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TMI Blog2016 (3) TMI 1475X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer without appreciating the facts brought of record by the Assessing Officer who rightly added this amount appearing in the books of accounts of the assessee against sundry creditors since the assessee could not substantiate these credits. 3. Ld. Commissioner of Income Tax (A)-II, Kanpur has erred in law and on facts in deleting the addition of Rs. 4,25,000/- made by the Assessing Officer without appreciating the facts brought on record by the Assessing Officer who rightly disallowed the expenses as the assessee was not able to substantiate his claim in respect of these expenses. 4. That the order of the Ld. CIT(A)-II, Kanpur dated 27.03.2014 being erroneous in law and on facts, be quashed and the order dated 30.12.2011 passed u/s 144 of the Income Tax Act,1961 by the Assessing Officer be restored." 3. Learned D. R. of the Revenue supported the order of Assessing Officer whereas Learned A. R. of the assessee supported the order of learned CIT(A). 4. We have considered the rival submissions. Regarding ground No. 1, we find that this issue was decided by CIT(A) as per the following findings on page No. 47 of his order, which is reproduced below for the sake of read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment year. Accordingly, this ground is rejected. 5. Regarding ground No. 2, we find that this issue was decided by learned CIT(A) on page No. 50 of his order, which is reproduced below for the sake of ready reference: "I have considered the facts of the case. The appellant has filed confirmations regarding these liabilities and above explanations. The A.O. has examined these liabilities and discussed in his Remand Report, dated 09-01-2014. In the case of Sri Ajay Kumar Gupta and Sri Dinesh Kumar Gupta statement have also been recorded. In the case of Sri Ajay Kumar Gupta the appellant has advanced Rs. 12,51,000/- in the month of September, October and November, 2006 for purchase of land from his personal amount. Sri Ajay Kumar Gupta returned this amount in May, 2008. The proceeds were credited in the Proprietorship Concern - M/s. Kamal Kumar Dinesh Kumar and thus Sundry Creditors appeared in the books of the appellant. Similar is the case of Sri Dinesh Kumar Gupta who was advanced Rs. 17,51,000/- by the appellant from his personal account, for purchase of House Property. Sri Dinesh Kumar Gupta returned this money in May, 2008 and the proceeds were deposited in the business c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are and securities. I have also enclosed the certified copy of the Ledger account of the expenses debited in the business concern M/s. Kamal Kumar Dinesh Kumar as per Para No. 5 below. I have also enclosed and submitted to the A.O. in remand Proceedings the copy of account statement of share brokers evidencing the expenses such as Brokerage expenses, D.P. Charges, Security Transaction Tax incurred with reference to share transactions. The expenses are duly detailed in the copy of accounts and are evidenced from bills, vouchers and records. I have considered the facts of the case. The appellant has claimed total expenses amounting to Rs. 9,96,429/- under various heads. The AO has disallowed a sum of Rs. 4,98,215/- being 50% of Rs. 9,96,429/- being excessive and unverifiable in nature and to cover up the possible leakage. Regarding audit fee the-in remand report the A.O. has stated that Audit Fee of Rs. 5,000/- is for share transactions, share is not the business of M/s. Kamal Kumar Dinesh Kumar; further no evidence of payment of Audit Fee has been produced. This has been explained by the appellant that this is Assessment of Kamal Raheja Individual, who has two business divisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n remand report no error in computation has been pointed out. From the details of depreciation it is seen that "-here is claim of depreciation of Rs. 45,402/- for car. The personal use of car cannot be ruled out. It would be justified to restrict the disallowance of depreciation for personal use to the extent of 1/5th being Rs. 9,080/-. The remaining disallowance is deleted. Regarding Insurance it is submitted by the appellant that this expense is paid to ICICI Lumbard GIC Limited towards Car Insurance. In remand report the A.O. has observed that the necessary evidence/copy of insurance policy was not produced for verification. In this regard appellant has explained that the payment is through banking channel for insurance of Car however policy of Insurance not traceable. I have considered the facts in this regard. The payment is evident from entry in bank statement. The expense is therefore allowable. However as held in the case of depreciation on car, it would be justified to restrict the disallowance of depreciation for personal use to the extent of 1/5th being Rs. 3,282/-. The remaining disallowance is deleted. Regarding legal expenses it is submitted by the appellant tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of wages, for the business and if paid at a particular rate with goods, the same cannot be adversely viewed merely for the reason that these are paid in cash. There is no specific material brought on record against allowability of loading expenses. Therefore the disallowance made in this regard is hereby deleted. Regarding Miscellaneous Expenses it is submitted that this is interest payment against late payment of VAT. The interest payment is not panel character and hence allowable business expense. The disallowance made in this regard is deleted. Regarding Postage and Telegram Expenses Rs. 101/- it is submitted that these are in the nature of Courier Charges. This is fully allowable business expense. In remand report it is mentioned that expenses have been incurred in cash. The payment made in cash for Courier expenses does not come in the way of allowability. This disallowance made is hereby deleted. Regarding Printing and Stationery Rs. 2,787/-, it is submitted that the expense is in the nature of purchase of paper, refilling of ink and charges debited by Cooperative Bank towards stationary and this is fully allowable as business expense. In remand report it is observ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is incurred on 31.05.2008 for entertaining customer and bill no. 1516 of Antarang Restaurant has been paid in cash. In view of this fact that bill no. and name of restaurant etc. has been given, the expense is verifiable. The payment in cash in such expenses is normal feature. The disallowance is made in this regard is hereby deleted. Regarding Telephone Expenses Rs. 33,088/- it is submitted by the appellant that there is land line phone and mobile phone for the business purposes. The provision of Rs. 2,988/- for the month of March, 2009 has been made on the basis of bills relating to March, 2009 received after March and appellant have other phone no. 2543643 and 9453036132 the expense of which not debited for business expense. However, the disallowance is restricted to Rs. 5,000/-. Regarding Travelling expenses R.41,01/- it is submitted that in business there is need of travelling to meet our supplier. In remand report the A.O. has observed that it is not established beyond doubt that these visits were in fact undertaken fully and exclusively for business purposes keeping in mind that assessee has not furnished anything from third parties regarding these business trips. In ..... 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