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TMI Blog2021 (1) TMI 850X X X X Extracts X X X X X X X X Extracts X X X X ..... balance and brought forward from the preceding year and then decide the issue afresh. Disallowances of expenses - assessee has failed to furnish any satisfactory explanation for the downfall of the GP and NP during the year under consideration as well as supporting evidence of the expenses - Addition confirmed by the CIT(A) to the extent of 5% as against 25% made by the Assessing Officer - HELD THAT:- From the details of the expenditure, it is noted that the expenditure under the head shop and office rent cannot be doubted as it is a recurring expenditure and the amount debited in the P L account cannot be disallowed on percentage basis. Accordingly, the disallowance of 5% as confirmed by the ld. CIT(A) on the shop and office rent is deleted. So far as the disallowance of 5% in respect of the other expenditure is concerned since, the assessee has failed to produce the supporting bills and vouchers to establish that the said expenditure has been incurred wholly and exclusively for the business purpose the 5% disallowance is reasonable and proper. Accordingly, the disallowance made by the ld. CIT(A) is restricted to the expenses other than shop and office rent. - ITA No.378/AL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsons, who have not filed the return of income. The Assessing Officer issued notice u/s. 142(1) and call the assessee to furnish the details of sundry creditors gross receipt and details of various expenses. The Assessing Officer has noted that despite number of opportunities given the assessee has not furnished the requisite information and details in respect of the sundry creditors/ loan as well as expenses. The Assessing Officer has also issued notice u/s. 133(6) to various persons from whom unsecured loan were claimed. From the replies, it was found that most of the persons are return filer except one Smt. Sharda Singh who is household lady and claimed to have given a sum of ₹ 5,45,000/-. The Assessing Officer accepted the unsecured loan in respect of the other persons except the amount of ₹ 5,45,000/- shown from Smt. Sharda Singh. The Assessing Officer held that the loan creditor has no source of income and therefore, the creditworthiness of the creditor is not genuine. Accordingly, the Assessing Officer made the addition of the said amount of ₹ 5,45,000/- as bogus sundry creditor. The assessee challenged the action of the Assessing Officer before the CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer conducted an enquiry by issuing notice u/s. 133 (6) to the various loan creditors. From the reply, the Assessing Officer noted that all the other loan creditors are income tax return filer except one Smt. Sharda Singh who has claimed to have given ₹ 5,45,000/- to assessee. The ld. CIT(A) confirmed this addition of ₹ 5,45,000/- on the ground that assessee has failed to prove identity, creditworthiness and genuineness of the transaction. The assessee has explained the fact that this loan was taken in the preceding year and it is only an opening balance as on 01.04.2013. This fact has not been examined by the ld. CIT(A) while confirming the addition. If the loan was introduced in the preceding year and the Assessing Officer while passing the assessment order u/s. 143(3) for the AY 2013-14 has not doubted the genuineness of the loan then the same cannot be held as a bogus sundry creditor for the year under consideration. It is noted that neither the Assessing Officer nor the CIT(A) has verified and consider this explanation of the assessee that this amount is only a brought forward amount and shown as opening balance and no new loan was taken from Smt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder consideration/ The assessee was provided a number of opportunities to substantiate the GP as well as NP as well as the income shown in the ITR and to explain the downfall if any, but he failed to furnish any satisfactory explanation for the same. On examination of the bills/vouchers in respect of expenses under different heads it is noticed that the expenses under the following heads were not found fully vouched. i) Shop office rent ₹ 2,88,000/- ii) Office shop expenses ₹ 94,603/- iii) Staff welfare expenses ₹ 1,91,660/- iv) Vehicle running maintenance ₹ 61,480/- v) Travelling conveyance expenses ₹ 32,279/- Total ₹ 6,68,022/- Therefore, a reasonable amount @25% of the expenses under the aforementioned heads totaling to ₹ 6,68,022/- which comes to ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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