9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (5) TMI 731 - AT - Income TaxAddition u/s 68 - unsecured loans taken by the assessee - AO made addition of the same since the assessee failed to furnish any details with regard to the same - CIT(A) deleted the addition on finding that the addition related to three loans all taken from directors of the assessee company, out of which two loans were old not taken during the impugned year while the third loan, taken in the name of one Mr. Bhavesh G. Patel, part of it was taken in earlier year which was assessed and no addition made on account of the same while for the balance assessee had filed confirmation regarding the deposits and the A.O. had also received confirmations from the parties against notices u/s. 133(6) - HELD THAT - It is evident that with respect to the issue of unsecured loans, the assessee had established from its financial results that they were majorly old loans. Further the enquiry conducted by the A.O. during remand proceedings also confirmed the genuineness of the unsecured loans. The A.O. having himself found the loan to be genuine after making due enquiry, we see no reason to interfere in the order of the Ld. CIT(A) deleting the addition made on account of unsecured loans u/s. 68 of the Act - Decided in favour of assessee. Disallowance of depreciation on newly acquired assets - CIT-A deleted the addition - HELD THAT - Disallowance of depreciation was made since no details were available with the A.O. vis- -vis the purchase of new assets. CIT(A) noted from the records of the assessee as well as the Tax Audit Report filed, that the assets were duly accounted for in the books of the assessee. Further the bills of the assets purchased were forwarded to the A.O. for verification, and no adverse comments were made by him on the same. We note that it was only contemporary data/evidence which was furnished by the assessee, verified by the A.O. and no infirmity found in the same. CIT(A) was justified in admitting the evidences and deleting the disallowance of depreciation. Unexplained investment u/s. 69 - addition related to the bank balance reflected in the return of income filed by the assessee on account of the same remaining unreconciled with the ban - CIT-A deleted the addition - HELD THAT - CIT(A) deleted the addition on finding that these balances were duly reflected in the books of account of the assessee and were majorly carried forward from the earlier years. We find that it was only contemporary evidence which was appreciated by the ld. CIT(A) for the purposes of holding that the entire bank balance was explained as appearing in the books of accounts of the assessee. Even the A.O. did not make any adverse comment with regard to the same in his remand report. The Ld. CIT(A) we hold was therefore wholly justified in deleting the addition made u/s 69. Addition made on account of unexplained credit - addition in relation to the sundry creditors reflected in the return of income ,for failure of the assessee to furnish necessary details - CIT-A deleted the addition - HELD THAT - CIT(A) found the entire balance as pertaining to sundry creditors against which there were corresponding L/C s also all duly reflected in the audited books of accounts of the assessee and further found there was no basis with the A.O. for making the impugned addition which was merely done on estimate basis. He also noted that in remand proceedings, the A.O. had made sample verification of the details given by the assessee and found them to be correct. Considering the aforesaid fact therefore he deleted the addition made correctly. Disallowance of expenses which constituted 15% of the total expenditure incurred on Power and Fuel, Salary and Wages, Advertisement, Donation, Other expenses and Interest - CIT-A deleted the addition - HELD THAT - CIT(A) who we find has deleted the addition noting that there was no abnormal increase in these expenses as compared to the preceding years and further noting the fact that the A.O. had verified the expenses on sample basis and made no adverse comments. He also noted that in scrutiny assessment for earlier years no disallowance of such expenses was made except of a meagre amount of Rs. 20,000/- on lump sum basis in assessment year 2007-08. CIT(A) noted that the expenditure in the impugned year was comparable with the turnover of the assessee and in the absence of any specific defect/ abnormality pointed out by the A.O. correctly deleted the disallowance. Addition made by the A.O. by estimating gross profit - HELD THAT - CIT-A deleted the addition finding that there was no basis with the AO for either rejecting the Books of the assessee or for applying the GP rate for estimating the profits. He also noted that the Books of the assessee were duly audited. Accordingly he held the act of the AO of rejecting the Books of the assessee and estimating the Gross Profit to be entirely baseless and thus unjustified. Before us Ld.DR was unable to point out any infirmity in the above findings of the Ld.CIT(A) .
Issues Involved:
1. Validity of assessment due to non-issuance of notice under section 143(2) of the Income Tax Act. 2. Addition of unsecured loans under section 68 of the Income Tax Act. 3. Disallowance of depreciation. 4. Addition under section 69 for unexplained investment. 5. Addition under section 68 for unexplained credit. 6. Disallowance of expenses. 7. Estimation of gross profit. Detailed Analysis: 1. Validity of Assessment: The assessee challenged the validity of the assessment on the grounds that no notice under section 143(2) was issued within the prescribed time. The CIT(A) dismissed this ground, and the assessee did not press it further during the hearing. Consequently, the cross-objection on this issue was dismissed. 2. Addition of Unsecured Loans: The Revenue contested the deletion of an addition of Rs. 65,25,474/- made under section 68 for unsecured loans. The CIT(A) found that the loans were taken from directors, two of which were old, and the third was partially taken in an earlier year. The assessee provided confirmations, and the AO verified the loans during remand proceedings. The CIT(A) concluded that the loans were genuine and deleted the addition. The Tribunal upheld the CIT(A)'s decision, noting that the AO's verification supported the genuineness of the loans. 3. Disallowance of Depreciation: The Revenue challenged the deletion of a disallowance of Rs. 6,62,355/- for depreciation. The CIT(A) noted that the assets were duly accounted for in the books, and the purchase bills were verified by the AO without adverse comments. The Tribunal found no fault in the CIT(A)'s decision and upheld the deletion of the disallowance. 4. Addition for Unexplained Investment: The Revenue contested the deletion of an addition of Rs. 58,64,847/- made under section 69 for unexplained investment. The CIT(A) found that the bank balances were reflected in the books and were carried forward from earlier years. The AO's remand report did not dispute this. The Tribunal upheld the CIT(A)'s decision, noting that the balances were explained and reflected in the books. 5. Addition for Unexplained Credit: The Revenue challenged the deletion of an addition of Rs. 42,05,417/- made under section 68 for unexplained credit. The CIT(A) found that the sundry creditors were reflected in the books and were verified by the AO during remand proceedings. The Tribunal upheld the CIT(A)'s decision, noting that the AO's verification supported the genuineness of the creditors. 6. Disallowance of Expenses: The Revenue contested the deletion of a disallowance of Rs. 70,38,632/- for various expenses. The CIT(A) noted that the expenses were comparable to previous years and were verified by the AO without adverse comments. The Tribunal upheld the CIT(A)'s decision, noting that the expenses were justified and no specific defects were pointed out by the AO. 7. Estimation of Gross Profit: The Revenue challenged the deletion of an addition of Rs. 2,58,88,202/- made by estimating the gross profit. The CIT(A) found that the AO had no basis for rejecting the books or estimating the gross profit. The books were audited, and no specific defects were cited. The Tribunal upheld the CIT(A)'s decision, noting that the estimation was baseless and unjustified. Conclusion: The Tribunal dismissed both the Revenue's appeal and the assessee's cross-objection, upholding the CIT(A)'s decisions on all issues. The order was pronounced in the open court on 06-05-2022.
|
