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TMI Blog2014 (1) TMI 1932X X X X Extracts X X X X X X X X Extracts X X X X ..... orities below nor before us, the assessee has produced the supporting evidences; therefore, the view taken by the ld. CIT(A) confirming the disallowance of Rs.18,000/- is upheld. This ground of appeal is rejected. Disallowance of computer expenses - assessee failed to produce relevant bills - HELD THAT:- As assessee fairly admitted that the same is not traceable. In this view of the matter, we decline to interfere. This ground of appeal is rejected. Disallowance of interest - Interest free advances - assessee was paying interest, but has advanced interest free loan to the same person to whom interest has been paid in the proprietary concern and in one case, same was claimed to be advance to a friend of the assessee but no interest has been charged on the same - HELD THAT:- DR has not disputed the availability of interest free advance in personal books of accounts of the assessee as on 31.03.2005. The advance to Falguni A Shah and Anup A Shah (HUF) were made by the assessee out of capital balance available in the personal books of accounts and therefore no disallowance is called for. The advance to Online Business System Rs.205000/- is a business advance given to obtain franchisee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of Rs.18000 claimed as a business expense (out of credit card). (iii) Holding the disallowance of Rs.13,100 out of computer expenses. (iv) Holding the addition in respect of alleged low G.P. to the extent of Rs.15,60,234. On the facts and circumstances of the case the addition retained in the appeal order deserves to be deleted and the returned income be accepted as the assessed income. Your appellant craves leave to add, alter amend and / or withdraw any of the ground stated here above." 3. The grounds raised by the Revenue in its appeal are as under:- "1. The ld. CIT(A)-III, Rajkot has erred in law and on facts in restricting the addition up to Rs.5,51,313/- and deleting the addition of Rs.2,25,856/- out of total addition of Rs.7,77,169/- made on a/c of disallowance of interest u/s 40A(2)(b). 2. The ld. CIT(A)-III, Rajkot has erred in law and on facts in deleting the addition of Rs.40,135/- made on a/c of disallowance of interest. 3. The ld. CIT(A)-III, Rajkot has erred in law and on facts in restricting the addition up to Rs.15,60,234/- and deleting the addition of Rs.50,01,265/- out of total addition of Rs.65,61,499/- made on a/c of low GP. 4. The ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Neither before both the authorities below nor before us, the assessee has produced the supporting evidences; therefore, the view taken by the ld. CIT(A) confirming the disallowance of Rs.18,000/- is upheld. This ground of appeal is rejected. 7. Ground No.2 (iii) of assessee's appeal is against confirming the disallowance of Rs.13,100/- out of computer expenses. 7.1 We have heard both the sides. The Assessing Officer made this disallowance as the assessee failed to produce relevant bills. Before us, the ld. Counsel of the assessee fairly admitted that the same is not traceable. In this view of the matter, we decline to interfere. This ground of appeal is rejected. 8. Ground No.2 of Revenue's appeal is against deleting the addition of Rs.40,135/- made on account of disallowance of interest. The Assessing Officer has discussed this issue on page No.2 at paragraph No.4 of the assessment order. According to the Assessing Officer, the assessee was paying interest, but has advanced interest free loan to the same person to whom interest has been paid in the proprietary concern and in one case, same was claimed to be advance to a friend of the assessee but no interest has been charged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee explained that looking to the capital available in personal books of accounts as on 31.03.2005 which is about one crore rupees, no disallowance out of interest free advance given to three parties is called for. 8.3 Rival submissions were considered. The ld. DR has not disputed the availability of interest free advance in personal books of accounts of the assessee as on 31.03.2005. The advance to Falguni A Shah Rs.114456/- and Rs.15000 to Anup A Shah (HUF) were made by the assessee out of capital balance available in the personal books of accounts and therefore no disallowance is called for. The advance to Online Business System Rs.205000/- is a business advance given to obtain franchisee. Therefore, on this advance also no notional interest can be charged. Looking to the conspicuous facts of the case as brought on record by the ld. CIT(A) in the impugned order, we are convinced that there was no necessity to work out the notional interest and made disallowance of Rs.40135/-. The view taken by the ld. CIT(A) in the impugned order in this regard is upheld and ground of this appeal is rejected. 9. Now we take up the ground No.2 (iv) of assessee's appeal and ground No.3 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g admissibility of the same and also comments on the new/additional evidences by 15.10.2008. Thereafter, ld. CIT(A) issued reminders vide letter dated 25.11.2008, 06.04.2009 and 24.07.2009. However, no remand report was submitted by the Assessing Officer. Thereafter, the ld. CIT(A) issued final reminder on 04.11.2009 to submit the remand report by 16.11.2009. Despite this final reminder also, no remand report was received after lapse of 12 months. Therefore, the ld. CIT(A) decided the appeal on the basis of material available, after admitting the additional evidences which according to him falls in the category of clause (c) and (d) under Rule 46A and confirmed the addition of Rs.1560234/- and deleted the balance addition of Rs.5001265 for the detailed reason given in paragraph 7.3, which reads as under:- "7.3 I have carefully considered the finding given by the Assessing Officer and the submission of the AR of the appellant. Keeping in view the evidences available, it is now evident that the defects pointed out by the Assessing Officer have been reconciled by the appellant in the appellate proceedings that the confirmations of the three parties to whom payments have been made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e shortfall of 1.83%, the addition of Rs.1560234/- is being confirmed and rest of addition of Rs.5001265/- (6561499 - 1560234) is hereby ordered to be deleted. This ground of appeal is partly allowed." Aggrieved with the order of ld. CIT(A), both the sides are in appeal before this Tribunal. 9.4 At the time of hearing before us, on behalf of the assessee Shri S.N. Divatia, Advocate, appeared and pointed out that before the ld. CIT(A) the assessee submitted the additional evidences. The ld. CIT(A) called for remand report. Since the Assessing Officer was not submitting the remand report, the ld. CIT(A) rejected the explanation of the assessee on doubts and suspicion without verifying the Q-tally filed by the assessee. He submitted that the assessee is a 100% exporter. In most of the time he makes purchases on receipt of export order, therefore in few cases the assessee incurred losses. The loss so incurred is also liable as business expenditure. It is only on account of earning low profit or incurring loss in few transactions, the GP declared in the assessment year under appeal is low as compared to last year. He submitted that each and every entry in the books of accounts is su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) has deleted the addition for the detailed reason given in paragraph 9.2 which reads as under:- "9.2 I have carefully considered the finding given by the Assessing Officer and the submission of the AR of the appellant. It is noticed that the Assessing Officer has not given any finding regarding low household expenses. There is nothing on record to suggest that appellant has incurred more expenditure on household than what has been shown by the appellant towards household expenditure. Considering the standard of leaving, the withdrawal amount of Rs.72800 appears to be sufficient. There appears no reason for making such estimated addition. The Assessing Officer has not verified the expenses incurred by the appellant towards household in detail and same was also not brought on record to suggest otherwise. Therefore, in absence of existence of any material on record indicating more expenditure done by the appellant towards household expenses, the addition of Rs.50000/- made by the Assessing Officer is based on surmises and conjectures, and therefore, devoid of any merits and deserves to be deleted. Accordingly, the addition of Rs.50000/- made by the Assessing Officer is hereby ..... X X X X Extracts X X X X X X X X Extracts X X X X
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