TMI Blog2017 (5) TMI 1771X X X X Extracts X X X X X X X X Extracts X X X X ..... e safely presumed that the AR agreed to the impugned disallowance after taking instruction from the assessee and we also point out that as per ground no. 2 mentioned in Form No. 35 before the Commissioner of Income Tax (Appeals) it is not the contention or case of the assessee that the AR agreed to the ad hoc disallowance without any instructions from the assessee. We are, therefore, unable to see any valid reason to interfere with the orders of the authorities below wherein they have made ad hocdisallowance of 5% of total expenses claimed by the assessee on labour and wages. Therefore, the addition made by the Assessing Officer and upheld by the Commissioner of Income Tax (Appeals) is confirmed - Decided against assessee. - ITA. No. 922/Ind/2016 - - - Dated:- 30-5-2017 - SHRI C.M. GARG, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER For the Assessee : Shri Ashish Goyal Shri N.D. Patwa For the Revenue : Shri Mohd. Javed ORDER PER SHRI C.M. GARG, JM This appeal has been filed by the Revenue against the order of the learned CIT(A)-I, Bhopal, dated 10.6.2016 in First Appeal No. CIT(A)-1/BPL/IT-641/14-15 for the assessment years 2012-13. 2. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee submitted before us that the Commissioner of Income Tax (Appeals) has erred in confirming the addition of ₹ 5 lacs u/s 68 of the Act being the loan received from Smt. Parvati Bai Chouhan without considering the explanation offered by the assessee and without considering the arguments submitted from which the genuineness of transaction, identity and creditworthiness of the lender was clearly established. The learned counsel for the assessee drew our attention to various decisions of the Hon'ble High Courts including the decision of the Hon'ble Madhya Pradesh High Court in the case of CIT vs. Metachem Industries; 245 ITR 160(MP), decision of the Hon'ble Rajasthan High Court in the case of Aravali Trading Company vs. ITO; (2010) 187 Taxman 338(Raj.) and submitted that the assessee submitted confirmation, copy of bank statement, Adhar card, copy of account in the books of the assessee and an important fact that Smt. Parvati Bai Chouhan was receiving pension of ₹ 14,000/- p.m. and the amount was given to the assessee from her savings over the period of time. The learned counsel for the assessee also pointed out that the assessee received loan from Smt. Parv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lying to the above, the learned DR strongly supported the action of the authorities below and submitted that as per the ratio of the decision of the Hon'ble Gujarat High Court in the case of Umesh Krishnani (2013) 35 taxmann.com 598(Guj.) where substantial amount was deposited in the bank accounts of the lender shortly prior to the issuance of cheque by them, transaction, in question, being sham, loan amount wasa to be added to the assessee s taxable income u/s 68 of the Act. 7. Placing rejoinder to the above submissions of the learned DR, the cla submitted that the ratio of the decision of the Hon'ble Madhya Pradesh High Court in the case of Metachem Industries (supr) is applicable to the present case being proposition laid down by the Hon'ble High Court, therefore, the addition may kindly be deleted. 8. On careful consideration of the above rival submissions, we are of the view that undisputedly the assessee has filed confirmation, copy of bank statement, Adhar car and copy of account of the lender in the books of the assessee, which are available at pages 9 to 12 of the assessee s paper book. Further, it is also not in dispute that the assessee received loan fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s lender by manipulating the book entry then only the amount can be taxed in the hands of the assessee by making the addition u/s 68 of the Act. At this juncture, we respectfully note that since there is a direct proposition of Hon'ble Madhya Pradesh High Court in the case of Metachem Industries (supra) in favour of the assessee, the benefit of ratio of the decsion of the Hon'ble Gujarat High Court in the case of Umesh Krishnani (supra) is not available to the revenue in the present case. Accordingly, ground no. 1 of the assessee is allowed and the Assessing Officer is directed to delete the addition. 11. Apropos ground no. 2 the learned counsel for the assessee submitted that the Commissioner of Income Tax (Appeals) erred in confirming the disallowance of ₹ 6,08,632/- being 5% of labour and wages expenses without considering the explanation offered by the assessee that the regular and proper books of accounts have been maintained by the assessee, therefore, no disallowance is called for. 12. Replying to the above, the learned DR drew our attention to relevant operative part para 5 at pages 2 and 3 of the assessment order as well as para 6 of the impugned first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he head were not fully verifiable, therefore, on being confronted with these serious discrepancies, the AR agreed that 5% of such expenses may be disallowed because of discrepancies found. On being specifically asked by the Bench, the learned counsel for the assessee could not controvert this fact that some discrepancies in the books of accounts were confronted to the AR of the assessee by the A.O. and instead of submitting proper explanation against the discrepancies pointed out by the Assessing Officer, the AR agreed that 5% of such expenses may be disallowed. From the observations of the authorities below, we clearly observe that the discrepancies were pointed out by the Assessing Officer to the AR vide order sheet entry dated 9.1.2015 and on 12.1.2015 the AR agreed to disallowance of 5%, hence it can be safely presumed that the AR agreed to the impugned disallowance after taking instruction from the assessee and we also point out that as per ground no. 2 mentioned in Form No. 35 before the Commissioner of Income Tax (Appeals) it is not the contention or case of the assessee that the AR agreed to the ad hoc disallowance without any instructions from the assessee. We are, therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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