TMI Blog2015 (5) TMI 421X X X X Extracts X X X X X X X X Extracts X X X X ..... Disallowance of depreciation - CIT(A) deleted the addition in part - Held that:- the assessee was having old assets with opening written down value of ₹ 13,14,240/- and purchased new assets of ₹ 3,87,680/-. The ld. CIT(A) found that out of the aforesaid new assets three bills were in the name of Rohit Bhardwaj and not in the name of the assessee company. Therefore, the depreciation was not allowable on those new assets and the ld. CIT(A) rightly directed the AO in not allowing the deprecation on the furniture amounting to ₹ 66,648/- (Rs.38,561/- + ₹ 18,000 + ₹ 10,087/-). In respect of other assets nothing was brought on record to substantiate that those were not used for the purpose of business. We, therefore, do not see any valid ground to interfere with the findings of the ld. CIT(A). - Decided against revenue. Unexplained expenses - CIT(A) deleted the addition - Held that:- In the present case, it appears that the AO made the disallowance of almost all the expenses claimed by the assessee by presuming that no business activity was undertaken by the assessee. On the contrary the AO admitted the receipts of ₹ 14,23,065/- which were on acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 14,23,065/-. He also noticed that almost all the receipts were received in cash except a few amounting to ₹ 5,00,000/- and that there was another receipts of ₹ 12,11,801/- to which no explanation was offered. The AO added ₹ 26,34,866/- (Rs.14,23,065/- + ₹ 12,11,801/-) considering the same as income from other sources. 4. Being aggrieved the assessee carried the matter to the ld. CIT(A) and submitted that the assessee was regularly appearing before the AO and was carrying books of accounts but he did not examine the same. It was further submitted that certain details as asked for, were filed during the course of assessment proceedings which is evident from para 4 of the assessment order. The ld. CIT(A) asked the remand report of the AO who vide his repor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipts 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 bills, and addition of ₹ 26,34,866/- was made as income from other sources being receipts from unexplained sources. With regard to stand of the assessee that sufficient opportunity was not provided before passing ex-parte order u/s 144, it may kindly be seen that even in the remand report, ld. AO is not able to controvert the facts that no show cause was issued to the assessee company before making the impugned addition of ₹ 26,34,866/-. The requisite details were filed before the AO during the course of assessment proceedings. All details with regard to expenses claimed, details of hire charges received out of hiring of earth-moving machinery of ₹ 14,23, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 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. AO could not make any justification for making an imaginary addition of ₹ 26,34,866/-. No opportunity was given by the ld. AO to explain his doubts, even in the remand proceedings. Thus your Honour may kindly see from the remand report that the same has been prepared without considering the details submitted by the appellant in the paper book which was duly forwarded by your predecessor to the AO for consideration and comments. In view of the above facts, since the ld. AO could not rebut any of the facts, and submissions made by the appellant, it is humbly submitted that the additional evidences may kindly be admitted, as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g amount of ₹ 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 ₹ 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 ₹ 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 observations made in the assessment order. In his rival submissions the ld. Counsel for the assessee reiterated the submissions made before the authorities below and strongly supported the impugned order passed by the ld. CIT(A). 9. We have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, it appears that the assessee furnished all the relevant details along with the books of accounts before the ld. CIT(A) who forwarded the same to the AO for his examination. However, the AO in his remand report did not poin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rniture making and ₹ 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 ₹ 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 ₹ 38,561/-, ₹ 18,000/- and ₹ 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 allow the depreciation in respect of other assets. 13. Now the Department is in appeal. 14. We have considered the submissions of both the parties and carefully gone through the material available on the record. It is noticed that the assessee was having old assets with opening written down value of ₹ 13,14,240/- and purchased new assets of ₹ 3,87,680/-. The ld. CIT(A) found that out of the aforesaid new assets three bills were in the name of Rohit Bhardwaj and not in the name of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the assessee reiterated the submissions made before the authorities below and further submitted that the expenses were incurred for the business purposes. It was also submitted that the assessee furnished books of accounts, paper book and written submission during the course of appellate proceedings which were forwarded by the ld. CIT(A) to the AO for his examination and the AO did not make any adverse remarks on the books of accounts and the expenses incurred. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
