TaxTMI 
TaxTMI 
2015 (5) TMI 421
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Ld. CIT(A) has erred on facts and in law in deleting addition of Rs. 9,17,946/- on account of unexplained expenses ignoring that the assessee failed to produce any bill with respect to the expenses claimed and also failed to submit any evidence with respect of any business being conducted by the assessee. 4. The appellant craves leaves for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal" 3. Vide Ground No. 1 the grievance of the Department relates to the deletion of addition of Rs. 26,34,866/- made by the AO. The facts related to this issue in brief are that the assessee filed the return of income on 29.11.2006 declaring Nil income. Later on, the case was selected for scrutiny. According to the AO the assessee did not comply with the various notices issued u/s 143(2) and 142(1) of the Income Tax Act, 1961 (hereinafter referred to as the Act). He, therefore, proceeded to frame the assessment ex-parte u/s 144 of the Act. According to the AO, the assessee had not filed any details of hire charges earned by it amounting to Rs. 14,23,065/-. He also noticed that almost all the receipts were rec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the reply of the assessee. This is with regard to the explanation given by the assessee to justify its nature of business. Since, the assessee was not able to substantiate its explanation, his contention was rejected. In the end, in view of the fact that the assessee is not doing any business and is found to be in the business of providing entries, the total receipts have been added as these are found to be from undisclosed sources. It has specifically mentioned in the order that the receipts shown by the assessee was less than what was shown in the copy of Bank Accounts of the assessee company. Since, it was found that the assessee had shown all bogus activities, the entire receipts as per the bank account was added. Hence, it is seen that there is no ambiguity in the figures. In view of above, it is requested that the contention of the assessee is wrong footed and should be rejected. The addition made by the AO may please be upheld." 5. The said report was forwarded to the assessee who furnished in rejoinder dated 16.12.2010 by stating as under: "Ld. AO has mentioned in the remand report that the case of the assessee was completed u/s 144 in the absence of non production of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... CIT(A), but ignoring the same the ld. AO has again mentioned that the books of accounts were not produced. Ld. AO could not specify even in the remand proceedings as to what is the basis for arriving at a figure of Rs. 12,11,801/- or Rs. 26,34,866/-. In the remand report ld. AO has made allegation that the assessee is not doing any business and is found to be in the business of providing entries, but what is the basis of such a bald allegation made by the AO has not been described anywhere in the remand report, nor any such supporting documents has been furnished by the AO to prove such a bald allegation. Ld. AO has further mentioned in the remand report that the receipts shown by the assessee was less than what was shown in the copy of bank accounts of the assessee company. PB 51-52 is copy of the bank Account of Bank of India, and PB 53-54 is copy of the bank account of Syndicate Bank. Even complete total of these accounts do not reach to the figure of Rs. 26,34,866/-. Ld. AO has mentioned that entire receipts as per the bank account was added is again appears to be without considering the paper book submitted by the assessee, and the details filed therein. To sum up the ld. A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....al receipts declared by the assessee at Rs. 14,23,065/- but the AO arrived at a figure of Rs. 26,34,866/- and remained silent in his remand report on the books of accounts furnished by the assessee. The ld. CIT(A) observed that the paper book of the assessee containing books of accounts was forwarded which had been examined by the AO who did not find any discrepancy in those and had not commented on the evidences furnished by the assessee. He also observed that the AO had not given any reason for making the addition of Rs. 12,11,801/-. Accordingly, the said addition was deleted. As regards to the remaining amount of Rs. 14,23,065/-, the ld. CIT(A) observed that the source of receipt was only out of hiring of machinery, the assessee received hire charges of Rs. 14,23,065/- from different parties and nothing adverse had been brought on record by the AO to controvert that this receipts were not from hire charges of machinery owned by the assessee. He, therefore, directed the AO to consider the receipts of Rs. 14,23,065/- as business receipts instead of income from other sources. 8. Now the Department is in appeal. The ld. DR strongly supported the order of the AO and reiterated the o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....written down value of the assets was at Rs. 14,13,240/- which was used for the business purposes, therefore, the disallowance made by the AO was not justified. 12. The ld. CIT(A) after considering the submissions of the assessee observed that the evidences filed by the assessee during the course of Appellate Proceedings were forwarded to the AO for comments who had not offered any adverse comment after examining the said documents. He further observed that there were two bills for payment of Rs. 18,000/- to Darshan Singh for furniture making and Rs. 10,087/- to painter Chotte Lal for labour charges. It was also observed that the aforesaid two bills revealed that the timber was purchased in the name of Rohit Bhardwaj and one bill amounting to Rs. 38,561/- for wooden purchased from Durga Timber Trading Company was also in the name of Rohit Bhardwaj, Palam Vihar. The ld. CIT(A) held that the depreciation was not allowable on the above said payments of Rs. 38,561/-, Rs. 18,000/- and Rs. 10,087/-. But the rest of the bills either were cash bills or were in the name of the assessee which did not prove that those were not used for the business purpose. He, therefore, directed the AO to a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....business of lying of underground cables and this project required user of machinery, the building material for excavation and refilling/leveling of the land after laying the cable. 17. The ld. CIT(A) after considering the submissions of the assessee observed that the expenses claimed by the assessee did not include expenses of personal nature and that to keep the status to continue and to run the business, expenses were necessary. He further observed that no adverse material was brought on record by the AO, he, therefore, held that the expenses were incurred by the assessee to run its business. Accordingly, the disallowance made by the AO was deleted. 18. Now the Department is in appeal. The ld. DR reiterated the observations made by the AO and further submitted that the assessee was non-cooperative and did not provide the bills for purchases and the expenses claimed in the books of accounts. He further stated that from the detail of the closing stock it was not clear as the same was used to which business of the assessee. Therefore, the AO rightly made the disallowance and the ld. CIT(A) was not justified in deleting the same. 19. In his rival submissions the ld. Counsel for th....