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2016 (10) TMI 809 - ITAT DELHI

2016 (10) TMI 809 - ITAT DELHI - TMI - Genuineness of expenditure against professional receipts - 1/6th disallowance out of expenses claimed against professional receipt - Held that:- assessee has not maintained books of accounts and bills and vouchers in respect of the expenses claimed - the claim of the assessee that books of account in respect of expenses claimed against professional receipt were produced before the Assessing Officer is not tenable - the estimate of disallowance of 1/6th of t .....

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umstances of the case, according to us the disallowance of 1/6th of expenses made by the Assessing Officer is reasonable and no interference on our side is required - Decided against the assessee. - ITA No. 849/Del/2013 - Dated:- 5-10-2016 - SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. O.P. KANT, ACCOUNTANT MEMBER Appellant by : Sh. S.C. Agarwal, CA Respondent by : Sh. F.R. Meena, Sr.DR ORDER PER O.P. KANT, A.M.: This appeal by the assessee is directed against order dated 31/10/2012 passed by the lea .....

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a and is also doing his profession/ practice at Noida, despite of having filed the return of income stating his address of Noida, and clearly mentioning the designation of Assessing Officer at Ward-3 Noida in the Return of Income. Without prejudice to Ground No. 1 above, and to save otherwise the appellant further wants to give the following Grounds of Appeal also:- 2. The Ld. CIT (Appeal) was not justified not to hold a valid ground of dispute for disallowance of ₹ 1,33,376/-, as 1/6 of t .....

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Accounts made by the Ld. A.O. merely stating that the explanation is not satisfactory, the Ld. A.O. has made the additions without properly appreciating the sources, explanations and evidences furnished before him. The additions are improper, illegal, unjustified and are liable to be deleted. 4. The Ld. CIT (Appeal) was not justified to confirm the addition of ₹ 8,90,090/- in the Savings Bank Account with Standard Chartered Bank, made by the Ld. A.O. merely stating that the assessee has n .....

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ed income of ₹ 1,47,960/- which consisted of salary, income from house property, profits and gains from profession. The case of the assessee was selected for scrutiny under Computerized Assisted Selection of Scrutiny (CASS) and notice under section 143(2) of the Income-tax Act, 1961 (for short the Act ) was issued and served within the stipulated period. In the scrutiny assessment completed under section 143(3) of the Act on 29/12/2011, the Assessing Officer made following additions/disall .....

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d, therefore, the assessee is in appeal before the Tribunal raising the grounds as reproduced above. 3. The ground No. 1 of the appeal was not pressed by the learned Authorized Representative of the assessee and, therefore, being rendered infructuous, we dismiss the same. 4. In ground No. 2, the assessee challenged the disallowance of ₹ 1,33,376/- out of the expenses claimed against professional receipts. The facts in respect of the disallowance are that in the computation of income filed, .....

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f the expenses claimed for disallowances, which was worked out by the Assessing Officer at ₹ 1,33,376/-. The learned Commissioner of Income-tax (Appeals) also observed that the assessee has not maintained any bills/vouchers in support of the expenses claimed and accordingly confirmed the action of the Assessing Officer in disallowing 1/6th of the expenses. 4.1 Before us, the learned Authorized Representative of the assessee submitted that books of accounts, bills and vouchers were examined .....

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ould have been to ₹ 1,11,146/-. He further submitted that, if the Assessing Officer was not satisfied with a particular item of expenditure, he would have made disallowances of same after verification, but the ad-hoc disallowance was not permissible under the law. 4.2 On the other hand, the learned Sr. Departmental Representative submitted that while making the disallowance for the expenses, the Assessing Officer has specifically mentioned that books of accounts in respect of expenses clai .....

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st checked need to be ignored. He further submitted that in absence of bills/vouchers of expenses, there was no alternative left with the Assessing Officer except disallowing the expenses on proportionate basis. In view of above, the learned Senior Departmental Representative prayed that the order of the learned Commissioner of Income Tax (Appeals) on the issue in dispute might be confirmed. 4.3 We have heard the rival submissions and perused the material on record. We find that the Assessing Of .....

