Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2022 (6) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (6) TMI 549 - ITAT MUMBAIAddition u/s 37 (1) - expenditure on business promotion, car expenses - expenses paid to the partners for expenses - expenditure on lunch and entertainment of the clients - HELD THAT:- Facts are apparent that a sum of ₹ 334,403/– was made to the partners for expenses but only a sum of ₹ 187,042/– has been claimed in expenses in the account of the partnership and therefore the disallowance at the most could be restricted to ₹ 187,042/–. Further, the fact also shows that the assessee has incurred these expenditure on lunch and entertainment of the clients. Some of the expenditure is also in the nature of personal expenditure. Therefore to meet the interest of justice the disallowances restricted to the 50% of the sum of ₹ 187,042/– and the balance disallowances deleted. Thus, assessing officer is directed to restrict the disallowance to ₹ 93,600/ –. Accordingly, ground number 1 of the appeal is partly allowed. Addition on account of undisclosed contract receipt for the work undertaken of club link Ballard - HELD THAT:- There is no evidence that such work has been carried out by the assessee. There is no confirmation from Club Link, client of the assessee. It may not be the concern of the assessee that who has done the work but the documents seized clearly shows that it is merely a quotation. Based on the quotation, it cannot be said that assessee has executed this work and has received the consideration, which has not been accounted for in the books of assessee, without any corroborative evidence. Further, there is a letter dated 21/2/2003, which clearly says that the above assessee firm has been dissolved due to some personal reasons and now a new entity, Orion Enterprise will carry out the work if allotted. The assessee also requested for a new purchase order in the name of new entity. In the same letter, it was also stated that sketch is also sent for approval. Therefore, it is apparent that the work has not been done by the assessee. There is no inquiry whether any such new quotation was given to new entity or not. Both these letter and quotation were also seized during the course of search. When both the documents are seized during the course of search they could not be interpreted in the divergent manner, that assessee has earned unaccounted income by ignoring the other communication. In view of this, we do not find any reason to sustain the addition hence deleted. With respect to the other sums, no explanation is forthcoming which convinces us to deviate from the orders of the lower authorities, hence the same are confirmed. Accordingly, ground number 2 of the appeal is partly allowed Addition based on one document seized being the profit and loss account of the assessee for the relevant year - actual profit of the assessee is more as against the income declared in the return of income - HELD THAT:- Searched to place on 30/05/2008 and the profit and loss account is related to year ended on 31st of March 2003. The seized paper also does not have any date. Therefore, it cannot be asserted that the seized documents as well as the audited accounts are prepared on the same date. There may be certain expenditure, which are not incorporated in the seized profit and loss account however they have been incurred subsequently. In view of this, there is no reason to put more credence on the seized document. Further the findings of the learned and CIT – A that assessee firm was dissolved during the year and therefore the profits would have been higher. Had that been the fact then higher expenditure would have been taken into account at the time of resolution of the firm and that should have been found place in the seized profit and loss account, more particularly when there is no dispute on the gross receipts. Therefore, the learned and CIT – A confirmed the addition only on his guesswork. In view of this we reverse the orders of the lower authorities and direct the learned assessing officer to delete the addition on account of difference in profit i.e. which is only difference in expenditure being on higher side in the audited accounts then in the seized paper. Accordingly, ground number 3 of the appeal is allowed.
|