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2017 (2) TMI 548 - ITAT KOLKATA

2017 (2) TMI 548 - ITAT KOLKATA - TMI - Disallowance u/s 69A -Held that:- The assessee has withdrawn and introduced the capital in the earlier years. On verification of the drawing and capital introduction, we find that there was hardly any surplus fund available to the assessee for infusion of fresh capital. The assessee must also be spending money on actual personal expenses. In view of above we are of the view that the assessee failed to explain the sources of cash with supporting evidence. T .....

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ns of section 44AB of the Act and 194J of the Act, the gross receipts from both the sources shall be clubbed. Accordingly we find that the gross receipts 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 .....

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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 assessee under the head “rates and taxes” on account of nonavailability of supporting evidence - Held that:- AR before us pleaded that supporting .....

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d have been submitted now before us. As no relevant document has been submitted before us, Therefore we uphold the order of Ld. CIT(A) and this ground of assessee is dismissed. - Disallowance of expenditure claimed in the profit and loss account - Held that:- Admittedly the assessee failed to furnish the evidence in support of the expenditure claimed in the profit and loss account before the AO and the learned CIT(A). Indeed the onus lies on the assessee to justify the expenses claimed in th .....

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of the assessee is partly allowed. - Disallowance of accrued interest on taxable HFC Bond - Held that:- On perusal of records and after considering the submissions raised by both the parties, we find that assessee has already offered the interest income in the financial year 2009-10 and addition the same in the year under consideration would amount to double taxation of the same income earned by assessee. To put this ongoing dispute to rest and in the interest of justice and fair play, we re .....

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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 Sh .....

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08-09. The grounds raised by the assessee per its appeal are as under:- 1. For that on the facts of the case, the order passed by the Ld. C.LT.(A) is completely arbitrary, unjustified and illegal. 2. For that on the facts of the case, the Ld. C.LT.(A) was wrong in confirming the disallowance of ₹ 389 ,550 / - as capitalization of past savings u/ s. 69A of the LT. Act which is completely arbitrary, unjustified and illegal. 3. For that on the facts of the case, the Ld. C.LT.(A) was wrong in .....

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(A) amounting to ₹ 439,560/- which is completely arbitrary, unjustified and illegal. 5. For that on the facts of the case, the Ld CIT(A) was wrong in adding payments already made to junior Doctors from Ripon Nursing Home under section 40(a)(ia), although section 40(a)(ia) is only applicable to amount payable, therefore, the whole addition is completely arbitrary, unjustified and illegal. 6. For that on the facts of the case, the Ld. C.LT.(A) was wrong in dittoing the order of the A.O. and .....

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ong in dittoing the order of the A.G. and confirming the addition amounting to ₹ 38,940/- as rates & taxes viz. Municipal Taxes and other taxes which is completely arbitrary, unjustified and illegal. 9. 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 ₹ 22,996/- as various heads of expenditure on estimate basis which is completely arbitrary, unjustified and illegal. 10. For that on the facts .....

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4C 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 case is an individual and engaged as m .....

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firmed by Ld. CIT(A). Against these additions/ disallowances the assessee has filed appeal before us, which are discussed here in below. 3. First issue raised by assessee in this appeal in ground No.2 is that Ld. CIT(A) erred in confirming the order of AO by sustaining the disallowance of ₹3,89,550/- u/s 69A of the Act. 4. The assessee in the year under consideration has introduced capital in the form of cash on 01.04.2007 in his capital account. On question by AO about source of capital i .....

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ved that assessee has also introduced cash as capital in his firm in the earlier years; In view of the above, Assessing Officer disallowed the same u/s 69A of the Act and added the introduction of cash of ₹3,89,550/- to the total income. 5. Aggrieved, assessee preferred an appeal before Ld. CIT(A) whereas assessee submitted that there was drawings in the earlier years and this investment is arising out of such drawings. However, Ld. CIT(A) disregarded the plea of the assessee and confirmed .....

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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, .....

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as made u/s 69A of the Act. Now the issue before us arises so as to whether the addition made by the Authorities Below u/s. 69A of the Act is justifiable in the facts and circumstances of the facts of the case. In this regard, we find that admittedly the drawing was made by the assessee in the earlier years but the question arises whether the same drawings was introduced as capital in the year under consideration. On perusal of assessment order we find that the assessee has introduced cash as ca .....

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er years. On verification of the drawing and capital introduction, we find that there was hardly any surplus fund available to the assessee for infusion of fresh capital. The assessee must also be spending money on actual personal expenses. In view of above we are of the view that the assessee failed to explain the sources of cash with supporting evidence. Therefore the ground of appeal of the assessee is dismissed. 8. Next issue raised by assessee in this appeal in grounds No. 3 to 5 is that Ld .....

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ribed 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 .....

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on made by AO by observing as under:- The submission of A/R, grounds of appeal and assessment order were duly considered. The AO disallowed a sum of ₹ 4,39,560/- for non-deduction of TDS on professional fees. Appellant relied on the order of Hon'ble ITAT Special Bench judgement M/s Merilyn Shipping & Transports vs. ACIT, Range- 1, Vishakhapatnam ITA No. 477/Viz/2008, as nothing is payable, addition should be deleted. But the operation of the aforesaid judgment has been stayed by Ho .....

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lacs only. On the other hand, Ld. DR vehemently relied on the order of Authorities Below. 12. We have heard the rival contentions of both the parties and perused the materials available on record. From the foregoing discussion, we find that the payments made to the doctors were disallowed by Authorities Below on account of non-deduction of TDS u/s. 194J of the Act. To this issue, argument placed by Ld. AR for the assessee before us was that the gross receipt of assessee in the immediate proceed .....

