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2018 (12) TMI 1384 - AT - Income TaxUnexplained cash receipts u/s 68 - Held that - The addition is unsustainable as the cash deposited is as per the books of accounts being regularly maintained by the assessee. The Assessing Officer has not pointed out which cash receipt or deposited in the bank is unaccounted for. From the documents filed before the Assessing Officer placed it is evident that assessee has given explanation for each receipt and deposit in the bank. Since the facts are identical following our order in the case of ACIT vs. Piron Education Pvt. Ltd. 2018 (11) TMI 339 - ITAT DELHI we uphold the order of the Ld. CIT(A) deleting this addition Addition on account of bogus expenses - Held that - The assessee is carrying on regular business and all the expenses have been actually incurred. Further the assessing officer has made the disallowance arbitrarily ignoring the fact that assessee has actually carried out the business. As regard the survey report on going through the assessment order we note that though the Assessing Officer is making a reference to the survey report but is ignoring the fact that the allegations made are generic and in the light of evidences submitted by the assessee before him how he has ignored the same. It is important to point out that the assessing officer has not rejected the books of accounts nor has held that the assessee is not carrying any business. The expenses incurred are accounted for in the books of account and there is no material brought on the record by the AO that these expenses have not been actually incurred. Addition u/s 40A(2)(b) on account of remuneration to director - AO has made the above disallowance in respect of payment made to Mr. Abhishek Asthana who holds only 5% share of the assessee company - Held that - CIT(A) has deleted the addition holding that the remuneration paid is neither excessive nor unreasonable. Mr. Abhishek Asthana is a qualified Chartered Accountant and looking after the overall affairs. The learned DR could not controvert the above facts. The remuneration paid to Mr. Ashthana being a Chartered Accountant can t be said to be excessive. Further he is looking after the overall affairs. The observation the assessing officer on this issue is factually incorrect. Addition in respect of the service charges received by the assessee from M/s ESAJV D-Art Indo India Pvt. Ltd. - Held that - The facts of the present case are identical to the facts in the case of Piron Education Pvt. Ltd. (Supra). This entire amount of ₹ 38,60,500/- forms part of the receipt declared by the assessee as its income in the Profit & Loss account of the year under consideration. Accordingly following the reasoning given in our order dated 31.10.2018 in the case of ACIT vs. Piron Education Pvt. Ltd., (Supra), we direct the Assessing Officer to delete the entire addition on this account. In the result ground no. 4 of Revenue s appeal is dismissed. Unexplained investment under section 69 - Held that - Analysis of each of the creditors shows that assessee has filed sufficient evidences so as to establish identity, creditworthiness and genuineness of the transactions. There is nothing abnormal so as to draw any adverse inference against the assessee. It may be relevant to point out that he AO has made addition without application of mind. This fact gets established that AO has made addition of the amount paid back and not that of the amount received by the assessee. The above analysis clearly demonstrate that the assessee has discharged its onus fully in respect of the credit. The observation made by the AO in the assessment order are factually incorrect. AO has not brought any material so as to draw any adverse inference. He has indulged into surmises. The CIT(A) has rightly deleted the addition. Unexplained cash credits - Held that - In the said appeal in the case of M/s Piron Education Pvt. Ltd. we have held that the addition is unsustainable as the cash deposited is as per the books of accounts being regularly maintained by the assessee and such cash in books of accounts represents the fee receipt from the students which has been included in the income. Since the facts are identical following our order and the reasoning in the above said order we uphold the order of the Ld. CIT(A) deleting this addition. And this ground is dismissed. Addition being false expenses and unexplained credit of money - Held that - Disallowance has been made on the allegation that during the course of survey at the business premises of the assessee no evidence of any activity or the assets of the company was found. These expenses pertain to fixed assets and there was no justification for making this addition. The reasoning given by the AO is incorrect. As held in ground no. 2 the assessee is very much carrying on the business and this addition made by the AO is unsustainable. Further the addition of ₹ 6,76,299/- has been rightly deleted by the Ld. CIT(A). This was the loan given by the assessee in the preceding year and has been received back during the year. As regards the further addition of ₹ 8,48,803/- the same represents the creditors for the various services and expenses outstanding as on last day of the year. CIT(A) was correct in deleting these additions.
