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2016 (3) TMI 637 - ITAT LUCKNOW

2016 (3) TMI 637 - ITAT LUCKNOW - TMI - Adoption of 5% gross profit rate - Held that:- It is noted by CIT(A) that the assessee has not furnished the details of sales and sundry debtors and the assessee has also not maintained any stock register from which the sales made by the assessee could be verified. He has also noted that in earlier two years, the gross profit rate declared by the assessee was 6.88% and 7.44% and against this factual background, adoption of 5%, gross profit rate in the pres .....

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g expenses - Held that:- assessee neither furnished any bill/ticket nor explained the purpose of the travels undertaken nor submitted the copies of his passport and those of his family members. This is settled position of law that when the assessee makes claim of deduction of an expenditure, he has to establish that the expenditure was in fact incurred and the same was for business purposes. When the assessee has not furnished the copy of passport of self and family members and has not explained .....

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of depreciation on furniture is confirmed because this is the claim of the assessee that the addition of ₹ 64,46,016/- was made to furniture in the present year and the entire payment was made in cash. The objection of the Assessing Officer is quite strong that when the assessee is closing down the business then what is the purpose of making such huge investment. Hence, we confirm the disallowance of ₹ 1,57,633/- being depreciation on furniture in view of facts discussed above. - .....

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issue also. - Disallowance u/s 40a(ia) - applicability of provision of section 194C - whether assessee liable to get his accounts audited u/s 44AB? - Held that:- As per explanation below sub section 7 of section 194C, an individual assessee who is liable to get his accounts audited u/s 44AB during the financial year immediately preceding the financial year in which such sum credited or paid to a contractor is liable to deduct TDS u/s 194C. Hence, the provision of section 194C was applicable .....

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0, the amount of net profit transferred to capital account is ₹ 10,39,279/- while as per profit & loss account, the net profit has been shown at ₹ 9,14,248/- resulting in difference of ₹ 1,25,030/-. Neither before the Assessing Officer nor before CIT(A), this difference could be reconciled by the assessee and the same was not explained by the assessee. - ITA No.29/LKW/2015 - Dated:- 3-2-2016 - SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER For .....

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i. Out of traveling expenses Rs.3,92,660.00 iv. Disallowance of Depreciation Rs.1,67,608.00 v. Legal & Professional Expenses .. (1,85,000 (out of 2,17,000 claimed) vi. Disallowance u/s 40 a(ia) Rs.2,56,000.00 vii. Difference in Capital A/c Rs.1,25,030.00 2. That the authorities below failed to appreciate the material evidences brought on record and chose to rely on issues which were irrelevant and immaterial. 3. That the authorities below gave a verdict which was one sided, imaginary and alt .....

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objected by the residents of the locality, being out of market and specifically the nature and style of business being on wholesale basis yielding lower margin of profits. 5. That the appellant has been denied a reasonable and sufficient opportunity as directed by the Hon'ble ITAT in its Appellate order in 1TA No.377/Lkw/2013 dated 10-07- 2014 and even failed to issue a fresh notice of hearing and partly heard the case on 24-09-2014 and 13-10-2014 and thereafter refused to accept even an app .....

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10-2014 are ex-pane orders without going into the intricacies and surrounding circumstances of the case and lacks proper opportunity and fair play. 3. None appeared on behalf of the assessee on the appointed date of hearing. Before this, the appeal was fixed for hearing on 16/12/2015. On this date, A.R. Shri Abhinav Mehrotra, Advocate made a request for adjournment on the plea that he is out of station. On his request, the hearing was adjourned to 21/01/2016 and the date of hearing was pronounce .....

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orities below. 5. We have considered the submissions of Learned D.R. of the Revenue, perused the material available on record and gone through the orders of the authorities below. The main issue regarding addition of ₹ 9,30,587/- has been decided by CIT(A) as per Para 3.2 of his order, which is reproduced below for the sake of ready reference: 3.2 I have considered the matter. I find that in the profit and loss account the appellant has shown opening stock at ₹ 2,79,22,747/- which ha .....

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s declared gross profit rates of 6.88% and 7.44% respectively. The only explanation given by the appellant for drastic decrease in gross profit rate to 1.72% was that during the year he closed down its business. However this explanation could not be substantiated by furnishing the details of sales and sundry debtors. The appellant has also not maintained any stock register from which sales made by the appellant could be verified. The audit report in Form No. 3CD is also a bland report and in mos .....

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te of 5% applied by the AO in respect of business turnover of the appellant is more than reasonable. Under the circumstances, addition of ₹ 9,30,587/- made by the AO is confirmed. Ground is decided against the appellant. 5.1 From the above Para from the order of CIT(A), we find that it is noted by CIT(A) that the assessee has not furnished the details of sales and sundry debtors and the assessee has also not maintained any stock register from which the sales made by the assessee could be v .....

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nly 5% of the total telephone expenses. It is not the case of the assessee that the assessee is maintaining separate telephone for use for personal purposes and therefore, in the facts of the present case, we do not find any infirmity in the order of CIT(A) on this issue also. 5.3 Regarding the third issue i.e. disallowance of ₹ 3,92,660/- out of travelling expenses, we find that it is noted by CIT(A) in Para 5 of his order that the assessee neither furnished any bill/ticket nor explained .....

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usiness purpose. Hence, on this issue also, we find no infirmity in the order of learned CIT(A) and decline to interfere with the same. 5.4 The next issue is regarding confirming of disallowance of ₹ 1,67,608/- on account of depreciation. It is noted by the Assessing Officer in the assessment order that as per copy of ledger account of furniture filed by the assessee, all the payments to the tune of ₹ 64,46,016/- towards addition in furniture account has been shown to be made in cash .....

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ed when the business was not closed in the present year and it was carried out by way of sale of pending stock. Hence, this disallowance is deleted but disallowance of depreciation on furniture is confirmed because this is the claim of the assessee that the addition of ₹ 64,46,016/- was made to furniture in the present year and the entire payment was made in cash. The objection of the Assessing Officer is quite strong that when the assessee is closing down the business then what is the pur .....

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lief of ₹ 32,000/- being the amount paid to Arsan and Company, Chartered Accountants and the auditor of the assessee. Regarding the balance amount of ₹ 1.85 lac, it is noted by CIT(A) in Para 7.1 of his order that it is not known as to whether the expenses have been incurred for business purpose and are of revenue nature. Considering the facts of the present case, we find no infirmity in the order of CIT(A) on this issue also. 5.6 The next issue is regarding disallowance of ₹ 2 .....

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