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2014 (11) TMI 173 - AT - Income TaxDeletion of GP rate Held that - The assessee had submitted the copy of audited balance sheet and profit and loss account along with the auditor s report, copy of sales tax returns, copy of bank account of the assessee, copy of details of ledger account of assessee, copy of VAT paid by the assessee and confirmation from debtors and creditors etc. AO had not pointed out any specific defect in the books of accounts - There was no basis to estimate such income - It was completely baseless addition, thus, the order of the CIT(A) is upheld Decided against revenue. Deletion on account of gifts - Opportunity to cross examine the donor not provided by CIT(A) - the assessee has not produced the donor, Shri Dinesh Bansal before the AO - CIT (A) should have granted an opportunity to the AO also for cross examination of Shri Dinesh Bansal who appeared before him - It is against the basic principle of natural justice thus, the matter is to be remitted back to the AO for cross examination of Shri Dinesh Bansal (Donor) with regard to the gifts given to the assessee Decided in favour of revenue. Deletion of unsecured loan Held that - The assessee has submitted loan confirmation from all these parties - The loan shown from Smt. Raj Rani was outstanding from previous year and it was a carry forward balance and this amount was not taken during the year - The confirmation has been submitted with regard to the loan taken of ₹ 1,30,000/- from M/s. Pardeep Bansal HUF and the details of the bank statement and the income-tax details of the persons from whom amount was taken, was also submitted - Similarly with regard to amount of ₹ 1,68,000/- received from Smt. Preeti Bansal, sister-in-law, necessary confirmation was submitted - Copy of the return of income was also submitted along with the copy of bank statement thus, the order of the CIT(A) is upheld Decided against revenue.
Issues Involved:
1. Deletion of addition on account of Gross Profit (G.P.) rate and commission. 2. Deletion of addition on account of Gift. 3. Deletion of addition on account of Unsecured Loan. Detailed Analysis: 1. Deletion of Addition on Account of Gross Profit (G.P.) Rate and Commission: The Assessing Officer (AO) increased the Gross Profit (G.P.) ratio from 0.08% to 0.5% and made an addition of Rs. 6,94,748/- on the grounds that the assessee did not submit complete books of accounts, bills, and vouchers. Additionally, the AO estimated the commission income at Rs. 3,00,000/- and made an addition of Rs. 1,64,500/- due to insufficient details provided by the assessee. The CIT (Appeals) deleted these additions, noting that the AO did not bring any discrepancies on record and that the documents like VAT returns, sales tax returns, and audited balance sheets were available and verified. The Tribunal upheld the CIT (A)'s decision, stating that the revenue failed to controvert the findings and that the additions were based on pure guesswork. 2. Deletion of Addition on Account of Gift: The AO added Rs. 13,44,015/- to the income of the assessee, questioning the genuineness of a gift received in the form of jewelry from the assessee's brother, Shri Dinesh Bansal. Despite the assessee submitting the donor's income tax return, wealth tax return, gift deed, and affidavit, the AO made the addition as the donor was not produced for cross-examination. The CIT (A) deleted the addition after personally hearing Shri Dinesh Bansal, who confirmed the gift. However, the Tribunal found that the CIT (A) should have allowed the AO to cross-examine the donor, which was against the principles of natural justice. Thus, the issue was remanded back to the CIT (A) to provide an opportunity for the AO to cross-examine Shri Dinesh Bansal. 3. Deletion of Addition on Account of Unsecured Loan: The AO added Rs. 3,98,000/- to the income of the assessee, questioning the genuineness of unsecured loans from Priti Bansal, Raj Rani, and Pradeep Bansal (HUF). The AO noted that cash was deposited in the lenders' bank accounts just before issuing cheques to the assessee. The CIT (A) deleted the addition, accepting the loan confirmations and supporting documents submitted by the assessee. The Tribunal upheld the CIT (A)'s decision, noting that the confirmations and necessary documents were provided, and the revenue failed to prove otherwise. Conclusion: The appeal by the revenue and the cross-objection by the assessee were partly allowed for statistical purposes. The Tribunal upheld the CIT (A)'s decision on the issues of G.P. rate and commission, and unsecured loans, but remanded the issue of the gift back to the CIT (A) for further examination. Order: The appeal filed by the revenue and the cross-objection filed by the assessee are partly allowed for statistical purposes. The order was pronounced in open court on October 21, 2014.
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