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2013 (12) TMI 359 - AT - Income TaxDisallowance of expenditure on account of double claim of expenses The assessee is the managing director of Hyderabad House P. Ltd. - Also having his own catering business under the name and style of MBA Catering Services - Search and seizure operations under section 132 of the Act were conducted on December 12, 2007 in the case of Hyderabad House P. Ltd. and at the residential premises of the assessee Held that - The authorities failed to prove with sufficient evidence The assessee has not claimed the same expenses twice The expenses claimed by the assessee have been incurred for the purpose of MBA Catering Services Decided against Revenue. Disallowance of expenses @ 8 percent The assessee could not produce bills and vouchers for most of the expenses incurred in cash - Held that - Following GSP Infratech Development Ltd. 2013 (11) TMI 374 - ITAT HYDERABAD - The disallowance at 5 per cent. of cash expenses other than statutory payments and payments to the Government authorities and the amount subjected to TDS is sufficient - In view of the data furnished and comparing the ratio of expenses incurred to turnover for the earlier years - The scope for some inflation of such expenses should be given Decided against Revenue. Whether the income from agricultural land is agricultural income or income from other sources The assessee has shown agricultural income in his original return of income No material or evidence was found during search showing assessee s ownership of agricultural land - Held that - In view of the details of agricultural land holding and document numbers and relevant records furnished - The assessee is the owner of the agricultural lands - In the assessment year 2006-07, the agricultural land was sold and was offered to capital gains Decided against Revenue. Whether the Assessing Officer is required to confine himself only to the material found during the course of search operation Held that - The assessee has filed a letter dated November 24, 2009 explaining that the ownership of the agricultural land purchased in the year 1986 and 87 - The assessee has substantiated the fact of holding agricultural land by way of proper evidence No question of observing material found during search Decided against Revenue. Addition u/s 68 The assessee had received certain unsecured loans - The assessee filed confirmation letters and other details in respect of some of the creditors and in respect of other creditors the information filed was either incomplete or no information was filed at all - Held that - Following CIT v. Maduri Rajaiahgari Kistaiah 1975 (12) TMI 8 - ANDHRA PRADESH High Court Even on rejection of books of account and when business income is estimated the addition towards unexplained cash credit can be separately valued The issue was restored back for re-examining the facts and circumstances.
Issues Involved:
1. Disallowance of expenditure on account of duplication. 2. Disallowance of expenditure in the absence of vouchers. 3. Addition towards agricultural income. 4. Addition under section 68 of the Income-tax Act for unexplained cash credits. 5. Unexplained investment in jewelry. Issue-wise Detailed Analysis: 1. Disallowance of Expenditure on Account of Duplication: The first issue pertains to the disallowance of expenditure due to alleged duplication by the Assessing Officer (AO). The AO disallowed expenses claimed by the assessee in the business of MBA Catering Services based on a statement from one of the employees, suggesting that the kitchen facilities of Hyderabad House P. Ltd. were utilized by MBA Catering Services. The Commissioner of Income-tax (Appeals) (CIT(A)) found that the expenses such as electricity, rent, diesel charges, and telephone were genuine and paid by cheque, thus not duplicated. The Tribunal upheld the CIT(A)'s decision, stating that the Department failed to provide material evidence supporting the claim of duplication. 2. Disallowance of Expenditure in the Absence of Vouchers: The second issue involves the disallowance of expenses due to the absence of proper bills and vouchers. The AO made estimated disallowances for each assessment year. The CIT(A), following a previous decision in a similar case, directed the AO to restrict the disallowance to 8% of the cash expenses. The Tribunal, referencing a similar case (Hyderabad House P. Ltd.), concluded that a 5% disallowance of cash expenses was more appropriate, given the nature of the business and the lack of specific evidence of inflated expenses. 3. Addition Towards Agricultural Income: The third issue concerns the addition made by the AO, treating agricultural income as "income from other sources" due to a lack of documentary evidence. The CIT(A) held that such additions could not be made under section 153A without reference to seized material. The Tribunal confirmed the CIT(A)'s order, noting that the assessee had provided sufficient evidence of owning agricultural land and that the AO had accepted the sale of agricultural land in a subsequent year, thus proving the existence of agricultural land. 4. Addition Under Section 68 for Unexplained Cash Credits: The fourth issue deals with the addition of unexplained cash credits under section 68. The AO made additions for various assessment years where the assessee could not provide satisfactory evidence for certain credits. The CIT(A), after considering additional evidence and a remand report from the AO, allowed some credits as genuine but sustained others as unexplained. The Tribunal remitted the issue back to the AO for fresh consideration, directing the assessee to cooperate with the Department. 5. Unexplained Investment in Jewelry: The fifth issue is specific to the assessment year 2008-09, where the AO made an addition for unexplained investment in jewelry. The assessee did not press this ground of appeal during the hearing, leading to its dismissal as not pressed. Conclusion: The Tribunal dismissed all the appeals of the Revenue and partly allowed the appeals of the assessee for statistical purposes. The detailed analysis of each issue reflects the Tribunal's thorough examination of the facts, evidence, and applicable legal principles, ensuring a fair and just resolution of the disputes.
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