TMI Blog2017 (2) TMI 548X X X X Extracts X X X X X X X X Extracts X X X X ..... ipts for the tax audit for the FY 2006-07 is of more than ₹ 10 lacs so it is clear that the assessee was liable for tax audit for the FY 2006-07, consequently the TDS provisions will be applied for the year under consideration. Hence the assessee has defaulted in the TDS deduction on the professional payment to doctors, therefore the deduction for the same shall not be allowed. Hence the ground of appeal of the assessee is hereby dismissed. Disallowance u/s 41(1) - Held that:- We find that the liability ceased to exist if it is written off by assessee in its books of account. In case on hand we find that the liability is very much reflecting in the balance-sheet of assessee. Therefore the same cannot be added under the provisions of section 41(1) of the Act. Hence this ground of appeal of the assessee is allowed. Addition u/s 23(4)(b) - Held that:- AR has not brought anything on record to demonstrate that the flat at high land park is used for the purpose of assessee residence. In the absence of any documentary evidence we find no infirmity in the order of ld. CIT(A). Hence this ground of appeal of the assessee is dismissed. Disallowance of expenditure claimed by ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the addition needs to be deleted. Hence, in terms of above, assessee’s ground is allowed for statistical purpose Disallowance of foreign travel expenses - Held that:- Aforesaid foreign travelling expenses were incurred from the disclosed bank account. Therefore, in our considered view, the question of incurring expense from undisclosed income does not arise. It is also important to note that the drawing shown by the assessee is less than the amount of travelling expenses. Therefore we are of the view the issue requires to be considered by the ld. CIT(A). Hence, in terms of above, assessee’s ground is allowed for statistical purpose. - ITA No.659/Kol /2013 - - - Dated:- 8-2-2017 - Shri Waseem Ahmed, Accountant Member and Shri S.S.Viswanethra Ravi, Judicial Member For The Appellant Shri Soumitra Choudhury, Advocate For The Respondent : Shri Salong Yaden, Addl-CIT-DR ORDER PER Waseem Ahmed, Accountant Member:- This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-XXXVI, Kolkata dated 06.02.2013. Assessment was framed by ITO Ward-55(1), Kolkata u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the order of the A.G. and confirming the addition amounting to ₹ 22,996/- as various heads of expenditure on estimate basis which is completely arbitrary, unjustified and illegal. 10. For that on the facts of the case, the Ld. C.I.T.(A) was wrong in dittoing the order of the A.G. and confirming the addition amounting to ₹ 28,000/- as accrued interest on taxable HDFC Bond which is completely arbitrary, unjustified and illegal. 11. For that on the facts of the case, the Ld. C.I.T.(A) was wrong in confirming foreign travel expenses amounting to ₹ 3,26,345/- disallowed by the A.O. u/s. 69C which is completely arbitrary, unjustified and illegal. 12. For that the interest u/ s. 2348 234C amounting to ₹ 3,40,211/- and ₹ 5,278/ - respectively charged mechanically is wrong illegal. 13. For that the appellant reserves the right to adduce any further ground or grounds, if necessary, at or before the hearing of the appeal. Shri Soumitra Choudhury, Ld. Advocate appeared on behalf of assessee and Shri Sallong Yaden, Ld. Departmental Representative appeared on behalf of Revenue. 2. Facts in brief are that assessee in the present c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anking? Appellant is a educated person to handle banking transactions. Hence, AO was right in adding a sum of ₹ 3,89,550/- u/s. 69A of Income Tax Act. Appeal of appellant is dismissed on this issue. Aggrieved by this order, assessee has come up in appeal before us. 6. Before us Ld AR filed paper book which is running pages from 1 to 71 and stated that assessee has shown drawing for ₹ 15,88,171/- which beginning from AYs 2004-05 to 2007-08 respectively. He in support of assessee s claim has submitted the year-wise details of drawings which is placed on page 13 of the paper book. Ld. AR stated that issue may be decided on merit. On the other hand, Ld. DR vehemently supported the order of Authorities Below. 