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Ch. Ravi Prasad, Hyderabad Versus Income-tax Officer, Ward – 11 (3) , Hyderabad

2016 (8) TMI 598 - ITAT HYDERABAD

Net income determination - assessee has not maintained proper vouchers but spent it in cash. - Held that:- As only in AY 2008-09, he had earned additional revenue compared to other years and as well as the net profit declared by the assessee and the same was accepted by the department in the preceding and following years are between 15% to 17%. Moreover, the assessee had to spend certain expenditure to earn this income. The Assessing Officer cannot wear shoes of the assessee and determine, how m .....

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h. The Assessing Officer has rejected the submissions of the assessee and disallowed 50% of advertisement and 50% on other expenditures. In our considered view, Assessing Officer should have estimated the income. The assessee was admitting the net income in the earlier year at 16.13% against the gross receipts of ₹ 16.88 lakhs and in subsequent year, it has admitted 14.80% on gross revenue of ₹ 17.71 lakhs. In the interest of justice, we direct the Assessing Officer to determine the .....

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n perusal of record, we find that there was a delay of 5 days in filing the appeal before the ITAT. The assessee filed a petition requesting for condonation of delay stating therein that the assessee was ill at the relevant point of time and to this effect a copy of the medical certificate was annexed to the petition. The assessee also filed an affidavit affirming the reasons mentioned in the condonation petition. 3. After hearing the parties, we are of the view that since the assessee was preve .....

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e on 29-09-2008 admitting an income of ₹ 9,95,940/-. The case was selected for scrutiny and a notice under Sec. 143 (2) &142(1) of the Income Tax Act,1961 (in short Act ) was issued. The Assessing officer completed the assessment under section 143(3) r.w.s. 144 on 24.12.2010 and determined the total income at ₹ 19,96,782/- by making the following additions: 1. Addition 50% of the total expenditure on account of Car Hire Charges, Vehicle Maintenance & Travelling Expenses ͅ .....

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e is very high, since no vouchers, bills, details of the parties to whom payments have been paid are not produced, 50% of the above expenditure debited to P&L A/c is disallowed and made addition of ₹ 7,11,415/-. 6. Before the CIT(A), the assessee objected for such addition stating that for the purpose of activity carried on by him he has to hire cars for taking the intending purchasers from their residence to the site for showing the area and as such vehicle maintenance and travel expe .....

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the assessment order. As could be seen from the facts of the case, the appellant shown to have earned commission of ₹ 45,62,801/- from real estate company M/s.V.V.R.Housing Pvt. Ltd. for the year under reference against which a mere net profit of ₹ 10,48,625/- was arrived, which constitutes only 20% of commission receipts, after debiting various expenses, which included the amount of ₹ 15,22,830/- which in turn shown to have incurred in the form of car hire charges (Rs.8 ,87,72 .....

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e expenses are justified. Indeed the expenses were claimed and allowed as business· related expenses. However, keeping the fact that the appellant could not produce any information regarding the expenses, the disallowance of a portion of claim is justified. However, keeping the nature of activity in mind, the disallowance to the extent of 50% of the claim may not be justified and a disallowance of 30% of such expenses may meet justice at both the ends. Accordingly, the grounds related to .....

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advertisement campaign and there is no necessity on the part of the assessee to incur such huge expenditure towards advertisement. Thus, the Assessing Officer disallowed 50% of advertisement expenditure of ₹ 6,07,800/- i.e. ₹ 3,03,900/- and added the same to the income returned. 9. Before the CIT(A), the assessee objected for such addition stating that the advertisement undertaken by the company M/S.V.V. R. Housing Pvt. Ltd. is at macro level. The appellant further submitted that th .....

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A) after considering the submissions of the assessee, restricted the disallowance to 40% as against 50% made by the AO by observing as under: 6.3 Perused the submissions of the appellant and the observations of the Assessing Officer. As could be made out from the facts, the appellant was an agent to M/s.V.V.R. Housing Pvt. Ltd. and earned huge commission of ₹ 45,62,801/-, during the year under reference. For arriving at the net profit, the assessee debited certain expenses to the P&L A .....

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argument against the said disallowance was that the company is responsible for advertisement at macro level, whereas his responsibility lies at micro level, with pamphlets printed and distributed on door to door basis. Though there is strength in the argument of the appellant, it is not enough to controvert the total disallowance, due to the fact that no information could be furnished by assessee, relatable to the said expenses and the amounts were mostly incurred through cash payments, which d .....

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bmitted that CIT(A) erred in sustaining the income of assessee 40% of the aggregate expenditure by holding that the assessee could not produce any information regarding the expenses. He contended that the CIT(A) ought not to have sustained the addition. The ld. AR submitted that the CIT(A) erred in sustaining addition of 40% of expenses by holding that the major responsibility of advertisement lies with the principal, as compared to the agent. The CIT(A) ought not to have sustained the addition. .....

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