2019 (2) TMI 643 - AT - Income Tax

Addition of labour expenses - Held that - As perused the materials available on record and gone through the orders of the authorities below. We find that the A.O. has made addition by estimating the expenses. A.O. has not given any reason to disallow the claim of the assessee merely stating that these are excessive, in our view is not sufficient. There has to be some reason for treating the expenses as disproportionate or excessive as wages are never remained constant. Therefore, we direct the A.O. to delete this addition. Ground No.1 of the assessee is allowed. Addition made on account of low house withdrawal - Held that - As perused the materials available on record and gone through the orders of the authorities below. We find that the revenue has not controverted the fact that the A.O. has not taken a lower withdrawal and has been made addition purely on estimation basis. No reasoning is given as to why this amount is excessive. We therefore, direct the A.O. to delete this addition. Addition of Shop expenses - Held that - A.O. has made disallowance purely on the basis of estimation. No reason is given as to why the pre-survey and post-survey are excessive. Therefore, we cannot sustain these additions and the A.O. is directed to delete the same. Excess stock as found and declared during the course of survey without properly appreciating the facts of the case and submission made before him - Held that - Undisputedly, the assessee has declared amount in his return of income. The assessee himself has declared its amount and has not even revised his return of income. The assessee has also not stated as to how he is aggrieved by the order of the A.O. as he has not made any addition in the assessment order. Therefore, we do not see any infirmity in the order of the CIT(A) and the same is hereby affirmed. Appeal of the assessee is dismissed.

Issues:
1. Addition of labor expenses and low household withdrawal for assessment year 2014-15.
2. Reduction of total income by the amount of excess stock found during a survey.
3. Addition of shop expenses and unexplained investment for assessment year 2014-15.

Issue 1: Addition of Labor Expenses and Low Household Withdrawal for AY 2014-15
- Two assessees appealed against CIT(A) orders for AY 2014-15.
- Disputed additions included labor expenses and low household withdrawal.
- AO made additions based on estimation without sufficient reasoning.
- Assessees argued against the additions, stating compliance with Section 44AD.
- Tribunal directed AO to delete the additions, finding them unjustified and lacking proper basis.
- Grounds raised by assessees allowed due to lack of valid reasoning for the additions.

Issue 2: Reduction of Total Income by Excess Stock Amount
- Assessee challenged CIT(A) decision not to reduce total income by excess stock amount declared during a survey.
- Assessee had declared the amount in the return of income without revision.
- Tribunal affirmed CIT(A) decision as no addition was made by AO regarding excess stock.
- No infirmity found in CIT(A) order, and appeal partly allowed.

Issue 3: Addition of Shop Expenses and Unexplained Investment for AY 2014-15
- Another assessee appealed against CIT(A) order for AY 2014-15.
- Disputed additions included shop expenses and unexplained investment.
- CIT(A) partly allowed the appeal, deleting the unexplained investment addition.
- Tribunal found the addition of shop expenses unjustified, made on estimation basis.
- AO directed to delete the shop expenses addition, as no valid reasoning was provided.
- Assessee's appeal partly allowed due to lack of proper justification for the additions.

In conclusion, the Tribunal addressed various issues concerning additions made by the Assessing Officer based on estimations without adequate reasoning. The Tribunal directed the AO to delete unjustified additions and affirmed decisions where no infirmity was found. The appeals by the assessees were partly allowed based on the lack of valid justifications for the additions made during the assessments for the respective assessment years.

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