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Shakti S. Singh Versus DCIT, Circle, Sawai Madhopur

Allowability of various expenses claimed by the appellant against the professional receipts - Held that:- Nature of the expenses such as depreciation, interest on car loan, audit fee etc. once purchase of assets in the nature of computer, car, books etc. and the utilization thereof for the purposes of earning professional income has been accepted, where is the question of disallowing 40% of the depreciation claim or interest on car loan. Similarly, once the books of accounts have been audited an .....

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of his consulting engagement which cannot be refuted in absence of any contrary evidence on record. In our view, the expenses incurred on space for ₹ 7000/- per month and on staff ₹ 30,000/- per month and other related travel and other expenses appears to be reasonable. Further, the ld. CIT(A) has not specified any specific transactions or the expenses which the appellant has claimed and the same has not found favour with the ld. CIT(A). In our view, it is clear case of adhoc disallo .....

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sional consultancy business. The appellant introduced a sum of ₹ 7,05,500/- in his profession on various dates and he has withdrawn a sum of ₹ 4,52,891 from his capital account on various dates. Thus the net capital amounting to ₹ 2,52,609/- was introduced in the profession consultancy activities. In our view, the addition, if at all, is required to be made should therefore be restricted to ₹ 2,52,609 as the appellant has demonstrated the clear linkage between the deposit .....

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cash standard of living. In the light of above, we are of the view that the appellant has adequately demonstrated the source of cash deposits and the explanations are found to be reasonable and supported by the professional and personal statement of accounts and we hereby delete the amount of ₹ 7,05,500/- treated by the AO as undisclosed income of the appellant. Hence the ground of the appellant is allowed. - ITA No.615/JP/15 - Dated:- 29-6-2016 - SHRI R.P. TOLANI, JM & SHRI VIKRAM SIN .....

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legal or excessive. (ii) Under the facts and circumstances the ld. CIT(A) has erred by making addition of ₹ 7,05,500/- by treating cash introduced in business as undisclosed income, further CIT(A) erred by confirming the same. (iii) Under the facts and circumstances of the case, the ld. AO has erred by not allowing telescoping for expenses disallowed against addition for alleged unexplained investment in business. 2. Regarding ground no. 1, briefly the facts of the case are that assessee h .....

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head Income from Business & Profession , whereas, Ld. A.O. while making the assessment, assessed his total receipts as salary income and consequently, disallowed the entire expenses claimed against the receipts from M/S. Resonance. Further, by giving finding also disallowed the entire expenditure saying without prejudice to his action of considering the entire receipt as salary. Under the facts, once, if a receipt has been taxed as salary income then there is no scope of allowing any deduct .....

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. A.O. Further, department has also accepted said version of CIT(A). After considering the receipt under consideration as income from Business and Profession, Ld. CIT(A) made adhoc disallowance of 40%,out of total expenditure claimed on whole sale basis. Ld AR further submitted that during the assessment proceedings, books of accounts were produced, copies of the bills and vouchers were filed, however, it is alleged that the employees and original bills were not produced. In this regard, it is i .....

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t the fact that no such effective opportunity was given to the Appellant. In this regard, we place our reliance on the judgments of the (i) Hon ble Calcutta High Court given in the case of CIT vs. Panna Devi Saraogi (1970) 78 ITR 728, wherein, it is observed by the Hon ble Court that It is the opportunity of being heard which introduces the principle of natural justice. The opportunity, no doubt, must be reasonable and effective opportunity. It should not be a mere paper opportunity or any illus .....

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ed by law under which that action is taken is itself unreasonable. Ld AR further submitted that the Ld. CIT(A) while allowing 60% of the expenditure has admitted that it cannot be said that this income was earned without incurring any expenses as held by the AO means requirement and incurrence of expenditure is not under doubt and have accepted by the department. As far as adhoc disallowance of 40% is concerned on whole sale basis, it was submitted that disallowance on whole sale basis at the ra .....

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depreciation. Similarly, once the loan has been accepted to be taken and bank balance have been accepted then no such disallowance can be made for interest. Similarly, for telephone expenses which have been paid to the Telephone Company and audit fees to the Auditors, who himself have certified the financial statements and insurance premium have been made to the Insurance Company. Under the facts and circumstances, at the outset, no such disallowance can be made which amounts to ₹ 94,576/- .....

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ant is engaged as lecturer to IIT aspirants with one of the most prestigious institute of the country namely M/S. Resonance. As we all aware, the examination of IIT is very tough and demanding to keep himself updated on various fronts of teaching. Further, the prestigious institutes like Resonance have their own methodology of teaching and demanding from teachers as well to keep the institute front runner among the successful students. It is also well known fact that the most of aspirant student .....

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vailable to the institute guidance note for the topics which are to be covered by the consultant at his own cost. That agreed condition itself shows that Appellant is required his own office and staff to prepare such guidance note apart from the requirement of the office and staff to carried out other activities. Under the facts and circumstances, the finding of the A.O. is grossly misplaced that office and staff is only required, when fees are being received from students. LR AR further submitt .....

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t in reference to the contract for service. LR AR further submitted that It is a fact that books of accounts of the appellant are Audited u/s 44AB of the Income Tax Act, further, during the assessment proceedings books and accounts were produced along with supporting, therefore, it is an undisputed fact that expenditure have incurred and after examining the same it is not the case of Ld AO that expenditure under consideration is bogus. Further, expenditure under consideration is not capital in n .....

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hin prescribed limited is not debarred, therefore, on the basis of such apprehension the disallowances are not more than based on suspicion. Therefore, in absence of any specific instance, the ad-hoc disallowance is not more than surmises or suspicion and does not deserves to be hold good. 2.2 The ld DR is heard who has relied upon the order of the lower authorities. 2.3 We have heard the rival contentions and perused the material available on record. The nature of receipts in the hands of the a .....

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ssessee has not maintained external evidence in support of its claim of expenses, it would be reasonable to restrict the disallowance to 40% of the expenses claimed. The limited issue under consideration therefore relates to quantum of allowability of various expenses which have been claimed by the appellant against the professional receipts from M/s Resonance. The ld CIT(A) has not given any basis or justification as to how he has arrived at the figure of 40% of the expenditure which cannot be .....

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, there is no basis for disallowing 40% of the audit fees. Similarly the duty of the appellant require lot of research and analysis of time bound delivery on study material and guidance note and all these works requires involvement of staff and related office space. Even though the appellant has access to the infrastructure and office space at the Institute, the appellant has submitted that he has maintained office and hired staff at his own cost to assist him in discharge of his consulting enga .....

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h cannot be sustained in the eye of law. We accordingly delete the disallowance of 40% of the expenses of ₹ 5,28,250/- claimed by the appellant hence ground of the assessee s appeal is allowed. 3. Regarding next ground of appeal, briefly the facts of the case are that the AO required the assessee to explain the source of cash introduced by the assessee of ₹ 7,05,500/- on different dates in the cash book. The assessee was specifically required to explain the source of deposits in the .....

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ival contentions and perused the material available on record. Firstly, it is noted that the appellant is maintaining separate set of financial statements in respect of his consultancy activities. And in respect of his personal affairs, there is no requirement to maintain any books of accounts and the appellant has submitted estimated personal statement of affairs for the period 1.4.2004 to 31.3.2008. On perusal of the capital account which is available on record, it is noted that the appellant .....

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