2014 (2) TMI 562 - AT - Income Tax

Estimation of income - applicability of section 44AF - Disallowance for Non-furnishing of authentic vouchers and payments Held that - The AO is of the view that the assessee does not claim the benefit under section 44AF and writes Nil profit in column 33 sub clause (iii) - The assessee has not claimed the benefit of section 44AF in the return filed and also could not furnish the requisite vouchers to authenticate the purchases claimed by the assessee thus, there is no reason to interfere with the orders in making adhoc disallowance of 10% towards purchases Decided against Assessee. Disallowance of interest on unsecured loan Addition of Payment of MVAT and Sales Tax Non-submission of documentary evidence - Held that - The CIT(A) stated that the assessee has not produced any evidence towards purchase of plot of land, flat and residential premises - No details in respect of the sources as to how they were utilised for purchase of the above assets were furnished before him to show that the investments on the above assets were made in the earlier years - no evidences were filed by the assessee to controvert the facts as stated by the learned CIT(A) thus, there is no reason to interfere with the order of the CIT(A) Decided against Assessee. Addition made on account of low withdrawals for household expenses Held that - The CIT(A) has rejected the claim of the assessee of withdrawals of his wife and his son merely because the assessee had not produced copies of the bank account, evidence of source of income and expenditure incurred - Considering the submissions of the assessee and the fact that the assessee has shown total withdrawals without giving further brake up by the authorities - the addition on account of low withdrawals for household expenses is not justified as the same is not supported by facts by the authorities thus, the addition is set aside Decided in favour of Assessee.

Summary

Issues involved:
1. Disallowance of purchase amount due to lack of authentic vouchers and payments.
2. Disallowance of interest on unsecured loan as non-business expenditure.
3. Addition of payment of MVAT & Sales Tax due to non-submission of documentary evidence.
4. Addition on account of low withdrawals for household expenses.

Issue 1 - Disallowance of purchase amount:
The appellant appealed against the CIT(A)'s order disallowing a purchase amount of Rs.1,29,056 due to non-furnishing of authentic vouchers and payments. The AO observed discrepancies in the claimed purchases and disallowed 10% of the total purchase amount. The Tribunal upheld the decision, noting that the appellant did not claim benefits under section 44AF and failed to provide necessary vouchers to authenticate the purchases. As a result, the appeal on this ground was rejected.

Issue 2 - Disallowance of interest on unsecured loan:
The AO disallowed interest on an unsecured loan as non-business expenditure, citing investments made in non-business assets using the borrowed funds. The CIT(A) upheld the disallowance due to the lack of evidence regarding the utilization of the loan amount for business purposes. The Tribunal concurred with the CIT(A) as the appellant failed to provide evidence to challenge the findings. Therefore, the appeal on this ground was also rejected.

Issue 3 - Addition of payment of MVAT & Sales Tax:
The AO added an amount to the appellant's income for non-submission of documentary evidence regarding MVAT & Sales Tax payments. The CIT(A) upheld this addition as the appellant failed to furnish the required challans. Similarly, the Tribunal found no evidence presented by the appellant to contest this decision, leading to the rejection of the appeal on this ground.

Issue 4 - Low withdrawals for household expenses:
The AO added an amount under household expenses due to perceived low withdrawals, which the CIT(A) upheld. The appellant argued that additional withdrawals were made by family members, but failed to provide supporting documentation. The Tribunal noted the lack of detailed breakdown by the lower authorities and accepted the appellant's claim, deleting the added amount. Consequently, the appeal on this ground was allowed.

In conclusion, the Tribunal partially allowed the appellant's appeal, rejecting grounds related to purchase amount, interest on unsecured loan, and MVAT & Sales Tax addition, while allowing the appeal concerning low withdrawals for household expenses.