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2017 (2) TMI 548 - AT - Income TaxDisallowance u/s 69A -Held that - The assessee has withdrawn and introduced the capital in the earlier years. On verification of the drawing and capital introduction, we find that there was hardly any surplus fund available to the assessee for infusion of fresh capital. The assessee must also be spending money on actual personal expenses. In view of above we are of the view that the assessee failed to explain the sources of cash with supporting evidence. Therefore the ground of appeal of the assessee is dismissed. Non-deduction of TDS u/s. 194J - Addition u/s 40(a)(ia) - payments made to the doctors - Held that - On perusal of the submission of the assessee we find that the assessee has shown income from two sources (1) medical professional receipts (2) Nursing home receipts. The receipts from both the sources are of ₹ 14,34,833/- only in the immediate preceding financial year 2006-07. In our view for the applicability of the provisions of section 44AB of the Act and 194J of the Act, the gross receipts from both the sources shall be clubbed. Accordingly we find that the gross receipts for the tax audit for the FY 2006-07 is of more than ₹ 10 lacs so it is clear that the assessee was liable for tax audit for the FY 2006-07, consequently the TDS provisions will be applied for the year under consideration. Hence the assessee has defaulted in the TDS deduction on the professional payment to doctors, therefore the deduction for the same shall not be allowed. Hence the ground of appeal of the assessee is hereby dismissed. Disallowance u/s 41(1) - Held that - We find that the liability ceased to exist if it is written off by assessee in its books of account. In case on hand we find that the liability is very much reflecting in the balance-sheet of assessee. Therefore the same cannot be added under the provisions of section 41(1) of the Act. Hence this ground of appeal of the assessee is allowed. Addition u/s 23(4)(b) - Held that - AR has not brought anything on record to demonstrate that the flat at high land park is used for the purpose of assessee residence. In the absence of any documentary evidence we find no infirmity in the order of ld. CIT(A). Hence this ground of appeal of the assessee is dismissed. Disallowance of expenditure claimed by assessee under the head rates and taxes on account of nonavailability of supporting evidence - Held that - AR before us pleaded that supporting evidence was not available at the assessment proceedings as well as appellate stage. But the documents are now available. Accordingly, Ld. AR requested before the Bench to restore the same to the file of AO for fresh adjudication. However, AR did not produce any supporting evidence for our reference. As the Ld. AR failed to bring supporting evidence, we are not inclined to restore this issue to the file of AO. Had there been supporting evidence available with the assessee, in our view, it should have been submitted now before us. As no relevant document has been submitted before us, Therefore we uphold the order of Ld. CIT(A) and this ground of assessee is dismissed. Disallowance of expenditure claimed in the profit and loss account - Held that - Admittedly the assessee failed to furnish the evidence in support of the expenditure claimed in the profit and loss account before the AO and the learned CIT(A). Indeed the onus lies on the assessee to justify the expenses claimed in the P&L account. However in the absence of any documentary evidence then the lower authorities can also refer such amount of expenditure claimed in the earlier years before making the disallowance for the purpose of comparison and to check the consistence. As such we find no reference was made to the earlier year expenditure claimed by the assessee. Therefore in the interest of Justice and fair play we re inclined to limit the disallowance at the rate of 10% of such expenditure. Hence this ground of the assessee is partly allowed. Disallowance of accrued interest on taxable HFC Bond - Held that - On perusal of records and after considering the submissions raised by both the parties, we find that assessee has already offered the interest income in the financial year 2009-10 and addition the same in the year under consideration would amount to double taxation of the same income earned by assessee. To put this ongoing dispute to rest and in the interest of justice and fair play, we remit back this issue to the file of AO for fresh adjudication as per law with a direction to AO to check whether the interest income has been offered to tax in the assessment year 2010-11 after providing reasonable opportunity of being heard to assessee. If so, then the addition needs to be deleted. Hence, in terms of above, assessee s ground is allowed for statistical purpose Disallowance of foreign travel expenses - Held that - Aforesaid foreign travelling expenses were incurred from the disclosed bank account. Therefore, in our considered view, the question of incurring expense from undisclosed income does not arise. It is also important to note that the drawing shown by the assessee is less than the amount of travelling expenses. Therefore we are of the view the issue requires to be considered by the ld. CIT(A). Hence, in terms of above, assessee s ground is allowed for statistical purpose.