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ources shall be clubbed. Accordingly we find that the gross receipts 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 her .....

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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. Aggriev .....

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07-08 and no disallowance was made by AO. However, Ld. CIT(A) confirmed the order of AO by observing as under:- The submission of the A/R, grounds of appeal and assessment order were duly considered. The AO added a sum of ₹ 6,56,835/- u/s. 41(1) of Income Tax Act. The issue has been dealt by the AO in detail in assessment order. Appellant in the assessment proceeding could not verify the creditors. These creditors are 2-3 years old and their genuineness could not be established before AO. .....

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eal before us. 16. Before us Ld. AR submitted that the liabilities were not written off in the books of account assessee and therefore same cannot be held as ceased to exist. Ld. AR for assessee in support of assessee s claim drew our attention on page 68 of the paper book where the Schedule-C of the balance-sheet of the assessee was placed showing the amount of sundry creditors. On the other hand, Ld. DR vehemently supported the order of Authorities Below. 17. We have heard the rival contention .....

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the order 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 t .....

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en 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 flat located at Highland Park is not used for residential purpose and he worked out market rate on notional basis @ ₹10,000/- p.m. Therefore, AO added the notional rent in the hands of assessee. 20. Aggrieved, assessee preferred an appeal before Ld. CIT(A) whereas assessee submitted that noti .....

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t with the issue in details. I do not find any discrepancy in the order of AO on this issue. Hence, addition made by AO on this issue of ₹ 84,000/- u/s 23(4)(b) is sustained. Aggrieved by this, assessee has come up in appeal before us. 21. Before us Ld. AR stated that flat located at Highland Park is exclusively used for residential purpose of assessee and the third floor of the building located at Ripon Street is part and parcel of the nursing home which is running from ground and first f .....

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ord 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. 23. Next issue raised by assessee in Ground No.8 is that Ld. CIT(A) erred in confirming the order of AO by sustaining of ₹38,940/- on account of non-availability of supporting evidence. 24. Assessee for the year under consideration has claimed ex .....

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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 .....

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7. We have heard rival contentions of both the parties and perused the materials available on record. The limited issue in the instant case relates to disallowance of expenditure claimed by assessee under the head rates and taxes on account of nonavailability of supporting evidence. The view taken by AO was subsequently upheld by Ld. CIT(A). But Ld. AR before us pleaded that supporting evidence was not available at the assessment proceedings as well as appellate stage. But the documents are now .....

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he order of Ld. CIT(A) and this ground of assessee is dismissed. 28. Next issue raised by assessee in ground No. 9 is that Ld. CIT(A) erred in confirming the order of AO by sustaining the disallowance of ₹22,996/- on account of non-availability of supporting evidence in assessee s profit and loss account for the year ended on 31.03.2008. The assessee has claimed following expenditure:- Sl.No Head of expenditure Amount 1 Doctor s refreshment 46,890 2 General charges 25,524 3 Accounting char .....

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otal 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/- .....

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ntions of both the parties and perused the materials available on record. Admittedly the assessee failed to furnish the evidence in support of the expenditure claimed in the profit and loss account before the AO and the learned CIT(A). Indeed the onus lies on the assessee to justify the expenses claimed in the P&L account. However in the absence of any documentary evidence then the lower authorities can also refer such amount of expenditure claimed in the earlier years before making the disa .....

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on account of accrued interest on taxable HFC Bond. 33. The assessee has made investment in the financial year 2004-05 @ 8% taxable HDFC bond for ₹3.50 lakh. On perusal of the record, AO observed that the corresponding interest income on such bond has not been offered to tax. The AO also observed that the accrued interest on other fixed deposit for ₹48,658/- was offered to tax and similarly the interest accrued of PPF was also capitalized. Thus, AO was of the view that assessee is of .....

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TDS on maturity of taxable bonds. The assessee also submitted that there would have been mismatch in the amount of interest and TDS in the year of maturity of such bonds if the interest income would have been offered to tax on year to year basis. Therefore, same will be offered in the year of maturity of taxable bonds. 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 .....

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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 ord .....

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offer the interest income to tax on accrual basis. Accordingly, Authorities Below disallowed the claim of assessee. On perusal of records and after considering the submissions raised by both the parties, we find that assessee has already offered the interest income in the financial year 2009-10 and addition the same in the year under consideration would amount to double taxation of the same income earned by assessee. To put this ongoing dispute to rest and in the interest of justice and fair pla .....

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aining the disallowance of ₹3,26,345/- for the foreign travel expenses. 38. During the course of assessment proceedings, AO observed from the bank account of HSBC bank that assessee has incurred foreign travelling expenses for ₹3,26,345/- which has not been shown in the financial statement of assessee. The AO further observed that assessee has shown drawing in the year under consideration for 2,79,788/- only. Accordingly, AO observed that foreign travelling expense has been incurred .....

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iled 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 be .....

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y assessee was held by AO as incurred from undisclosed source of assessee s income. Accordingly, AO invoked the provision of Sec.69C of the Act which was subsequently confirmed by Ld. CIT(A). However, on perusal of assessment order we find that aforesaid expense was incurred out of disclosed bank account as evident from the finding of AO which is reproduced below:- It is found from the bank account of HSBC Bank, Gariahat branch, S/B account no. 023-057912-006 that the assessee has drawn the foll .....

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