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2016 (10) TMI 595 - ITAT DELHI

2016 (10) TMI 595 - ITAT DELHI - TMI - Trading addition - Held that:- It is a settled law that in the absence of any specific finding, the adhoc additions made by the AO cannot be sustained - Decided in favour of assessee. - Disallowance of deduction under Chapter VIA / under section 80C on account of LIC premium and the Tuition Fees paid - AO has disallowed the said deduction only on the basis that no documentary evidence in this regard was produced by the assessee - Held that:- The said am .....

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ssessment year 2007-08 2. The grounds raised by the assessee read as under:- 1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals)[(CIT(A)] is bad both in the eye of law and on facts. 2(i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the action of the AO in making addition of ₹ 17, 10,000/- on account of cash deposits in bank. (ii) That the above-said has been co .....

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n law in confirming the addition of ₹ 50,000 made by the AO on account of trading results, without there being any basis for the same. 4. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the action of the AO in disallowing business expenses to the extent of 50% without there being any basis for the same. 5. On the facts and circumstances of the case, the learned GIT(A) has erred both on facts and in law in confirming the action .....

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d on behalf of the assessee. However, notice u/.s. 142(1) alongwith Questionaire and AIR information was served upon the assessee for hearing on 23.11.2009, but on 19.11.2009 the Assessee s Representative attended and noted down the details of AIR information on 19.11.2009. But on the scheduled date of hearing none appeared on behalf of the assessee nor any application was received by the AO, hence, the AO completed the assessment exparte to the best of his judgment u/s. 144 on the basis of mate .....

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tention has filed the Written Synopsis. For the sake of convenience, we are reproducing the same as under: 1. This is an appeal filed by the assessee against the order dated 14.02.2014 passed by the Ld. CIT(A), wherein the additions made by the AO have been sustained by the Ld. CIT(A). 2. Assessee filed its return of income for the year under consideration on 05.11.2007, declaring an income of ₹ 1,01,960/-. Thereafter, the case of the assessee was selected for scrutiny and following additi .....

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.2 During the course of assessment, it was observed by the AO that as per the AIR information, the assessee had made cash deposit of ₹ 17,10,200/- in its bank account. The AO has considered these deposits as unexplained deposits alleging that no explanation in respect of these deposits was offered by the assessee. 3.3 During the course of appellate proceedings the assessee filed various documentary evidences in support of its contention along with an application under Rule 46A. The details .....

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idences were very essential for the adjudication of the matter. 3.5 At the very outset, it was submitted by the assessee that the net cash deposited by the assessee in its bank account was for ₹ 15,15,2001-, as the amount of ₹ 1,95,000/- was withdrawn and then re-deposited by the assessee in its bank account. 3.6 It was further submitted by the assessee that the cash deposited by "'the assessee in the bank account was received as loan from various friends and relatives, in o .....

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t is submitted that the assessee has duly submitted complete details of the persons from whom the loans have been obtained, and the addition made by the AO has been sustained by the Ld. CIT(A) without pointing out any defect or discrepancy in the evidences filed by the assessee. The Ld. CIT(A), only on the basis of surmises and conjectures has sustained the addition made by the AO. Therefore, the addition made by the AO and sustained by the Ld. CIT(A) deserves to be deleted. 3.9 Without prejudic .....

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is rightly applied or not. It is well established that no income can be taxed twice. It is also not in dispute that these deposits include refunds of the subscriptions made from the deposits. Thus, by aggregating all deposits, they tend to get taxed twice which is against the principles of taxation the decisions cited by the Id. counsel lend support to the case of the assessee and hence we decline to interfere with the decision of the CIT(A)." 3.10 The Hon'ble ITAT has also considered t .....

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ee. 4. Ground No.3 and 4: 4.1 These grounds deal with the action of the Ld. CIT(A) in sustaining the adhoc additions made by the AO. 4.2 The AO has made addition of ₹ 50,OOO/- on account of trading results declared by the assessee, alleging that no documentary evidences were filed by the assessee in support of the trading results declared in the return of income. 4.3 In this regard, it is submitted that it is a settled law that in the absence of any specific finding, the adhoc additions ma .....

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tion has been made by the AO without any basis. Evidently, the AO has not pointed out any particular voucher or expenditure, which was unrelated to the business of the assessee. There is no instance noticed by the AO, which showed that the expenditure was incurred for personal purpose. Moreover, the accounts of the assessee, as noted by us earlier, are statutorily required to be audited and have been so done. There is also no adverse observation by the auditors in this regard. The disallowance, .....

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ed the decisions cited before us. There is no dispute to the fact that the accounts of the assessee are audited. We find the Assessing Officer has not pointed out any specific defect in any of the vouchers and has made a general remark that huge cash expenditure has been incurred and some vouchers are not fully supported by bills, etc. Although the Assessing Officer mentions that huge cash expenses have been incurred, we find provisions of section 40A(3) of the Act have not been applied which sh .....

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ed with vouchers, therefore, we do not find any infirmity in the order of the CIT(A) deleting the ad hoc disallowance made on the basis of presumptions and guesswork. We accordingly uphold the same. The grounds by the Revenue are accordingly dismissed. " • Devji Nenshi Palani vs: ITO, ITA No. 6519/Mum/2009, AY 2006-07 dated 29.10.2010 . • Nitin Sales Corpn. 212 Taxation 49 (Del), ITA No. 1809/Del/2005 dt. 11.7.2008 Ground No.5: This ground 'deals with the action of the Ld. CIT .....

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ee. It is submitted that the said amounts have been duly paid out of the banking channels and thus, should be allowed to the assessee. 7. In this case, Notice of hearing to both the parties was sent, despite the same, the Ld. DR not appeared to prosecute the matter in dispute, nor filed any application for adjournment by the Department. Keeping in view the facts and circumstances of the present case and the issue involved in the present Appeal, I am of the view that no useful purpose would be se .....

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.2 With regard to ground no. 2 relating to addition of ₹ 17,10,200/- made by the AO and confirmed by the Ld. CIT(A) without pointing out any defect or discrepancy in the evidences filed by the assessee. I find that the Ld. CIT(A) merely on the basis of surmises has sustained the addition made by the AO which is not sustainable in the eyes of law, in view of the various ITAT Benches decision including one i.e. ITAT, Rajkot Bench decision in the case of ITO vs. Mahesh Kumar Jayantilal Vora, .....

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