Issues Involved:
1. Disallowance under Section 69A for capitalization of past savings. 2. Disallowance under Section 40(a)(ia) for non-deduction of TDS on professional fees. 3. Addition under Section 41(1) for cessation of liability. 4. Addition under Section 23(4)(b) for notional rent. 5. Disallowance of municipal taxes and other rates. 6. Disallowance of various heads of expenditure. 7. Disallowance of accrued interest on taxable HDFC Bond. 8. Disallowance of foreign travel expenses. 9. Interest charged under Sections 234B and 234C. Detailed Analysis: 1. Disallowance under Section 69A for Capitalization of Past Savings: The assessee introduced capital in cash amounting to ?3,89,550/- on 01.04.2007, claiming it was from past savings over 22 years. The AO disallowed this under Section 69A due to inconsistencies in the balance sheet and the improbability of keeping such a large amount in cash. The CIT(A) upheld this disallowance, citing the lack of evidence and the improbability of not using modern banking facilities. The Tribunal found that the assessee failed to substantiate the source of cash, confirming the disallowance. 2. Disallowance under Section 40(a)(ia) for Non-Deduction of TDS: The assessee paid ?4,39,560/- to doctors without deducting TDS, claiming gross receipts in the previous year were below the threshold for TDS applicability. The AO found the gross receipts exceeded the limit, making TDS applicable. The CIT(A) upheld this, referencing a stayed Special Bench judgment. The Tribunal confirmed the applicability of TDS provisions due to combined gross receipts exceeding the threshold, sustaining the disallowance. 3. Addition under Section 41(1) for Cessation of Liability: The AO added ?6,56,835/- as cessation of liability under Section 41(1), considering the sundry creditors as non-genuine. The CIT(A) upheld this, noting the creditors were unexplained. The Tribunal found the liabilities still reflected in the balance sheet and not written off, thus not ceased, and deleted the addition. 4. Addition under Section 23(4)(b) for Notional Rent: The AO added notional rent of ?84,000/- for a flat at Highland Park, considering it not used for residential purposes, based on an Inspector's report. The CIT(A) upheld this addition. The Tribunal found no evidence provided by the assessee to demonstrate residential use, confirming the addition. 5. Disallowance of Municipal Taxes and Other Rates: The AO disallowed ?38,940/- for lack of supporting evidence. The CIT(A) upheld this, noting the absence of relevant bills. The Tribunal agreed with the lower authorities, as no supporting documents were presented, confirming the disallowance. 6. Disallowance of Various Heads of Expenditure: The AO disallowed 20% of ?1,14,978/- claimed under various heads due to lack of proper bills. The CIT(A) found the disallowance reasonable. The Tribunal, considering the absence of evidence but aiming for fairness, reduced the disallowance to 10%. 7. Disallowance of Accrued Interest on Taxable HDFC Bond: The AO added ?28,000/- for accrued interest on HDFC bonds, following the mercantile system of accounting. The CIT(A) upheld this, noting the inconsistency in accounting methods. The Tribunal remitted the issue back to the AO to verify if the interest was offered in a subsequent year, to avoid double taxation. 8. Disallowance of Foreign Travel Expenses: The AO added ?3,26,345/- for foreign travel expenses, assuming it was from undisclosed income. The CIT(A) did not adjudicate the additional ground. The Tribunal found the expenses were from a disclosed bank account and remitted the issue back to the CIT(A) for fresh consideration. 9. Interest Charged under Sections 234B and 234C: The interest charged under Sections 234B and 234C was deemed consequential and dismissed by the Tribunal. Conclusion: The appeal was partly allowed for statistical purposes, with specific issues remitted back for fresh adjudication and others confirmed or adjusted as per the Tribunal's findings.
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