2018 (2) TMI 1520 - AT - Income Tax

Bogus purchases - Held that - Large number of opportunities were provided by the A.O. to the assessee. It is noted from the financial statements of the assessee that for the F.Y. 2012-13 and 2013-14, the assessee was having total turnover of ₹ 92,01,799/- and ₹ 57,26,420/- respectively. Various notices were issued by the Assessing Officer to file the details but no compliance was made by the assessee. In view of the above facts and circumstances, the Bench find that there are no any contrary material in the order of the ld. CIT(A), therefore, we uphold the order of the ld. CIT(A) on this issue. Accordingly, this ground of assessee s appeal is dismissed. Trading addition disallowing 15% of the entire purchases - Held that - The assessee has not produced its books of accounts, therefore, the purchases made by the assessee remained unverifiable. The Coordinate Bench of the ITAT, Jaipur Bench in the case of Anuj Kumar Varshney & Ors. 2015 (4) TMI 533 - ITAT JAIPUR had decided that 15% of such bogus/unverifiable purchases can be disallowed and the ld. CIT(A) had followed the same. Therefore, the Bench find no merit in the contention of the ld. AR of the assessee. Disallowance u/s 40(a)(ia) - Held that - The assessee has admitted that he has not deducted tax at source on account of payment of ₹ 73,714/-. In view of the above, the Bench find no any contrary material in the order of the ld. CIT(A), therefore, we uphold the same. Hence, this ground of appeal of assessee stands dismissed. Addition considering the peak of cash deposit and withdrawal from the bank account as unexplained - Held that - Assessing Officer comes to a finding that withdrawn amount was used or spent by the assessee for any other investment or expenditure than the benefit of peak of such credit, in such circumstances, may not be available. No specific reason was recorded regarding the utilization of cash withdrawal by the assessee from its bank accounts in some investment or expenditure. In view of the above and considering the totality of the facts and circumstances of the case, the Bench find no any contrary material in the order of the ld. CIT(A), therefore, we uphold the same. Hence, this ground of appeal of assessee stands dismissed. Disallowance of deduction under Chapter VI of the Act - payment of amount as premium of LIC - Held that - The assessee has claimed deduction under Chapter VI-A of the Act but no evidence was submitted by the assessee. During the appellate proceedings, the assessee has submitted that he has paid the amount as premium of LIC but he failed to submit necessary documents. Therefore, the ld. CIT(A) has rejected the claim of the assessee. Considering the totality of the facts and circumstances of the case, the Bench find no any contrary material in the order of the ld. CIT(A), therefore, we uphold the same. Hence, this ground of appeal of assessee stands dismissed.

Issues Involved:

1. Admission of additional evidence under Rule 46A.
2. Confirmation of trading addition by disallowing a percentage of purchases.
3. Disallowance under Section 40(a)(ia) for non-deduction of TDS.
4. Addition of unexplained cash deposits by considering peak credit theory.
5. Disallowance of deductions under Chapter VI-A.

Detailed Analysis:

1. Admission of Additional Evidence under Rule 46A:

The assessee contended that the Commissioner of Income Tax (Appeals) [CIT(A)] erred by not admitting additional evidence under Rule 46A. The CIT(A) noted that the assessee failed to produce evidence during assessment due to illness, but the financial turnover in subsequent years suggested the illness did not hinder business activities. The CIT(A) concluded that the additional evidence did not meet the conditions of Rule 46A, which requires specific circumstances for admission, such as refusal by the Assessing Officer (AO) to admit evidence or the appellant being prevented by sufficient cause from producing evidence. The Tribunal upheld the CIT(A)'s decision, noting no procedural errors or unjust consequences.

2. Confirmation of Trading Addition by Disallowing a Percentage of Purchases:

The assessee's books of accounts were not produced, leading to unverifiable purchases. The AO disallowed 25% of the purchases, which the CIT(A) reduced to 15%, following the precedent set by the ITAT Jaipur in similar cases. The assessee argued that the Gross Profit (G.P.) rate declared was better than previous years and provided supporting documents. However, the Tribunal upheld the CIT(A)'s decision, emphasizing the consistent approach of disallowing a percentage of unverifiable purchases.

3. Disallowance under Section 40(a)(ia) for Non-Deduction of TDS:

The AO disallowed expenses under Section 40(a)(ia) due to non-deduction of TDS on certain payments. The CIT(A) confirmed the disallowance for payments where TDS was not deducted but directed the AO to verify TDS returns for other payments. The assessee argued that the second proviso to Section 40(a)(ia), which provides relief if the payee has paid taxes, should apply retrospectively. The Tribunal upheld the CIT(A)'s decision, noting the lack of evidence for TDS deduction on the disputed amount.

4. Addition of Unexplained Cash Deposits by Considering Peak Credit Theory:

The AO added unexplained cash deposits as income, while the CIT(A) applied the peak credit theory, reducing the addition to the peak balance of deposits and withdrawals. The assessee provided bank statements and cash book entries as additional evidence, which were not admitted. The Tribunal upheld the CIT(A)'s application of the peak credit theory, noting no specific findings by the AO on the utilization of cash withdrawals for other investments or expenditures.

5. Disallowance of Deductions under Chapter VI-A:

The AO disallowed deductions under Chapter VI-A due to lack of evidence. The CIT(A) upheld the disallowance as the assessee failed to provide necessary documents during appellate proceedings. The assessee claimed the evidence was misplaced but argued that withdrawals from the capital account should be considered. The Tribunal upheld the CIT(A)'s decision, emphasizing the requirement for documentary evidence to support the claim.

Conclusion:

The appeal was dismissed, with the Tribunal upholding the CIT(A)'s decisions on all grounds, emphasizing adherence to procedural rules and the necessity of documentary evidence to support claims.

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