TMI Blog2017 (9) TMI 1857X X X X Extracts X X X X X X X X Extracts X X X X ..... against the declared turnover by the assessee in its books of account. These disallowances are made for lack of supporting vouchers and documentary evidences and where no details were submitted with regard to the cash discount. Since the ld. CIT(A) has estimated net profit @ 25% of the commission @ 6% on the sales of ₹ 92,02,368/-, therefore, in the interest of justice direct to estimate net profit as 1.5% of declared sales of ₹ 5.00 crores, thus part addition sustained. The declared turnover was of around ₹ 5.00 crores. Hence the estimated income on this turnover comes at ₹ 7.5 lacs. Instead of net income declared in the return of income, the income from declared turnover shall be at ₹ 7.5 lacs. Thus, the total income from the business of Adathiya is estimated at ₹ 8,88,035/- ( 7,50,000/- + 1,38,035/-). Accordingly grounds No. 1 and 2 are partly allowed and ground No. 4 of the appeal is dismissed. - ITA No. 438/JP/2016 - - - Dated:- 8-9-2017 - SHRI BHAGCHAND, ACCOUNTANT MEMBER For The Assessee : Shri Rajiv Sogani (CA) For The Revenue : Smt. Poonam Roy (DCIT) ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirming the addition of ₹ 1,38,035/- out of the addition made being business income of the assessee. 6. The ld. CIT(A) s findings on disallowance of ₹ 1,70,322/- raised in the ground No. 1 of the appeal are as under:- 7.5 I have perused the assessment order, remand report of the AO, submissions and cross reply of the appellant and find that the disallowance of expenses claimed under the following heads have been made by the AO on the ground that supporting vouchers and other documentary evidence for these expenses could not be produced:- ( i) Petrol, Depreciation on Car and Insurance - a disallowance of ₹ 20,000 out of the total expenses of ₹ 96650 has been made by the AO. Considering the fact that no controverting evidence could be filed by the appellant, the disallowance made by the AO is confirmed as being reasonable. ( ii) Vehicle Repair and Maintenance - a disallowance of ₹ 9,000 out of the total expenses of ₹ 44,054 has been made by the AO. Considering the fact that no controverting evidence could be filed by the appellant, the disallowance made b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the appellant, the disallowance made by the AO is confirmed. ( xi) Business promotion expenses - a disallowance of ₹ 6,500 out of the total expenses of ₹ 32,840 has been made by the AO. Considering the fact that no controverting evidence could be filed by the appellant, the disallowance made by the AO is confirmed. ( xii) Interest on car loan - a disallowance of total expenses of ₹ 19,022 has been made by the AO on the ground that interest free loans have been given to related persons. Therefore, there is no justification in obtaining funds at higher cost. Considering the fact that no controverting evidence could be filed by the appellant to justify the payment of interest, the disallowance made by the AO is confirmed. 6.1 The ld. CIT(A) s finding on ground No. 2 for sustaining the disallowance of ₹ 2.00 lacs are as under:- 8.5 I have perused the assessment order, remand report of the AO, submissions and cross reply of the appellant and find that a disallowance of ₹ 2 lacs out of the total expenses of ₹ 7,89,526 claimed under this head has been made b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of business income of other adhatiyas transacted through appellant s bank account. During the course of assessment proceedings, it was found that an amount of ₹ 92,02,360 has been deposited in the bank account of the appellant, which was stated to be the collection of proceeds for other adhatiyas. AO has treated the commission of 6% on such receipts as the income of the appellant at ₹ 5,52,142 and after allowing deduction of bank collection charges of ₹ 46,000 made an addition of ₹ 5,06,142 to the income of the appellant. 12.6 The appellant has stated that commission on gross basis accrues to the dealer @ 6% and in this case all the proceeds deposited in the bank account were on behalf of another party M/s Surendra Co. A copy of the agreement duly executed with that party has been filed on record. It is stated that profit of 25% of the gross commission earned on sales @ 6% of sales, is earned by the appellant. It is submitted that out of gross commission - 6% of sales of ₹ 5,52,142, after meeting expenses a net profit of 25% of this commission amount which comes to 1,38,035, is the income of the appellant. The collection charges of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on which the assessee is in appeal in ground No. 1 and 2, I found that these disallowances are out of the various expenses debited in the P L account against the declared turnover by the assessee in its books of account. These disallowances are made for lack of supporting vouchers and documentary evidences and where no details were submitted with regard to the cash discount. Since the ld. CIT(A) has estimated net profit @ 25% of the commission @ 6% on the sales of ₹ 92,02,368/-, therefore, in the interest of justice I direct to estimate net profit as 1.5% of declared sales of ₹ 5.00 crores, thus part addition sustained. The declared turnover was of around ₹ 5.00 crores. Hence the estimated income on this turnover comes at ₹ 7.5 lacs. Instead of net income declared in the return of income, the income from declared turnover shall be at ₹ 7.5 lacs. Thus, the total income from the business of Adathiya is estimated at ₹ 8,88,035/- ( 7,50,000/- + 1,38,035/-). Accordingly grounds No. 1 and 2 are partly allowed and ground No. 4 of the appeal is dismissed. 8. In the result, the appeal of the assessee is partly allowed. Ord ..... X X X X Extracts X X X X X X X X Extracts X X X X
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