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2015 (7) TMI 994 - ITAT LUCKNOW

2015 (7) TMI 994 - ITAT LUCKNOW - TMI - Addition under section 41(1) on account of cessation of liability - CIT(A) deleted the addition - Held that:- The addition was deleted by CIT(A) on the basis that if these additions are made, the net profit rate of the assessee will be 2.38% as against 1.46% from year to year exhibited in books of account duly audited u/s 44AB and accepted by the Department. We fail to understand this logic of learned CIT(A) that when addition is made u/s 41(1) in respect .....

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Disallowance of conveyance and telephone expenditure - possibility of making personal/non business purposes', 'possibility leakages/ inflation', 'absence of supporting evidence', 'not properly vouched' are the reasons for these disallowances - Held that:- The disallowance made by the Assessing Officer is reasonable and not excessive and since the partners of the assessee firm are not having separate personal telephone and vehicles, it is reasonable to assume that the telephone and vehicles were .....

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r dated 27/06/2013 for the assessment year 2004- 05. 2. None appeared on behalf of the assessee on the appointed date of hearing although adjournment was granted on several occasions with last opportunity and on the present date of hearing i.e. 25/06/2015 also, an application for adjournment was filed by Learned A.R. of the assessee which is dated 09/06/2015 and it is stated by him in this application that he has been authorized to represent this case very recently but since this is an old appea .....

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ough the facts and material brought on record by the A.O. that as to how a sum could be determined/shown to payable to a truck rather than any person within name & address whereas the assessee could not furnished the name of the persons to whom this amount was paid. 2. That Ld. CIT(A) has erred in law and on facts in deleting the addition of ₹ 3,42,121/- made under section 41(1) on account of cessation of liability without looking into the merits and without appreciating the facts and .....

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s filed by the assessee. 4. That Ld, CIT(A) has erred in law and on facts in deleting the addition of ₹ 1,00,000/- towards telephone expenses as made by the A.O. because no log book was maintained. It is pertinent to mention here that in the A.Y. 2001-02 the books of accounts were rejected u/s 145(3) on account of such defects. Further, CIT(A)-II, Kanpur while adjudicating upon the case had made disallowances on this score. 5. That Ld. CIT(A) has erred in law and on facts in deleting the a .....

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h and they were not open to full verification. 7. That the Ld. CIT(A) has ignored the facts in deleting the addition of ₹ 36,000/- out of depreciation that the partners are not in the ownership of any other car apart from these two cars and some alignment of personal use is involved in the usage of these vehicles. 8. That the order of the Ld. CIT (A) being erroneous in law and on facts needs to be vacated and the order of the A.O. be restored. 5. We have considered the submissions of Learn .....

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ircumstances of the case and submissions of the appellant. It is evidenced that the sundry creditors to the extent of above ₹ 4 crores continue in the books of the appellant since last several years. The appellant explaining the fact that the amounts represent earlier year balances. Remaining, part balances of the parties are that which were not settled in the past and related addition have already been made in the assessment year 2001-02 for such amounts. 8. The appellant has filed a char .....

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want of verification/confirmation but the same is not supported by any material adverse to the appellant. While considering this issue, my attention is drawn to the decision in the following cases ;- a. Delhi ITAT 5 Member Special Bench in Manoj Agarwal; b. Allahabad High Court in 205 CTR 444 Panchamdas; & c. Gujrat High Court in 163 ITR 249 where it was held that - "Whether section 68 is applicable to creditor arising out of purchases made in normal course of business, which have not .....

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circumstances, if same are added to the income of the appellant without any basis, the net profit rate of the appellant will be 2.38% as against 1.46% from year to year exhibited by the books of account duly audited u/s 44AB and accepted by the department. 10. The nature of business of the appellant is also to be considered where the extensive, emergent and temporary nature of sundry creditor is part of such business. Considering the same and if full details of each entry was available with the .....

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the accounts stand closed. In view of above discussions, the AO is directed to delete the additions of ₹ 43,000/-, ₹ 3,42,121/- and ₹ 8,13,238/-, as per grounds no.2, 2(i) to 2(iii), 3(i) & 3(ii) and 4(i) & 4(ii) of appeal are allowed. 7. We also find that it is noted by Assessing Officer on page 3 of the assessment order that the outstanding liability of ₹ 43,000/- is said to be on account of transportation charges but the assessee is not in the knowledge of phy .....

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are payable. Similarly for the third amount of ₹ 8,13,238/- also, it is noted by Assessing Officer on page No. 4 that the assessee was required to give name, address to whom this credit is payable but no detail was furnished. Therefore, the decision of CIT(A) should be considered in the light of these categorical finding of the Assessing Officer in the assessment order that the assessee could not provide even the name and address of the partie to whom the amount was payable under these thr .....

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shown by the assessee in earlier years has ceased to exist in the present year and therefore, it amounts to income of the present year u/s 41(1) of the Act. Under these facts, we feel that the order of CIT(A) is not sustainable on this issue. We, therefore reverse the same and restore that of the Assessing Officer. Accordingly, ground No. 1 to 3 are allowed. 8. In respect of ground No. 4 to 7, as per which the Revenue is disputing the deletion of addition made by the Assessing Officer of ₹ .....

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tion', 'absence of supporting evidence', 'not properly vouched' are the reasons for these disallowances. Obviously, these are general observations and no specific example/instance observed by AO on which this observation is based At the same time, the books of account of the appellant are maintained and audited and have also been produced before the AO, same have been examined and primafacie accepted by her. In view of the decision in the case of CIT vs. Utkal Alloys Ltd. 226 .....

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entitled to make an assessment without reference to any evidence or material at all. There must be something more than bare suspicion to support the assessment u/s 143(3)". 23. The disallowance made by AO on account of l/5th depreciation on the car is against without basis. Same has been disallowed summarily where no fact finding has been given by AO for personal use of car by the appellant. It is also seen that the ownership and user of the car has not been questioned by the AO. Finally, .....

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he assessee that the expenses on telephone are not wholly and fully vouched and a flexible attitude is held by the assessee as for telephone calls are concerned. This is also noted that in assessment year 2001-02 also, the books of account were rejected u/s 145(3) and the CIT(A) has made addition of ₹ 50,000/- out of conveyance expenses, ₹ 1,00,000/- out of telephone, ₹ 36,000/- out of donation. On the same basis, in the present year also, the Assessing Officer made addition of .....

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