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2023 (2) TMI 569 - AT - Income TaxAddition on account of advance against the properties - HELD THAT - We find that the Ld. CIT(A) after considering the submission of assessee held that claim of assessee do not inspire confidence as no explanation was given as to why all properties were offered for sale and advances were received in cash. The assessee has no explanation about such fact as to why all the properties were put on sale. Before us, besides repeating the similar stand, which was submitted before AO, assessee submitted that the said advances were repaid in next/ subsequent year. We find that no such pleas were taken before assessing officer that the advances were returned either on 28.02.2013, 23.03.2013 or 28.03.2013 after withdrawals from Federal Bank that such advances were repaid in cash. Assessee has improved his explanation step-by-step and instead of explaining facts in a proper manner at respective stage, took a contradictory stand i.e., in the balance-sheet, they have shown unsecured, on show cause notice by AO took the plea that advances, which was not proved the advances against all the commercial and residential properties. CIT(A) the assessee submitted that complete evidences were produced. Now before us, assessee went one step ahead by taking plea that such advances were refunded in next assessment year. No reason to interfere with the order of Ld. CIT(A). The ratio of case laws relied by for the assessee are not applicable on the facts of the present case before hand as the assessee has taken different stand before different authorities and that too without discharging his onus during the assessment proceedings. Moreover, entire transactions were shown in cash. This ground No.1 of assessee is dismissed. Unexplained transaction of loan - addition of loan transaction from three persons as assessee failed to prove the identity, creditworthiness and genuineness of such transactions by furnish required details - HELD THAT - On perusal of detailed furnished by assessee we find that assessee has received loan from Meenaben on 02.09.2011 and 08.09.2011 by way of transfer through banking channel. Similarly, loan from Shivabhai Rajani was received by assessee on 17.02.2012 and loan was repaid to Meena V Andani on 23.05.2015 and 25.03.2015 through banking channel RTGS process. The relevant entry in the bank statement of assessee of Federal Bank is available filed by the assessee. We find that repaid of loan had been accepted by Revenue in subsequent assessment year, so no addition loan in the year under consideration can be added as has been held by Hon'ble jurisdictional High Court in the case of CIT vs. Ayachi Chandrasekhar Narsangji 2013 (12) TMI 372 - GUJARAT HIGH COURT AO held that no details were furnished to substantiate the transaction of loan. However, before Ld. CIT(A) the assessee furnished detailed of loan transaction as has been recorded - However, no investigation of assessee carried out either by CIT(A) or through office of AO. Therefore, in absence of any adverse evidence, the disallowance of loan when the assessee has discharged his primary onus in furnishing requisites details of lender and assessee was not justified. Hence, we direct the AO to delete the addition of Rs.5.00 lakh and Rs.3.00 lakh respectively on account of loan received from Meena V. Andani and Shivabhai Rajani. We order accordingly. These grounds No.3 4 of assessee is allowed. Disallowance of various expenses - assessee submits that assessee claimed various expenses like salary of staff, depreciation on motor car, two wheelers, electric consumption, telephone bill, software expenses, insurance expenses and other miscellaneous expenses - HELD THAT - If assessee has not proved entire expenses beyond doubt, nor the Assessing Officer has investigated or examined whichever item of the expenses incurred is genuine or not, 100% of disallowance of expenses is not justified. Therefore, keeping in view the nature of assessees business as has been accepted by the lower authorities, we find that disallowance @ 25% of expenses would meet to ends of justice and possibility of revenue leakage. Therefore, we deem it appropriate to restrict the disallowance @ 25% Rs.6,36,925/- with a rider that same shall not be treated as a precedent in any other assessment year as in each year the assessee has to substantiate the expense.
Issues Involved:
1. Unexplained cash credit of Rs.21,72,500/- 2. Addition under section 68 on account of unsecured loan of Rs.8,00,000/- 3. Disallowance of various expenses of Rs.6,36,925/- Issue-wise Detailed Analysis: 1. Unexplained Cash Credit of Rs.21,72,500/-: The assessee contended that the amount of Rs.21,72,500/- was not an unsecured loan but an advance received from various persons against the proposed sale of properties. The Assessing Officer (AO) found discrepancies, such as one property not appearing in the balance sheet and advances being received in cash without proper documentation. The AO treated the amount as unexplained cash credits due to the lack of evidence and the nature of the transactions. The Commissioner of Income-tax (Appeals) [CIT(A)] upheld the AO's decision, noting the absence of cogent explanations for the discrepancies and the unrealistic nature of the transactions. The Tribunal found that the assessee's explanations were inconsistent and unsupported by evidence, leading to the dismissal of this ground of appeal. 2. Addition under Section 68 on Account of Unsecured Loan of Rs.8,00,000/-: The AO added Rs.11,62,720/- as income, citing the assessee's failure to provide confirmations, income tax returns, and bank statements for the loans. The CIT(A) deleted the addition for the loan from Deepak Desani (Rs.3,62,720/-) based on the evidence provided but upheld the additions for loans from Meenaben V. Andani (Rs.5,00,000/-) and Shivabhai Rajani (Rs.3,00,000/-) due to the lack of details. The Tribunal reviewed the evidence, including bank statements and repayment records, and concluded that the assessee had discharged his onus of proving the genuineness of the loans. Consequently, the Tribunal directed the AO to delete the additions for loans from Meenaben V. Andani and Shivabhai Rajani, allowing these grounds of appeal. 3. Disallowance of Various Expenses of Rs.6,36,925/-: The AO disallowed the entire amount of claimed expenses, citing inadequate evidence and self-made vouchers. The CIT(A) acknowledged that the nature of the assessee's business required some expenses but upheld the disallowance due to insufficient substantiation. The Tribunal found the CIT(A)'s findings contradictory, noting that while the necessity of expenses was recognized, the entire disallowance was not justified. The Tribunal deemed a 25% disallowance of the expenses as appropriate, partially allowing this ground of appeal. Conclusion: The Tribunal partly allowed the appeal, confirming the addition of unexplained cash credits, deleting the additions of unsecured loans, and restricting the disallowance of expenses to 25%. The judgment emphasizes the importance of consistent and substantiated explanations in tax assessments.
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