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TMI Blog2012 (7) TMI 370X X X X Extracts X X X X X X X X Extracts X X X X ..... or expenses 31,741/- General expenses 15,000/- Repairs & Maintenance 15,000/- 3. Because the authorities below have carried on irrelevant exercise of attributing certain expenses and then reducing him in respect of business which did not exist: Imaginary Claim Reduced by Commission 68,00,000 54,40,500 Interest 1,11,12,000 44,12,000 Management & Staff expenses 54,20,000 35,40,000 4. Because the authorities below have erred in taking income from non-existent business at Rs.46,60,000/- by applying strange formula. 5. Because the authorities have erred in making separate addition of Rs.1,17,600/- for property income as the same had been shown in the P/L account of Hotel business." 3. In the first ground of appeal, the assessee has challenged reopening of completed assessment under section 147 of the Income Tax Act, 1961 ('the Act' hereinafter). 4. At the time of hearing, the ld. Authorised Representative has not pressed this ground of appeal, therefore, the same is dismissed as not pressed. 5. Ground nos. 2 & 3 pertain to disallowance of expenses as detailed in grounds of appeal. 6. The brief facts of the ground no.2 are that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment account for 20% of the funds. The A.O. in his order dated 10.30.2006 for A.Y. 2001-02 has allowed expenses of Rs.67,20,000/-. Management Expenses: With virtually no activity of securing fresh deposits, the agents would be dispensable as also lost of collection expenses and related paper work. The requirements of agents, accountants and field staff would reduce as would be a number of branches and related expense. In fact, after the police action, there were no identifiable operative branches. Thus expenses like printing and stationery at Rs.3,68,797, Traveling and conveyance at Rs.4,12,797 and advertisement at Rs.4,56,148 and rent account at Rs.5,92,194 would be reduced to virtually "NIL". Thus out of total of Rs.20,12,518/- only 10% would be incurred in the year, i.e. disallow 90% on these heads = Rs.18,20,000/-. Further staff expense at Rs.45.00 lac would be drastically reduced and as the evidence would indicate the company after the police action is on mainly' skeletal staff". Thus 80% of the expenses on this head too would be disallowable. The disallow in this head (36.00 lac + 18.20 lac) = 54,20,000 Allowable expenses = (73 lac minus 54.20 lac) 18,80,000 Thus total al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not been able to furnish any cogent evidence/explanation/arguments to controvert the findings/observation of the AO. The written submission filed during appellate proceedings are general in nature, which is more or less narration of events which has no bearing on the merits of the case. The burden of proof could not be discharged by the appellant on any issue. It is pertinent to mention here the during appellate proceedings, the learned AR has filed a written submissions through post requesting to decide the appeal on the basis of said written submissions. However, the said written submission is not followed or supported by any evidence or material to substantiate the various pleas taken in the grounds of appeal/written submissions. It is also to mention here that similar issues were also involved in appellant's case for assessment year 1999-2000, 2000-01 & 2001-02 and in appeal, my learned predecessor vide his order dated 5.10.2005 in appeal No.20/05-06/GZB/FBD, 22/05-06/GZB-FBD & 21/05- 06/GZB-FBD, has dismissed assessee's appeal. Since the facts of the case in assessment year under consideration are identical to that of A.Y. 1999-2000 to 2001-02, and, therefore, considering t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 007 of I.T.A.T., Agra Bench in assessee's own case (supra) for earlier years wherein the I.T.A.T. has deleted the addition of Rs.84,00,000/- vide paragraph nos.26 to 28 at page nos.9 & 10. Similarly, addition of Rs.62,00,000/- was deleted by the I.T.A.T. vide paragraph nos.20 to 23 at page no.8. The estimated income/expenses of Rs.18,80,000/- in respect of non-existing business was also deleted by the I.T.A.T. vide paragraph nos.38 to 39 at page no.11. The aforesaid relevant findings of the I.T.A.T. are reproduced as below:- (ITAT order page nos.9 & 10) "26. The next issue relates to confirming the addition of Rs.84,00,000/- on account of estimated business income. 27. The AO has estimated the expenses at Rs.99.50 lacs. Further he has estimated an income of Rs.84,00,000/- by observing that "as per recognized accounting practice on actuaries - 6.5% of deposits mobilized by assessee forfeited (6.5 x 13,05,000) 84,00,000/-". The ld. CIT(A) has confirmed this action of the AO. 28. After considering the submissions and perusing the orders of the authorities below, we are not able to understand how this income has been arrived at by the AO. Without bringing any material on record or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the submissions and perusing the material on record, we find that assessee deserves to succeed in this ground also. 23. It is seen that neither any discussion has been made in the body of the order of the AO nor any valid reason has been given for adopting the interest income shown in last year. Any income can be added on the basis of any positive evidence. Since there was no interest income during the year under consideration neither there was any evidence that assessee had interest income during the year under consideration, therefore, we hold that AO and ld. CIT(A) were not justified in making and confirming this addition." *** *** *** (ITAT order page no.11) "38. For A.Y. 2003-04 there is one more addition i.e. making imaginary disallowances out of expenses of non existent business at Rs.18,80,000/-. 39. No reason whatsoever has been given by the AO while disallowing admissible expenses on adhoc basis. The income has been estimated on imaginary basis which we have already deleted. Therefore, without any basis any imaginary disallowance of any expenditure cannot be sustained. Therefore, the addition of this amount of Rs.18,80,000/- also stand deleted." 12. After heari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o to maintain consistency we delete the addition and decide the ground in favour of the assessee. ITA No.165/Agr/2009 for A.Y. 2004-05 by the assessee 16. The grounds raised by the assessee in the above appeal are as under :- 1. Because the assessment is bad in law having been made on the basis of return filed beyond the prescribed time under section 139(3) of the Act. 2. Because on the facts and in the circumstances of the case the authorities have erred in making following disallowance of expenses: Generator expenses 44,934/- General expenses 15,000/- Repairs & Maintenance 15,000/- 3. Because the AO has erred in reducing following imaginary expenses in respect of business which did not exist: Imaginary Claim Reduced by Commission 68,00,000 54,40,500 Interest 1,11,12,000 44,12,000 Management & Staff expenses 45,00,000 27,00,000 4. Because the AO has erred in estimating income from nonexistent business at Rs.46,60,000/- by applying an unknown formula. 5. Because the AO has erred in making separate addition of Rs.25,000/- as property income. 6. Because the AO has erred in holding that loss will not to carried over." ..... X X X X Extracts X X X X X X X X Extracts X X X X
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