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2016 (10) TMI 595 - AT - Income TaxTrading addition - Held that - It is a settled law that in the absence of any specific finding, the adhoc additions made by the AO cannot be sustained - Decided in favour of assessee. Disallowance of deduction under Chapter VIA / under section 80C on account of LIC premium and the Tuition Fees paid - AO has disallowed the said deduction only on the basis that no documentary evidence in this regard was produced by the assessee - Held that - The said amounts have been duly paid out from the banking channels and deserve to be allowed, hence delete the addition in dispute - Decided in favour of assessee.
Issues Involved:
1. Legality and factual correctness of the CIT(A)'s order. 2. Addition of ?17,10,000 on account of unexplained cash deposits. 3. Addition of ?50,000 on account of trading results. 4. Disallowance of 50% business expenses. 5. Disallowance of ?49,971 claimed under Chapter VI-A of the Income Tax Act. Detailed Analysis: Issue 1: Legality and Factual Correctness of the CIT(A)'s Order The assessee challenged the order passed by the CIT(A) on both legal and factual grounds, claiming it to be erroneous. The Tribunal noted that the CIT(A) had dismissed the appeal without adequately addressing the evidences and explanations provided by the assessee. Issue 2: Addition of ?17,10,000 on Account of Unexplained Cash Deposits During the assessment, the AO added ?17,10,000 as unexplained cash deposits based on AIR information. The assessee contended that ?1,95,000 was withdrawn and redeposited, making the net deposit ?15,15,200. The assessee provided documentary evidence, including the balance sheet, profit and loss account, cash book, and bank book, to support the claim that the cash deposits were loans from friends and relatives. The CIT(A) disregarded these evidences, terming them fabricated. However, the Tribunal found that the CIT(A) sustained the addition based on surmises and conjectures without pointing out any specific defects in the evidence. Citing the ITAT Rajkot Bench decision in ITO vs. Mahesh Kumar Jayantilal Vora, the Tribunal held that no income can be taxed twice and deleted the addition. Issue 3: Addition of ?50,000 on Account of Trading Results The AO made an ad-hoc addition of ?50,000, alleging lack of documentary evidence supporting the trading results. The Tribunal observed that in the absence of specific findings, ad-hoc additions cannot be sustained. It referenced several judgments, including ACIT vs. Amtek Auto Ltd. and DCIT vs. Yash B. Johar, which support the principle that ad-hoc disallowances without specific defects are not permissible. Consequently, the Tribunal deleted the addition. Issue 4: Disallowance of 50% Business Expenses The AO disallowed 50% of business expenses amounting to ?29,793 without providing a specific basis for the disallowance. The Tribunal reiterated that such ad-hoc disallowances are not sustainable in the absence of specific findings or defects, and thus, deleted the addition. Issue 5: Disallowance of ?49,971 Claimed Under Chapter VI-A The AO disallowed the deduction of ?49,971 claimed by the assessee under Chapter VI-A, citing lack of documentary evidence. The assessee argued that the deduction was for LIC premium and tuition fees paid through banking channels. The Tribunal found that the amounts were indeed paid through banking channels and deserved to be allowed. Therefore, the Tribunal deleted the disallowance. Conclusion The Tribunal allowed the appeal filed by the assessee, deleting all the additions and disallowances made by the AO and sustained by the CIT(A). The order emphasized the necessity of specific findings and evidence to justify additions and disallowances, aligning with established legal principles and precedents.
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