TMI Blog2014 (1) TMI 1932X X X X Extracts X X X X X X X X Extracts X X X X ..... confirming the disallowance of Rs.18,000/- is upheld. This ground of appeal is rejected. Disallowance of computer expenses - assessee failed to produce relevant bills - HELD THAT:- As assessee fairly admitted that the same is not traceable. In this view of the matter, we decline to interfere. This ground of appeal is rejected. Disallowance of interest - Interest free advances - assessee was paying interest, but has advanced interest free loan to the same person to whom interest has been paid in the proprietary concern and in one case, same was claimed to be advance to a friend of the assessee but no interest has been charged on the same - HELD THAT:- DR has not disputed the availability of interest free advance in personal books of accounts of the assessee as on 31.03.2005. The advance to Falguni A Shah and Anup A Shah (HUF) were made by the assessee out of capital balance available in the personal books of accounts and therefore no disallowance is called for. The advance to Online Business System Rs.205000/- is a business advance given to obtain franchisee. Therefore, on this advance also no notional interest can be charged. We are convinced that there was no necessit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isallowance of Rs.18000 claimed as a business expense (out of credit card). (iii) Holding the disallowance of Rs.13,100 out of computer expenses. (iv) Holding the addition in respect of alleged low G.P. to the extent of Rs.15,60,234. On the facts and circumstances of the case the addition retained in the appeal order deserves to be deleted and the returned income be accepted as the assessed income. Your appellant craves leave to add, alter amend and / or withdraw any of the ground stated here above. 3. The grounds raised by the Revenue in its appeal are as under:- 1. The ld. CIT(A)-III, Rajkot has erred in law and on facts in restricting the addition up to Rs.5,51,313/- and deleting the addition of Rs.2,25,856/- out of total addition of Rs.7,77,169/- made on a/c of disallowance of interest u/s 40A(2)(b). 2. The ld. CIT(A)-III, Rajkot has erred in law and on facts in deleting the addition of Rs.40,135/- made on a/c of disallowance of interest. 3. The ld. CIT(A)-III, Rajkot has erred in law and on facts in restricting the addition up to Rs.15,60,234/- and deleting the addition of Rs.50,01,265/- out of total addition of Rs.65,61,499/- mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s paid by the assessee are not open for verification. Neither before both the authorities below nor before us, the assessee has produced the supporting evidences; therefore, the view taken by the ld. CIT(A) confirming the disallowance of Rs.18,000/- is upheld. This ground of appeal is rejected. 7. Ground No.2 (iii) of assessee s appeal is against confirming the disallowance of Rs.13,100/- out of computer expenses. 7.1 We have heard both the sides. The Assessing Officer made this disallowance as the assessee failed to produce relevant bills. Before us, the ld. Counsel of the assessee fairly admitted that the same is not traceable. In this view of the matter, we decline to interfere. This ground of appeal is rejected. 8. Ground No.2 of Revenue s appeal is against deleting the addition of Rs.40,135/- made on account of disallowance of interest. The Assessing Officer has discussed this issue on page No.2 at paragraph No.4 of the assessment order. According to the Assessing Officer, the assessee was paying interest, but has advanced interest free loan to the same person to whom interest has been paid in the proprietary concern and in one case, same was claimed to be advance to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hemently supported the order of ld. CIT(A). The ld. Counsel of the assessee explained that looking to the capital available in personal books of accounts as on 31.03.2005 which is about one crore rupees, no disallowance out of interest free advance given to three parties is called for. 8.3 Rival submissions were considered. The ld. DR has not disputed the availability of interest free advance in personal books of accounts of the assessee as on 31.03.2005. The advance to Falguni A Shah Rs.114456/- and Rs.15000 to Anup A Shah (HUF) were made by the assessee out of capital balance available in the personal books of accounts and therefore no disallowance is called for. The advance to Online Business System Rs.205000/- is a business advance given to obtain franchisee. Therefore, on this advance also no notional interest can be charged. Looking to the conspicuous facts of the case as brought on record by the ld. CIT(A) in the impugned order, we are convinced that there was no necessity to work out the notional interest and made disallowance of Rs.40135/-. The view taken by the ld. CIT(A) in the impugned order in this regard is upheld and ground of this appeal is rejected. 9. Now we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paragraph 7.2 of the impugned order, ld CIT(A) observed that new additional evidences were filed, therefore vide his office letter dated 29.02.2008 he asked the Assessing Officer under Rule 46A regarding admissibility of the same and also comments on the new/additional evidences by 15.10.2008. Thereafter, ld. CIT(A) issued reminders vide letter dated 25.11.2008, 06.04.2009 and 24.07.2009. However, no remand report was submitted by the Assessing Officer. Thereafter, the ld. CIT(A) issued final reminder on 04.11.2009 to submit the remand report by 16.11.2009. Despite this final reminder also, no remand report was received after lapse of 12 months. Therefore, the ld. CIT(A) decided the appeal on the basis of material available, after admitting the additional evidences which according to him falls in the category of clause (c) and (d) under Rule 46A and confirmed the addition of Rs.1560234/- and deleted the balance addition of Rs.5001265 for the detailed reason given in paragraph 7.3, which reads as under:- 7.3 I have carefully considered the finding given by the Assessing Officer and the submission of the AR of the appellant. Keeping in view the evidences available, it is now ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Auto Hoods cover 25 ex brown - 253228 13) Auto Hoods cover 25 ex white - 448140 14) Auto Hoods cover 25 ex brown - 431172 15) Masoor Dal - 329200 As such, the Assessing Officer s action in rejecting books of accounts u/s 145(3) of the Act is held correct and valid and same is upheld. However, the adoption of 12% gross profit for making addition by the Assessing Officer is not found supported by the various facts. The Assessing Officer has taken average gross profit of last 3 years to arrive at the figure of 12%. At the best, the last year s gross profit can be taken for computation for this year s gross profit at 8.02% and shortfall of 3.72% (8.02 4.30). As far as the explanation of less realization is found to be acceptable, which comes to 1.89% and after deducting the same from shortfall of 3.72 1.89, the unexplained difference remains at 1.83%. As there is no reasonable explanation for the above shortfall of 1.83%, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also filed confirmation of all the parties to whom notices u/s 133(6) of the Act remain unserved. Qtally and confirmations could not be filed on account of non availability of sufficient opportunities as the case was getting time-barred. Be that it may be, since no remand report was submitted by the Assessing Officer on additional evidences furnished, we are of the view that it will meet the end of justice if GP addition is restored to the file of the Assessing Officer with the direction that the Assessing Officer will re-examine the books of accounts in the light of additional evidences furnished before the ld. CIT(A) and re-adjudicate the GP addition afresh after allowing adequate opportunity of being heard to the assessee. 10. Ground No.4 of Revenue s appeal is against deleting the addition of Rs.50,000/- made on account of low household withdrawal. 10.1 The Assessing Officer discussed this issue on page No.7 in paragraph 11 of the assessment order. The assessee has shown house hold expenses of Rs.72,800/-. This addition was made on the ground that the assessee failed to furnish the bill of electricity of his residence. On appeal, in the impugned order, the ld. CIT(A) has ..... 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