2015 (10) TMI 1628 - AT - Income Tax

Addition of 30% of sundry creditors - CIT(A) deleted the addition - Held that - Disallowance of 30% of sundry creditors on ad hoc basis is arbitrary. We do not understand how such addition can be made by the AO. The factual findings of the ld. CIT(A) could not be controverted by the ld. DR. - Decided in favour of assessee. Ad hoc disallowance of 30% of expenses on estimate basis - CIT(A) deleted the addition - Held that - The records show that the necessary registers and details were produced by the appellant before the AO during the remand proceeding. The said expenses relate to salary, insurance paid to insurance companies on vehicles and stock, advertisement, legal and professional charges and telephone charges etc. The ld. AR has submitted that TDS has been deducted wherever required under the law, the details of which were produced before the AO except for interest paid Cholamandalam DBS. The AO has not pointed out any specific defects in the books of account, except making some flimsy comments in the remand report, despite the fact that the ld. CIT(A)-VI had remanded the matter to the AO for examination as many as three times. In view of the above, disallowance to the extent paid to Cholamandalam DBS without TDS is confirmed. The balance addition of ₹ 5,60,156/- is deleted - Decided against revenue.

Issues Involved:
1. Admission of additional evidence under Rule 46A by the CIT(A).
2. Deletion of addition of 30% of sundry creditors.
3. Deletion of ad hoc disallowance of 30% of expenses on an estimate basis.
4. General ground.

Issue 1: Admission of additional evidence under Rule 46A by the CIT(A):
The appeal was filed by the revenue against the order of CIT (Appeals)- IV, New Delhi for the Assessment Year 2007-08. The AO had assessed the total income of the assessee without serving any notice on the company. The first appellate authority admitted additional evidence under Rule 46A, considering the financial difficulties faced by the company and the non-receipt of notices. The Tribunal found no infirmity in the decision of the first appellate authority and dismissed ground no. 1.

Issue 2: Deletion of addition of 30% of sundry creditors:
The revenue appealed against the deletion of the addition of 30% of sundry creditors. The CIT(A) held that the AO conducted inquiries and verified the claims of the assessee during the remand proceedings. The Tribunal found the disallowance of 30% of sundry creditors on an ad hoc basis to be arbitrary and without merit. The factual findings of the CIT(A) were upheld, and the ground of the revenue was dismissed.

Issue 3: Deletion of ad hoc disallowance of 30% of expenses on an estimate basis:
The revenue challenged the deletion of ad hoc disallowance of 30% of expenses on an estimate basis. The first appellate authority reviewed the necessary registers and details produced by the appellant before the AO during the remand proceedings. The Tribunal found no defects in the books of account pointed out by the AO. The disallowance to the extent of expenses paid without TDS was confirmed, while the balance addition was deleted. The Tribunal upheld this factual finding and dismissed ground no. 3.

Issue 4: General ground:
The fourth ground raised by the revenue was of a general nature. The Tribunal did not provide specific details regarding this ground in the summary of the judgment. However, it is mentioned that the appeal of the revenue was ultimately dismissed by the Tribunal.

In conclusion, the Tribunal's judgment addressed various issues raised by the revenue regarding the assessment for the Assessment Year 2007-08. The Tribunal upheld the decisions of the CIT(A) regarding the admission of additional evidence, deletion of additions to sundry creditors, and ad hoc disallowance of expenses. The general ground raised by the revenue was also dismissed, resulting in the appeal of the revenue being ultimately dismissed.

← Previous Next →