7. We have heard rival contentions of both the parties and perused the materials available on record. From the foregoing discussion, we find that assessee has shown introduction of capital in the form of cash as on 01.04.2007 for ₹ 3,89,550/- and assessee claimed that such introduction of cash made out of past savings from several years. However, Authorities Below disregarded the argument of assessee and accordingly the addition was made u/s 69A of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question by AO for nondeduction of TDS on the aforesaid payments assessee submitted that gross receipt in the financial year 2006-07 was less than prescribed limit as specified u/s. 44AB of the Act. Therefore, the provision of TDS as specified u/s. 194J of the Act is not applicable. However, AO observed that the gross receipt of assessee for the financial year 2006-07 exceeded the limit as prescribed u/s. 44AB of the Act. Therefore, the provisions of TDS for the financial year 2007-08 are very much applicable upon the assessee. Thus the AO disallowed the sum of ₹4,39,560/- on account of nondeduction of TDS and added the same to the total income of assessee. 10. Aggrieved, assessee preferred an appeal before Ld. CIT(A) whereas assessee submitted that no fees to the doctors were payable at the end of the financial year and therefore no TDS required to be deducted in terms of ITAT order Special Bench in the case of M/s Marilyn Shipping Transpors vs. ACIT, Raange-1, Visakhapatnam in ITA No.477/Viz/2008 relating to assessment year 2005-06 reported in 136 ITD page 23 146 TTJ page 1. However, Ld. CIT(A) sustained the addition made by AO by observing as under:- The sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be allowed. Hence the ground of appeal of the assessee is hereby dismissed. 13. Next issue in this appeal of assessee raised in Ground No.6 is that Ld. CIT(A) erred in confirming the order of AO by sustaining the disallowance of ₹6,56,835/- u/s 41(1) of the Act. 14. Assessee in its balance-sheet as on 31.03.2008 has shown closing sundry creditor for ₹ 9,36,441/- whereas the opening sundry creditor as on 01.04.2007 was shown for ₹6,56,835/-. On question by AO to produce necessary details of all the sundry creditors such as name, address, bill No. date of credit etc. In compliance thereto, assessee submitted that out of opening sundry creditors of ₹5,56,835/- a sum has been offered for taxation in the financial year 2009-10 and the balance of ₹ 2.23 lacs will be offered for taxation in financial year 2010-11. However, AO observed that the opening sundry creditors of ₹6,56,835/- are the fake creditors and therefore same was to be deleted u/s. 41(1) of the Act and added to the total income of assessee. 15. Aggrieved, assessee preferred an appeal before Ld. CIT(A) whereas assessee submitted that AO cannot make the addition of the liabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der of AO by sustaining the addition of ₹ 84,000/- u/s 23(4)(b) of the Act. 19. Assessee is owner of two individual properties - first property is located at 52, Ripon Street, Kolkata comprising of ground floor plus 3 floors and second property is a flat at Highland Park, Kolkata. Accordingly, AO issued notice to assessee vide letter No.999 dated 02.12.2010 for making the addition of rental income u/s. 23(4)(b) of the Act on notional basis. In compliance thereto, assessee submitted that the building located at Ripon Street is used for the purpose of business and also rental income is derived from such property. The flat located at Highland Park is also used for residential purpose of assessee. The AO deputed an Inspector for physical verification of immovable property of assessee. The said Inspector, in turn submitted his report that assessee is running its nursing home at the ground and first floor of building located at Ripon Street and second floor of the building has been rented out and assessee is earning rental income of ₹1,200/- per month. The third floor of the said building is used by assessee for his residential purpose. Accordingly, AO observed that the fl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orting evidence. Therefore, AO has disallowed the same and added to the total income of assessee. 