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TMI Blog2013 (8) TMI 822X X X X Extracts X X X X X X X X Extracts X X X X ..... declaring nil income. The return was processed u/s.143(1) on 05.03.2009 resulting in nil demand. Subsequently, the case was selected for scrutiny and statutory notices were issued. The assessment was completed and the Assessing Officer made the following additions: i) Towards share capital Rs. 28,15,000/- ii) Towards salary Rs. 1,02,000/- iii) Director s remuneration Rs. 24,000/- iv) Disallowance of furniture Rs. 2,69,309/- v) Purchase of computers/software Rs. 1,24,000/- 3. The assessee company was incorporated on 15.2.2006. The Directors of the company with their respective capital investments are mentioned below: S.No. Name of Directors Amount Invested (Rs.) 1. Sri Syed Asadullah Hussaini 10,00,000 2. Smt Rasheeds Begum 9,00,000 3. Sri Syed Armanullah Hussaini 9,15,000 TOTAL 28,15,000 4. From the capital accounts of the Directors produced by the Authorised Representative, it can be seen that the capital investments made by all the Directors mentioned above was in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ided any details like when was the cheque given to Sri Armunallah, when was the cheque encashed by Sri Armanullah, was this money transferred to Sri Armanullah s bank account, when were withdrawals made etc. The Assessing Officer held that there is no clarity on whether all the money given by his grandfather was invested in the Company only or was used for other purposes. Even the dates of withdrawals and investments do not coincide or appear logical. The Assessing Officer further held that in the absence of above details in case of how the money was invested by Sri Armanullah in the Company on different dates, the capital investments made by Sri Armanullah to the extent of Rs.9,15,000/- is treated as unexplained investment in the hands of the Company and the same is added back to the total income of the Company as its income. 7. In the case of Sri Syed Asadullah Hussaini s capital investment, bank statement was produced in reply to show cause notice. When the capital account of Sri Asadullah and the bank statement were compared, the dates of cash withdrawals from banks did not match with capital investment dates as shown in the capital account. The Assessing Officer held that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as received by cheque and deposited in the bank account on 6.1.2007. A copy of the confirmation letter from the grandfather, bank statement has been filed before me. As seen from the bank statement, an amount of Rs.6,00,000/- was received by Sri Syed Armanullah Hussaini on 6.1.2007. The source of investment to the extent of Rs.5,00,000/- stands explained as Rs.5,00,000/- has been invested on two dates after withdrawal from the bank account. As regards the balance capital of Rs.4,15,000/-, the learned Authorised Representative requested that the appellant may be permitted to accept disallowance of Rs.4,15,000/- out of the capital investment of Rs.9,15,000/-. A letter to the effect was filed during the appeal proceedings. In the light of the above, the disallowance of the capital introduced by Sri Syed Armanullah Hussaini is restricted to Rs.4,35,000/-. 12. As regards the next issue is disallowance of Rs.1,02,000/- towards salaries paid to employees, we find that the signatures of the employees were being taken on the day book on the day of disbursement of the salary and a copy of the day book evidencing such payments was produced during the appeal proceedings. The CIT(A) has delet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gift amount of Rs.5,00,000 received by Syed Armanullah Hussaini from his grand father Syed Mir Hussain has been credited/deposited into the company s BANK account before satisfying that the amount is explained. 7. The CIT(A) erred in allowing relief of Rs.1,02,000/- on account of salaries paid to employees, considering the additional evidence of a copy of day book showing salary payments. 8. The CIT(A) erred in giving relief of Rs.33,400/-, accepting the additional evidence of a purchase order copy of a computer for the amount, which was not produced before the Assessing Officer during the course of assessment proceedings. 9. The CIT(A) erred in deleting the addition of Rs.24,000/- towards director s remuneration, without verifying bank withdrawals for the purpose of paying remuneration to the Director. 10. The order passed by the CIT(A) is not in line with the provisions of Rule 46A of IT Rules, 1962. 15. Before us, the prime contention of the learned DR is that the order passed by the CIT(A) is not in line with the provisions of Rule 46A of IT Rules, 1962, for the following reasons: i) In the case of Sri Syed Armanullah Hussaini, additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sec.69 of the I.T. Act. 21. In the departmental appeal with respect to this issue we have remitted it back to the files of Assessing Officer for deciding the issue denovo after examining the evidences produced before the CIT(A). Hence, this issue is also set aside to be decided by the Assessing Officer accordingly. Ground No. 2 is allowed for statistical purposes. 22. Ground No. 3 is relating to disallowance of Rs.2,69,309/- towards furniture. 23. It was submitted by the assessee that the entire work of furniture was entrusted to Osmani Associates, Karimnagar. The assessee submitted before the Assessing Officer that the furniture work was given on contract basis. In the absence of any details of contract agreement, the Assessing Officer concluded that as no TDS was made on the payment of Rs.2,69,309/- to M/s. Omani Associates, the total amount of Rs.2,69,309/- was liable to tax. It was submitted that the expenditure incurred was capital in nature. On appeal, the CIT(A) decided that since no evidence for payment was made available the TDS provisions were applicable to the contract given to M/s. Omani Associates. Hence he confirmed the disallowance u/s.40(a)(ia) made by the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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