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sessment order the fact of non-maintenance of books of accounts and bills and vouchers for the claim of expenses against professional receipt, the general comment of the test check of books of accounts, bills and vouchers, in first paragraph of the assessment order is not relevant. Further, we find that the learned Commissioner of Income-tax (Appeals) has also observed that the assessee has not maintained books of accounts and bills and vouchers in respect of the expenses claimed. In view of abo .....

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ce of 1/6th of the expenses by the Assessing Officer is reasonable irrespective of the fact whether the same was accepted by the assessee or not. However, we agree with the contention of the learned Authorized Representative that 1/6th disallowance of the ₹ 6,66,880/- works out to ₹ 1,11,147/- and, therefore, the disallowance should be restricted to amount of ₹ 1,11,147/-. 4.4 We may like to mention here that the legislature has introduced Section 44ADA in the Act for computing .....

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basis. 44ADA. (1) Notwithstanding anything contained in sections 28 to 43C, in the case of an assessee, being a resident in India, who is engaged in a profession referred to in sub-section (1) of section 44AA and whose total gross receipts do not exceed fifty lakh rupees in a previous year, a sum equal to fifty per cent of the total gross receipts of the assessee in the previous year on account of such profession or, as the case may be, a sum higher than the aforesaid sum claimed to have been e .....

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ase of professional on presumptive basis, therefore, in the facts and circumstances of the case, according to us the disallowance of 1/6th of expenses made by the Assessing Officer is reasonable and no interference on our side is required, however, the same is restricted to amount of ₹ 1,11,147/- computed correctly as 1/6th of the expenses claimed. Accordingly, the ground No. 2 of the appeal is allowed partly. 5. In ground No. 3, the assessee has challenged addition of ₹ 5,14,548/- m .....

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- and ₹ 2,87,548/-, totalling to ₹ 5,14,548/- in these two bank accounts. The explanation furnished by the assessee was not found to be satisfactory by the Assessing Officer in absence of any documentary evidence and accordingly he made addition for the amount of ₹ 5,14,548/-. Before the learned Commissioner of Income-tax (Appeals) also the assessee did not file any explanation or documentary evidence and therefore he sustained the addition. 5.1 Before us, the learned Authorize .....

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009 was ₹ 24.71 and ₹ 1 463.76 aggregating to ₹ 1,488.47 only. The Ld. authorised representative referred to the bank statements available at pages 35 and 37 of the paper book. 5.2 On the other hand, the learned Senior Departmental Representative submitted that no explanation in respect of the deposit was filed before either the assessing officer or the learned Commissioner of Income-tax (Appeals) and it is for the first time that the assessee has submitted explanation of runni .....

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e also submitted that in the statement of bank accounts under reference, the deposits made are in cash whereas the expenses have been incurred mostly by cheque. Whereas, the learned Authorized Representative submitted that explanation of assessee of running mess was not considered by the Assessing Officer. In view of the facts, we are of the opinion that the explanation of the assessee need to be examined by the Assessing Officer and, therefore, we feel appropriate to restore the issue to the fi .....

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allowed for statistical purpose. 6. In ground No. 4, the assessee has challenged addition of ₹ 8,90,090/- towards unexplained deposits in saving bank account with the Standard Chartered Bank. The facts in respect of issue in dispute are that as per the information received from annual information return, the assessee had deposited cash of ₹ 30,58,140/- in the saving bank account bearing No. 530-1031467-3 of the Standard Chartered bank, Noida, Uttar Pradesh. The Assessing Officer obs .....

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ized Representative of the assessee submitted that cash deposit of ₹ 8,90,090/- with the Standard Chartered Bank was consisting of ₹ 2,75,500/- as security deposit for two months from tenants and ₹ 5,98,452/were reimbursement of expenses like electricity, water bills, cleaning and maintenance, security service charge and security deposit etc. The learned Authorized Representative submitted that this explanation was submitted before the Assessing Officer vide submission dated 28 .....

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