25. Aggrieved, assessee preferred an appeal before Ld. CIT(A) whereas assessee submitted that municipal and other taxes in connection with nursing home has been paid for an amount of ₹38,940/- which is liable for deduction u/s. 37 of the Act. However, Ld. CIT(A) disregarded the claim of assessee and confirmed the order of AO by observing as under:- The submission of the A/R, grounds of appeal and assessment order were duly considered AO disallowed a sum of ₹ 38,940/- on account of rent and taxes as no bills were produced as supporting evidences and none of the bills pertain to the assessment year under consideration. I agree with the views of AO and hence addition made of ₹ 38,940/- on account of disallowance of municipal taxes is sustained . Aggrieved by this, assessee has come up in appeal before us. 26. Before us Ld. AR for the assessee reiterated same submissions as made before Ld. CIT(A) and further stated that the supporting evidence to justify the expenditure incurred on the rates and taxes were not available at the time of assessment proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer also observed that the payment for the aforesaid expenditure has been made through cash and only self-made vouchers have been maintained. Accordingly, AO has disallowed 20% of the aforesaid expenses and added a sum of ₹22,996/- to the total income of assessee. 29. Aggrieved, assessee preferred an appeal before Ld. CIT(A) whereas assessee submitted that AO has disallowed the expenditure on ad hoc basis. The assessee prayed to restrict the disallowance to 5% of such expenditure. However, Ld. CIT(A) disregarded the claim of assessee and confirmed the order of AO by observing as under:- The submission of the A/R, grounds of appeal and assessment order were duly considered AO disallowed 20% of various expenses of ₹ 1,14,978/- in the absence of proper bills and vouchers. This has been mentioned in audit report, disallowance of 20% of such expense is quite reasonable. Hence, addition made of ₹ 22,996/- is therefore sustained . Aggrieved by this, assessee has come in appeal before us. 30. Before us Ld. AR reiterated same submissions as made before Ld. CIT(A) and he stated that issue may be decided on merit. On the other hand, Ld. DR vehemently r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owever, Ld. CIT(A) disregarded the claim of assessee and confirmed the order of AO by observing as under:- The submission of the A/R, grounds of appeal and assessment order were duly considered. AO added a sum of ₹ 28,000/- on account of interest following the mercantile system of accounting. Appellant pleaded that this should e income of the year in which interest is received. On perusal of Balance Sheet of the appellant it was found that he is following mercantile system of accounting. Appellant does not have freedom to follow two system of accounting. Hence AO was right in taking interest income on mercantile system of accounting. Addition made by AO of ₹ 28,000/- on account of interest is sustained . Aggrieved by this, assessee has come up in appeal before us. 35. Before us Ld. AR for the assessee stated that assessee got the matured value of taxable bonds along with interest in the financial year 2009-10 which was offered to tax in financial year 2009-10. He in support of assessee s claim submitted the copy of balance-sheet along with ITR which is placed on pages 27 to 31 of the paper book. On the other hand, Ld. DR vehemently relied on the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed source is baseless and irrelevant. However, Ld. CIT(A) did not admit the additional ground of appeal filed by assessee and confirmed the order of AO by observing as under:- Vide note sheet entry dt. 26/11/2012, the A/R was asked to file copy of additional ground taken, to file re-casted Balance Sheet showing foreign travelling etc. but no such reply was filed. A/R wanted to withdraw additional ground vide note sheet entry dt. 28/01/2013 but did not submit an reply. Since additional ground of appeal were not submitted, same are not adjudicated. Aggrieved by this, assessee has come up in appeal before us. 40. Before us Ld. AR for the assessee reiterated same submissions as made before Ld. CIT(A). He drew our attention at pages 35 to 39 of the paper book where detailed bank statement showing the foreign travel expense was placed. On the other hand, Ld. DR vehemently relied on the order of Authorities Below. 41. We have heard rival contentions of both the parties and perused the materials available on record. From the foregoing discussion, we find that foreign travelling expense incurred by assessee was held by AO as incurred from undisclosed source of assessee s in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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