TMI Blog2020 (12) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... den of proving identity and creditworthiness of the lender - Decided in favour of assessee. Disallowance of vehicle expenses, salary expenses and purchase expenses - Whether AO had made these disallowances on ad-hoc basis, which is not permissible under the law? - HELD THAT:- CIT(A) has confirmed/restricted the disallowances in question inter alia on the ground that the assessee has shown more business loss as compared to the earlier year - authorities below have not given any cogent reason for making/confirming disallowance in question. Hence, respectfully following the ratio laid down in WALCHAND AND COMPANY PVT. LIMITED. [ 1967 (3) TMI 2 - SUPREME COURT] we hold that the ad-hoc disallowance made/sustained on the ground of increase of business loss is not sustainable. Hence, we delete the additions made on account of vehicle expenses, salary expenses and purchase expenses. - Decided in favour of assessee. - ITA No. 3311/MUM/2014 - - - Dated:- 6-11-2020 - Shri Rajesh Kumar (AM) And Shri Ram Lal Negi (JM) For the Assessee : Shri Dharan Gandhi (AR) For the Revenue : Shri Michael Jerald (DR) ORDER PER RAM LAL NEGI, JM This appeal has been filed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r insurance claim was filed. 3. Ground No. 3- Disallowance of ₹ 650,048/- on account of vehicle expenses, ₹ 4,753,120/- on account of salary expenses and ₹ 6,814,695/- on account of purchase expenses. The CIT (A) has erred in confirming disallowance of vehicle expenses, salary and purchase expenses on an arbitrary ad hoc basis. 4. During pendency of this appeal, the assessee raised additional grounds without prejudice to the grounds raised in the appeal. The additional grounds raised by the assessee are as under: 1. Without prejudice to the other grounds, the Ld. AO has erred in not setting off the unabsorbed depreciation and brought forward business loss against the income assessed u/s 68 of the Act. 2. Without prejudice to the other grounds, the Ld. AO ought to set off brought forward business loss first in preference to the unabsorbed depreciation. 5. Vide Ground No. 1. (a) (b) and (c), the assessee has challenged the action of the Ld. CIT (A) in confirming the addition to the extent of ₹ 1,30,18,510/- on account of unexplained cash credit made by the AO u/s 68 of the Act. The Ld. counsel for the assessee submitted that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s pointed out by the Ld. counsel, the DCIT Tax-5 (Mumbai) in its report dated 26.11.2012 has mentioned that as per the ledger account and the bank statements, the assessee had taken loan of ₹ 1,22,34,110/- from Director Shri Cyrus Nallaseth. Further, he has also furnished the copy of return of income for the AY 2009-10, balance sheet for the AY 2009-10, loan confirmation documents, copy of bank statements, reflecting transaction during the period 01.04.2008 to 31.03.2009 and copy of bank statement reflecting the said transaction during the relevant period. However, the DCIT has asked for rejection of assessee s contention on the ground that Mr. Cyrus Nallaseth has stated that balance sheet for the AY 2009-10 is not relevant in the present case. We do not find any substance in the observation of the AO, as there is no evidence on record to show that Shri Cyrus Nallaseth was asked by the AO to furnish the relevant balance sheet. Since, the AO has admitted in the remand report that Shri Cyrus Nallaseth had advanced loan to the assessee amounting to ₹ 1,22,34,110/-, there is no justification in making addition of ₹ 1,30,18,510/- on account of unexplained cash credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce some of the documents during assessment proceedings. Further, as contended by the assessee since the assessee was carrying on its business from 19 outlets, the vouchers were produced on sample basis. We notice that the In the case of CIT vs. Walchand Company Pvt. Ltd ( supra) the Hon ble Supreme Court upheld the findings of the High Court whereby the High court had set aside the order of the Tribunal confirming similar disallowance, holding as under:- 4. In para 2 of their order the Tribunal correctly set out the principle applicable to claims for deduction of expenditure incurred in payment of remuneration to its employees by the assessee. But for partially rejecting the claim for allowance of the amount paid, no reasons where recorded. If the Tribunal was satisfied that the expenditure was laid out or expended wholly and exclusively for the purpose of the business of the assessee there was no reason why the full amount expended should not have been allowed. It is open to the Tribunal to come to a conclusion either that the alleged payment is not real or that it is not incurred by the assessee in the character of a trader or that it is not laid out wholly and exclusivel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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