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2021 (1) TMI 850 - AT - Income TaxAddition u/s 68 - unsecured loan obtained - CIT(A) confirmed this addition on the ground that assessee has failed to prove identity, creditworthiness and genuineness of the transaction - HELD THAT:- The assessee has explained the fact that this loan was taken in the preceding year and it is only an opening balance as on 01.04.2013. This fact has not been examined by the ld. CIT(A) while confirming the addition. If the loan was introduced in the preceding year and the AO while passing the assessment order u/s. 143(3) for the AY 2013-14 has not doubted the genuineness of the loan then the same cannot be held as a bogus sundry creditor for the year under consideration. Neither the AO nor the CIT(A) has verified and consider this explanation of the assessee that this amount is only a brought forward amount and shown as opening balance and no new loan was taken from Smt. Sharda Singh during the year under consideration. Hence, this issue is remanded to the record of the ld. CIT(A) for limited purpose to verify this fact from the record whether this amount was only an opening balance and brought forward from the preceding year and then decide the issue afresh. Disallowances of expenses - assessee has failed to furnish any satisfactory explanation for the downfall of the GP and NP during the year under consideration as well as supporting evidence of the expenses - Addition confirmed by the CIT(A) to the extent of 5% as against 25% made by the Assessing Officer - HELD THAT:- From the details of the expenditure, it is noted that the expenditure under the head shop and office rent cannot be doubted as it is a recurring expenditure and the amount debited in the P&L account cannot be disallowed on percentage basis. Accordingly, the disallowance of 5% as confirmed by the ld. CIT(A) on the shop and office rent is deleted. So far as the disallowance of 5% in respect of the other expenditure is concerned since, the assessee has failed to produce the supporting bills and vouchers to establish that the said expenditure has been incurred wholly and exclusively for the business purpose the 5% disallowance is reasonable and proper. Accordingly, the disallowance made by the ld. CIT(A) is restricted to the expenses other than shop and office rent.
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