year 2013-14, the assessee has admitted the disallowance in respect of the identical expenses based on the audit report of the RBI. In our opinion following the rule of consistency, the assessee is not justified in preferring the appeal on same issue in the year under consideration without any valid reasons. The assessee has not submitted any rebuttal of the observation by the RBI in respect of deficiency of vouchers of the expenses. In the circumstances, the finding of the Ld. CIT(A) on the issue in dispute is upheld. - Decided against assessee
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