Issues Involved:
1. Deletion of addition on account of unexplained cash receipts. 2. Deletion of addition on account of bogus expenses. 3. Deletion of addition on account of salary remuneration to Director. 4. Deletion of 50% of the total addition on account of bogus expenses and receipts. 5. Deletion of addition on account of unexplained investment. 6. Deletion of addition on account of unexplained cash credit. 7. Deletion of addition on account of false expenses and unexplained credit of money. 8. General grounds challenging the CIT(A)'s order. Issue-wise Detailed Analysis: 1. Unexplained Cash Receipts: The Revenue challenged the deletion of ?54,08,275/- added by the AO as unexplained cash receipts. The Tribunal referred to a similar case (Piron Education Pvt. Ltd.) where the addition was deemed unsustainable since the cash deposits were accounted for in the assessee’s regularly maintained books. The AO failed to identify any unaccounted cash receipts or deposits. The Tribunal upheld the CIT(A)'s order deleting the addition. 2. Bogus Expenses: The Revenue contested the deletion of ?44,96,163/- added by the AO as bogus expenses. The Tribunal found that the AO’s observations were factually incorrect and that the assessee had provided all necessary details, including faculty lists, training programs, and supporting bills. The AO did not identify any specific errors or mistakes. The Tribunal confirmed that the assessee was conducting regular business activities and upheld the CIT(A)'s order deleting the addition. 3. Salary Remuneration to Director: The Revenue disputed the deletion of ?6,00,000/- added by the AO under section 40A(2)(b) for remuneration to a director. The Tribunal noted that the director was a qualified Chartered Accountant managing the company’s affairs, and the remuneration was neither excessive nor unreasonable. The Tribunal upheld the CIT(A)'s order deleting the addition. 4. Bogus Expenses and Receipts: The Revenue appealed against the partial relief (50%) given by the CIT(A) on the addition of ?38,60,500/- related to service charges from M/s ESAJV D-Art Indo India Pvt. Ltd. The Tribunal referred to a similar case (Piron Education Pvt. Ltd.) where it was held that the addition was unsustainable since the service charges were already included in the assessee’s income. The Tribunal directed the AO to delete the entire addition, upholding the CIT(A)'s decision. 5. Unexplained Investment: The Revenue challenged the deletion of ?65,78,666/- added by the AO as unexplained investment. The Tribunal referred to a similar case (Piron Education Pvt. Ltd.) where it was found that the AO had incorrectly added the amounts paid back to creditors rather than amounts received. The Tribunal confirmed that the assessee had provided sufficient evidence to establish the identity, creditworthiness, and genuineness of the transactions. The Tribunal upheld the CIT(A)'s order deleting the addition. 6. Unexplained Cash Credit: The Revenue contested the deletion of ?4,65,000/- added by the AO as unexplained cash credits. The Tribunal referred to a similar case (Piron Education Pvt. Ltd.) where it was found that the cash deposits were accounted for in the assessee’s books and represented fee receipts from students. The Tribunal upheld the CIT(A)'s order deleting the addition. 7. False Expenses and Unexplained Credit of Money: The Revenue disputed the deletion of ?1,31,863/-, ?6,76,299/-, and ?8,48,803/- added by the AO as false expenses and unexplained credit of money. The Tribunal found that the AO made these additions without any basis or adverse evidence. The Tribunal confirmed that the expenses were related to fixed assets, loans received back, and sundry creditors, all of which were accounted for. The Tribunal upheld the CIT(A)'s order deleting the additions. 8. General Grounds: The general grounds challenging the CIT(A)'s order were deemed non-specific and required no adjudication. Conclusion: The Tribunal dismissed the Revenue’s appeal, upholding the CIT(A)'s order in all respects. The judgment was pronounced on 05-11-2018.
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