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TMI Blog2018 (9) TMI 962X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessee (since expired) was an individual and was doing business in the name of M/s Mahender Flour Mills. For the impugned assessment year, the assessee filed a return of income declaring a taxable income of Rs. 9,04,654/- and declared gross profit rate of 2.88% and net profit rate of 0.54%. The assessment was completed u/s 144 of the Income Tax Act, 1961 (hereinafter called 'the Act'). As the assessee could file only details in part and had also failed to produce books of accounts, in absence of details of closing stock, the Assessing Officer was of the opinion that in such nature of trade, the normal profit varied between 5% to 7% and he proceeded to make an addition of Rs. 37,13,384/- being 2% of the turnover to the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he addition of Rs. 2,0,50,000/- made by the Assessing Officer on account of disallowance of unconfirmed unsecured loans. 4. Whether the Ld. CIT(A) on the facts and circumstances of the case and in law was correct in deleting the addition of R.s 2,94,521/- made by the Assessing Officer on account of disallowance of unverifiable expenses. 5. In spite of ample opportunity provided to the assessee, the assessee did not cooperated and neither produced the bills and vouchers before the Assessing Officer during the course of assessment proceedings nor any remand report was sought by the Ld. CIT(A) in any of the issues. 6. The appellant craves to leave, to add, alter or amend any ground of appeal raised above at the time of hearing." 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. AR submitted that audited financial statements were available before the AO and that no defects in the said financial statements and auditor's report have been pointed out by the Assessing Officer. The Ld. AR submitted that the method of accounting employed by the assessee is being consistently followed in all the assessment years and the financial statements as well as books of accounts for preceding years were duly accepted and no addition due to difference in GP rate was made. She submitted that the addition is merely on the basis of guesswork and estimations of the Assessing Officer. 4.1 Coming to the addition of Rs. 5 lakh on account of credit card expenses, it was submitted by the Ld. AR that there is no finding of the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that during the course of assessment proceedings, the assessee had submitted the confirmations of the loans from various parties. However, no further query was raised by the AO in this regard. Also, no show cause notice was issued to the assessee in this regard before making the addition. The assessee having submitted the copy of confirmations from various parties has duly discharged his onus of substantiating the claim of unsecured loans. 4.3 With regard to the addition of Rs. 2,94,521/- on account of unverifiable expenses, it was submitted by the Ld. AR that the Ld. CIT (A) has given a relief of Rs. 2,09,712/- out of the addition of Rs. 2,94,521/-. Though, in the department's appeal, they have raised the ground for the whole amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer had audited financial statements before him which had not been adversely qualified by the auditor. Further, the method of accounting followed by the assessee was also being followed consistently since past many assessment years and financial results for the preceding assessment years were duly accepted by the department u/s 143(3) of the Act and no addition on account of difference in GP rate was made. It is apparent that this addition has been made merely on the basis of assumptions and guess work on the part of the Assessing Officer without bringing any cogent evidence on record in support of the assumptions made by the Assessing Officer. Therefore, we find no reason to interfere with the findings of the Ld. CIT (A) on this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is also verifiable from Form 3CD which has been filed by the assessee along with the tax audit report. The Ld. Sr. DR has also not been able to negate this factual finding of the Ld. CIT (A). Therefore, on facts, we find no reason to interfere on this issue also and we uphold the order of the Ld. CIT (A) and dismiss the ground raised by the department. 5.3 The last challenge of the department is against the deletion of addition of Rs. 2,94,521/- being ad hoc disallowance out of salary, labour charges, repair and maintenance and staff welfare expense and the Ld. CIT (A) has deleted the amounts pertaining to salary and labour charges by holding that the expenses on salary and labour charges cannot involve any element of personal nature. Thu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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