2016 (12) TMI 491 - AT - Income Tax

Addition to total income on account of sale bill not realized - Held that - We have observed that the assessee has earned contractual receipts of ₹ 11,798/ - from Kaapi Machines (India) Pvt. Ltd. who deducted tax at source on this amount of ₹ 11, 798/ - which was reflected in ITS details. The said receipts had not been disclosed as income by the assessee in the return of income filed with the Revenue. The assessee has taken a plea that the assessee cancelled the bill due to dispute with the party but the party deducted tax at source which is reflected in form no 26AS. No evidence has been submitted by the assessee about the dispute with the client or cancellation of the bill. Since the assessee failed to discharge the onus cast on him with respect thereto, the assessee s contentions are rejected and order of the learned CIT(A) is confirmed. - Decided against assessee Addition of expenses - Held that - We have observed that the assessee has incurred total expenses of ₹ 2,78,851/- on account of advertisement, business promotion, telephone & mobile expenses, conveyance and miscellaneous expenses. The assessee could not produce proper and satisfactory evidence/explanations before the authorities below to prove that the expenses were incurred wholly and exclusively for the purposes of business. Ad-hoc addition has been made @ 25% of the total expenditure by the authorities below on the ground that personal usage cannot be ruled out. However, no deficiency has been pointed out by the A.O. which is specific to any bill/voucher submitted by the assessee, but keeping in view satisfactory details about expenditure being incurred wholly and exclusively for the purpose of business was not submitted by the assessee, personal usage with respect to these expenses being incurred for personal purposes instead of business purposes cannot be completely ruled out. In view thereof interest of justice will be best served if the disallowance of the afore-stated expenses is restricted to 10% of the total expenditure - Decided partly in favour of assessee Addition on account of excess rent paid - Held that - The assessee failed to submit the details of the working of increased rent being excess payment of ₹ 8,000/- over and above the subsisting rent agreement which was stated to be an old agreement. In our considered view, this enhanced rent of ₹ 8,000/- is not allowable in the absence of rent agreement or some other evidence satisfactory explanation to corroborate and substantiate the increased rent. The assessee did not submit any details, explanation or evidence to substantiate its contentions about increased rent and this enhanced rent of ₹ 8,000/- cannot be allowed as deduction while computing income of the assessee keeping in view facts and circumstances of the case, as the assessee is not able to discharge the onus cast on the assessee, and the addition made by the A.O. as confirmed by the Id. CIT(A) is hereby upheld/confirmed, as we do not find any infirmity in the order of learned CIT(Al which we affirm. - Decided against assessee Addition on sundry deposits in the Balance Sheet - Held that - Since the assessee could not produce any evidence/ satisfactory explanations to explain these deposits appearing in its Balance Sheet, in our considered view, the decision of the Id. CIT(A) is quite justified and we uphold the same as we donot find any infirmity in the appellate order of learned CIT(A) which we affirm. - Decided against assessee

Summary

Issues Involved:
1. Addition to total income on account of unrealized sale bill.
2. Addition of expenses for want of justification.
3. Addition of excess rent paid.
4. Treatment of sundry deposits as unexplained investments.

Issue 1: Addition to Total Income on Account of Unrealized Sale Bill
- The assessee failed to provide evidence of cancellation of a bill from a client, resulting in the addition of contractual receipts to the income.
- The appellate order confirmed the addition as no satisfactory explanation or evidence was presented.
- The Tribunal upheld the decision as the assessee did not discharge the burden of proof regarding the dispute with the client or the cancellation of the bill.

Issue 2: Addition of Expenses for Want of Justification
- The AO added a percentage of total expenses to the income due to lack of proper documentation and justification.
- The CIT(A) upheld the addition, stating that the expenses were not proven to be wholly and exclusively for business purposes.
- The Tribunal partially allowed the ground, reducing the disallowance to 10% of the total expenditure, considering the lack of satisfactory evidence.

Issue 3: Addition of Excess Rent Paid
- Discrepancy in rent payments led to the disallowance and addition to income by the AO.
- The CIT(A) rejected the claim of increased rent due to insufficient explanation and evidence.
- The Tribunal upheld the decision, as the increased rent was not supported by a new rent agreement or adequate evidence, leading to the disallowance of the excess payment.

Issue 4: Treatment of Sundry Deposits as Unexplained Investments
- Sundry deposits in the balance sheet without proper explanation were treated as unexplained investments by the AO.
- The CIT(A) confirmed the addition as the assessee failed to provide satisfactory evidence.
- The Tribunal upheld the decision, as no evidence or explanation was presented regarding the source of the deposits, leading to the dismissal of the ground raised by the assessee.

In conclusion, the Tribunal partly allowed the appeal filed by the assessee for the assessment year 2009-10, addressing various issues related to additions to total income, expenses justification, excess rent paid, and treatment of sundry deposits. The decisions were based on the lack of evidence, explanations, and documentation provided by the assessee, leading to the confirmation of additions by the authorities and the Tribunal.