New User   Login      
Tax Management India .com TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2015 (12) TMI 1564 - ITAT JAIPUR

2015 (12) TMI 1564 - ITAT JAIPUR - TMI - Rejection of books of accounts - trading addition - Held that:- During the course of survey, the diary as Annexure A-8 was found and impounded by the ld Assessing Officer where number of transactions were found unrecorded. The stock register has not been maintained by the assessee. Therefore, correct income of the business cannot be deduced in absence of rejection of books of account. Accordingly, the Assessing Officer was right in applying Section 145(3) .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ess stock was in form of furniture. However, this was the discrepancy on unaccounted sale made by the assessee. There was no disclosure on account of excess cash during the course of survey. Accordingly we confirm the order of the ld CIT(A) on both the grounds. - Disallowance U/s 40 (a)(ia) - Held that:- The interest of ₹ 3,21,952/- was not payable as on 31/3/2009, therefore, the case laws referred by the assessee is squarely applicable. However, remaining interest amount of ₹ 27 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f the ld CIT(A). - ITA No. 595/JP/2013 - Dated:- 14-12-2015 - Laliet Kumar (Judicial Member) And T. R. Meena (Accountant Member) For the Assessee : P. C. Parwal (CA) For the Revenue : O. P. Bhateja (Add.CIT) ORDER T. R. Meena (Accountant Member) This is an appeal filed by the assessee against the order dated 22/03/2013 of the learned CIT(A)-II, Jaipur for A.Y. 2009-10. The effective grounds of appeal are as under:- 1. The ld CIT(A) has erred on facts and in law in confirming the action of A.O. i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

erred on facts and in law in confirming the disallowance of ₹ 27,81,388/- out of interest expenses by treating it as capital expenditure as against the disallowance made by A.O. U/s 40(a)(ia) which is otherwise not disallowable under that section. 2. Grounds No. 1 and 2 of the appeal are against rejection of books of account U/s 145(3) of the Income Tax Act, 1961 (in short the Act) and confirming the trading addition of ₹ 12,14,417 by estimating the turnover at ₹ 5.50 crores a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sactions in which name of the party and details of furniture had been mentioned. The notings mentioned in this diary were in the handwriting of Smt. Sneh Gupta, one of the Director of assessee company. The ld Assessing Officer gave reasonable opportunity of being heard on these entries written in the diary, which was replied by the assessee vide letter dated 22/12/2011. It was submitted by the assessee that some orders were executed some parties were not purchased goods. The assessee issued chal .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

dication of sale price. On verification with bills it was seen that sale bills had not been issued in respect of all these sales of goods. It is general practice in this line of trade to sale the goods without raising bills for the same because of high rate of sales tax/VAT. An exercise had been done and verification of each entry of diary had been made with the sale bills by the Assessing Officer. It was noticed that bills had not been issued in respect of following notings of the sale, which i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Chair 1 28-06-2008 Bed Set 1 Study Table 1 Study Chair 1 Dressing Table 1 Mirror Frame 1 Peg Table 1 Sofa 3 seater 1 04-07-2008 Shoe rack 2 Fire Place 2 Set of Table 2 08-07-2008 Sofa 3+2+2 3 Center table 1 21-07-2008 Ward robe 1 Bathroom mirror 1 Study chair 2 Study table 1 He further held that the assessee company was engaged in the sales outside the books of account. Shri Sudhir Gupta, director of the assessee company admitted in reply to question No. 3 of his statement recorded during surve .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

45(3) is squarely applicable. Therefore, he rejected the book result. The total turnover of the assessee was estimated at 5.5 crores against ₹ 4,99,54,718/- shown by the assessee and GP rate has been applied @ 24.12%, which has been disclosed during the year. This gave gross profit of ₹ 1,32,66,000/- as against gross profit of ₹ 1,20,51,583/- shown by the assessee. The difference of ₹ 12,14,417/- was added by the Assessing Officer in the trading account. 3. Being aggrieve .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

different dates. Please refer to the list reproduced in the assessment order. In the absence of stock register it is not open for verification that because no sale bills were issued so furniture found recorded in the diary was not sold. Therefore the A.O s contention that the impounded diary shows sales without raising bills cannot just be brushed aside, especially when during appellate proceedings no new evidence in the form of any confirmation from any party who posted the order but cancelled .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cess stock of ₹ 27,38,820/- was found which was surrendered by the director of assessee company in his statement recorded U/s 131 in reply to question No. 38. The director admitted that the source of excess stock is out of the unrecorded sales made during the year. Therefore, separate addition of ₹ 12,14,417/- made by the A.O. by estimating the higher sales and applying a g.p. rate of 24.12% thereon has resulted into double addition. The CIT(A) has not given any finding on this conte .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

