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2013 (2) TMI 701 - AT - Income TaxDisallowance of expenditure - Held that - We find that the CIT(A), after a detailed discussion on each and every aspect of the matter including the claim of expenditure and after examining the details filed by the assessee in respect of expenditure, came to a reasonable conclusion and addition to the extent of ₹ 5,00,000/- has been sustained for want of verification of expenditure and others and has rightly allowed relief of ₹ 45,46,166/- as sustaining 50% of expenses and running a business with remaining 50% expenses is impossible. The view taken by the CIT(A) appears to be fair and reasonable. We, therefore, confirm the order of CIT(A) in respect of disallowance of expenses. Addition on account of creditors - Held that - When the A.O. himself accepted the genuineness of the creditors before the CIT(A) in the remand report and the CIT(A) has deleted the addition to that extent, we are of the considered view that there is no error in the order of CIT(A) in deleting the addition
Issues Involved:
1. Disallowance of expenses due to failure to produce books of account. 2. Addition on account of unconfirmed creditors. Detailed Analysis: 1. Disallowance of Expenses: The Revenue challenged the relief granted by the CIT(A) regarding the disallowance of expenses. The Assessing Officer (A.O.) initially disallowed 50% of the expenses claimed by the assessee due to the failure to produce books of account and substantiate the genuineness of the expenses. The CIT(A) later restricted the disallowance to Rs. 5,00,000 and deleted the addition of Rs. 45,46,166. The CIT(A) based this decision on the remand report, which confirmed that the assessee had produced books of account, ledger, cash book, original vouchers, and bank statements. Although some expenses were incurred in cash and some vouchers were unsigned, the CIT(A) found that the books of account were generally well-maintained and backed by vouchers. The CIT(A) considered the original assessment and the remand report, concluding that a rounded-off addition of Rs. 5,00,000 would suffice. The Tribunal upheld the CIT(A)'s decision, noting that the A.O.'s assessment under section 144 was based on incorrect facts and that the CIT(A) had reasonably sustained the addition of Rs. 5,00,000 while allowing relief for the remaining amount. 2. Addition on Account of Unconfirmed Creditors: The A.O. added Rs. 1,26,51,811 to the assessee's income as unexplained sundry creditors due to the failure to produce books of account. The CIT(A) later confirmed only Rs. 40,998 of this addition and deleted Rs. 1,25,69,815. The CIT(A) relied on the remand report, which accepted the veracity of the documents filed by the assessee, including bank statements and confirmations from creditors. The A.O. had accepted the statements of almost all creditors except for one amounting to Rs. 40,998. The Tribunal found no error in the CIT(A)'s order, as the A.O. had accepted the genuineness of the creditors in the remand report. The Tribunal upheld the CIT(A)'s decision to delete the addition of Rs. 1,25,69,815, as the Revenue failed to provide any contrary material. Consolidated Order for A.Y. 2008-09: The issues and grounds for A.Y. 2008-09 were similar to those for A.Y. 2006-07. Following the detailed discussion and findings for A.Y. 2006-07, the Tribunal confirmed the CIT(A)'s order for A.Y. 2008-09 as well. Conclusion: Both appeals filed by the Revenue were dismissed, and the Tribunal upheld the CIT(A)'s decisions regarding the disallowance of expenses and the addition on account of unconfirmed creditors.
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