TMI Blog2012 (5) TMI 581X X X X Extracts X X X X X X X X Extracts X X X X ..... period of three years, therefore, according to the A.O. they have ceased to be the liability of the assessee as on 31.03.2007, hence these could be treated as income of the assessee. The A.O., therefore, targeted eight parties and treated the sums owed to them aggregating to ₹ 22,20,986/- as cessation of liability and added the amount to the income of the assessee in the current year. 5. Aggrieved by the treatment of the A.O., the assessee approached the CIT(A), who looked into the accounts of the assessee for preceding three years and gave relief to the extent of ₹ 8,57,340/- out of ₹ 22,20,986/- and sustained the additions of ₹ 13,63,646/-. It is against this amount, the assessee is in appeal before the ITAT. 4. Before us, the counsel for the assessee firm took us through the details of outstanding balances from financial year 31.03.2004 and pleaded that even if the law of limitation is applied, even then the period of three years cannot be said to have elapsed, because the year of default has always to be excluded and in the present case, the first year of the amounts being shown as payable by the assessee would commence from 31.03.2005. Taking year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue are that the assessee had taken unsecured demand loans , for business needs and paid interest on these demand loans. The assessee, thus claimed the payment of interest as allowable. 10. The revenue authorities disallowed the interest paid by the assessee. 11. Aggrieved, the assessee is now before the ITAT. 12. Before us, the AR submitted that the interest has been paid on unsecured demand loans taken by the assessee firm from the common pool . Beyond that, the assessee has not been able to address or substantial on the issue. 13. The DR relied on the decisions of the revenue authorities. 14. We have perused the orders of the revenue authorities and also the material placed on record and after hearing the AR, we have not been able to link the interest paid on the said demand loans which was supposed to have been utilized by the assessee for the purpose of business. The AR has not been able to lead us to any nexus as to how the said demand loan have been utilized for the purposes of business. 15. In the light of this, we are not inclined to disturb the findings of the revenue authorities. Hence, ground no. 2 is dismissed. Ground no. 3 is as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that the disallowance was made by the A.O. because there was no documentary evidence to prove the expense, he, therefore, pleaded that the disallowance made by the A.O. was correct and he further pleaded that even the disallowance reduced by the CIT(A) should be reversed. 22. We have heard the parties and have referred to the material brought on record. We find that the CIT(A) has basically accepted the market trend in the line of business and considering that, the CIT(A) has reduced the disallowance to 25%. We too, looking into the practicality of business, find that persons / executives going door to door, home to home or even office to office, face problems and these persons have been giving liberty to take even adverse decision on the spot, for which he can neither issue the voucher for short amount received nor he can reduce the receivable amount from the bill that is raised on the customer. Understanding the practical side of market trend in the nature of cable connection business, we find that even 25% seems excessive. We in all fairness reduce the disallowance by further 15% and sustain the disallowance to 10% i.e. ₹ 71,452/-. The assessee gets a further r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the income of the assessee. 38. Aggrieved by the addition made by the AO the assessee approached the CIT(A), wherein the assessee averred in the grounds of appeal appended with Form No. 35, wherein Ground no. IV(2) : 2. The learned AO erred in case of Nischal Corporate Services Pvt. Ltd. i) Neither giving a copy nor an opportunity to the Assessee to examine the alleged statement given by Directors of Nischal Corporate Srvises Pvt Ltd Shri Dinanath Yadav and Pradeep Prajapati. ii) Not giving am opportunity to examine the alleged Inspectors report, and relying on the same. iii) Relying on the alleged statement given in the earlier assessment year not pertaining to the Assessment on the Assessee. iv) Ignoring the fact that the Assessee did not had any dealing with the party during the earlier Asst. year which the alleged statement belong. v) Ignoring the supporting documents, Confirmation of Accounts, evidences payments made and details of services rendered. vi) Making the observations regarding the non submission of details regarding the services rendered, ignoring the detailed submitted. vii) Ignoring the fact that the bills were booked after deducting t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nspector, it gives the date of ward Inspector's visit and report dated 30.10.2009. The AR questioned as to how can the show cause notice dated 26.10.2009 include the reference of ward Inspector's report dated 30.10.2009. The AR further pointed out that reply on the show cause was submitted with the A.O. which was dated 23.11.2009, but the A.O. received it on the back date, i.e. on 16.11.2009. The AR pointed out that the A.O. passed the assessment order on 23.11.2009 (the date when the assessee actually placed its written submissions). He, therefore, pleaded that not only the A.O. had not gone into the submissions of the assessee before him but the order was passed with a preset mind, purely based on information collected by the A.O. for the preceding year and used the information collected on the assessee in the current year. He, therefore, pleaded that the assessee had been asking for the opportunity to cross examine the vendors on the information / statement collected by the A.O. on its back. The AR pleaded that the misunderstood position could only be ironed out if the assessee is supplied with the statement recorded and given a chance to go through the statement, and al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ering the trade practice such expenses duly supported by internal vouchers and authorized by the partners may please be allowed . The assessee further submitted that such expenses have to be met by the assessee, wherein license and permissions are required to be taken mainly from local police, BMC and other competent authorities for smooth and effective functioning of cable TV business. The A.O. rejected the submissions made by the assessee and disallowed ₹ 1,96,350/- which were found to be not supported by any evidence. 24. Aggrieved, the assessee preferred the appeal before the CIT(A) who in para 7.2 of the order observed giving reference to Explanation to section 37(1), .......any expenditure incurred by the appellant for any purpose which is an offence or which is prohibited by law shall not be deemed to have been incurred for the purpose of business and no deduction is allowable for the expenditure under the Act . The CIT(A), therefore, confirmed the addition. 25. Aggrieved by the decision of the CIT(A), the assessee is now before the ITAT. 26. Before us, the AR submitted that the expenses are purely in the nature of business, but here too was he unable to subs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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