were supplied against these orders since the same was not executed. The lower authorities have no material to presume that goods were supplied against these orders. Therefore, estimating the turnover of the assessee at ₹ 5,50,00,000/- as against ₹ 4,99,54,718/- declared by the assessee is arbitrary and without any basis. Even if it is assumed that goods were supplied against these orders, the fair sales value of such item is only at ₹ 11,67,000/-. Therefore, estimating the sal .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ld CIT(A) and argued that unaccounted transactions were made in the diary, which was verified by the Assessing Officer and the assessee was not maintaining stock register to verify the actual income of the assessee. He further argued that the opening stock and closing stock also not verifiable in absence of stock register. Therefore, the ld Assessing Officer rightly applied Section 145(3) of the Act and estimation made by the Assessing Officer is reasonable which has been confirmed by the ld CI .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ingly, the Assessing Officer was right in applying Section 145(3) of the Act. After rejecting the books of account, the ld Assessing Officer estimated the sale at ₹ 5.5 crores against ₹ 4,99,54,718/- and applied the same G.P. rate, which has been disclosed by the assessee, which is reasonable and estimated on the basis of discrepancies found during the course of survey. The assessee s alternative argument is also not acceptable as the assessee has not correlated with the disclosure o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

7; 3,21,952/- and ₹ 27,81,388/- . The ld Assessing Officer observed that the interest paid to the various private banks at ₹ 63,75,651/-. It is noticed by the Assessing Officer that the assessee has not deducted TDS on following amount. 1. GE Money Finance Ltd. ₹ 10096/- 2. India Bulls bank Ltd. ₹ 2781388/- 3. Cholamandlam DBS Fin. Ltd. ₹ 77508/- 4. Reliance Capital ltd. ₹ 110478/- 5. Tata Capital ₹ 123870/- Total ₹ 31,03,340/- The Assessing Office .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

deducted, deduction of that amount cannot be allowed. It is not disputed by the appellant that TDS was not deducted on interest debited in the P&L account claimed as deductions. The appellant has relied upon Hon ble ITAT Special Bench Visakhapatnam decision in the case of M/s Merilyn Shipping & Transport Vs ACIT (2012) 16 ITR (Trib) 1 (Visakha) in support of the argument that where the amount is payable on 31st March that expenditure cannot be disallowed as it has already been paid durin .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Vs ACIT. As the operation of Special bench decision has been suspended by Hon'ble Andhra Pradesh High Court Special Bench decision in my humble Hon ble ITAT Vishakhapatnam Special Bench decision in my view cannot be applied. It is seen that interest of ₹ 27,81,388 was paid to India Bulls Bank Ltd. for purchase of machinery, which was informed added to fixed assets during the year by the ld AR during appellate proceedings, therefore, this interest being part of cost of machinery added f .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ITAT Special bench Visakhapatnam decision in the case of M/s Merilyn Shipping & Transport Vs ACIT (2012) 16 ITR (Trib) 1 (Visakha) is being referred to cannot be applied because operation of this decision of Hon ble ITAT Special bench Visakhapatnam has since been suspended by the Hon'ble Andhra Pradesh High Court through decision dated 08th October, 2012. And as Hon'ble High Court has suspended Tribunal Special bench decision, any Hon ble ITAT decision is not applicable till the issu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

dition of ₹ 3,21,952/- U/s 40(a)(ia) of the Act and balance amount of ₹ 27,81,388/- paid to India Bulls bank Ltd. by treating it as capital expenditure on the ground that the same is for the purchase of machinery. Therefore, it is to be added to the cost of machinery. He further argued that Special Bench of ITAT in the case of M/s Merilyn Shipping & Transport Vs ACIT (2012) 16 ITR (Trib) 1 has held that Section 40(a)(ia) of the Act cannot be invoked in respect of amount actually .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hipping Services (P) Ltd. 94 DTR 101/357 ITR 642 held that it is only the amount which is payable and not that which has been already paid by the end of the year that can be disallowed U/s 40(a)(ia). Against the said decision of Allahabad High Court, the department filed a Special Leave Petition (SLP) in the Hon'ble Supreme Court which was dismissed by the Hon'ble Supreme Court vide its order dated 02/07/2014. The issue of applicability of Sec. 40(a)(ia) on the amount which is paid durin .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

o India Bulls Credit Services is for purchase of machinery and therefore the same is capital expenditure. This is incorrect. The allowability of interest on borrowed capital is governed by sec 36(1)(iii). This section allows the amount of interest paid in respect of capital borrowed for the purpose of business. The proviso to this section requires that interest paid on capital borrowed for acquisition of an asset for extension of the existing business shall not be allowed as deduction till the d .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version