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Income Tax Appellate Tribunal, Hyderabad ‘ B ‘ SMC Bench, Hyderabad
Before: Smt. P. Madhavi Devi
This is assessee’s appeal for the A.Y 2014-15 against the order of the CIT (A)-7, Hyderabad, dated 17.11.2017.
Brief facts of the case are that the assessee, an individual, engaged in the business of retailing of petroleum products, in the name and style of M/s. Jayaleela Filling Station, and also deriving income from salary, filed her return of income on 26.9.2014, admitting total income of Rs.8,72,529/-.
During the assessment proceedings u/s 143(3), the assessee was directed to file certain information. The assessee filed the information and after verification of the same, the AO found that the assessee has debited certain expenditure to the P&L A/c with regard to the dress maintenance, bunk maintenance, repairs & maintenance, general expenses, conveyance, generator maintenance, staff welfare, tanker batta Page 1 of 4 of 2018 Vandana Reddy Alva Hyderabad.
and vehicle maintenance etc., totaling to Rs.21,05,401/-. Some of the vouchers and bills were hand-made and some did not contain name and address of the recipient. In some bills, there was no signature of the recipient etc., Therefore, he held that they are not susceptible for verification. Therefore, he disallowed 25% of the expenditure which amounted to Rs.5,26,350/-.
Further, the AO also observed that the assessee has shown unsecured loan of Rs.10.00 lakhs from Shri T.R. Papalal who is the father of the assessee. When the assessee did not file the confirmation letter, the AO doubted the identity of the creditor and the genuineness of the loans. Therefore, he has treated it as unexplained the cash credit and brought it to tax. Aggrieved, the assessee preferred an appeal before the CIT (A) who dismissed the same and the assessee is in second appeal before the Tribunal by raising the following grounds of appeal: “1. The order of the learned CIT (A) is erroneous both on facts and in law. 2. the learned CIT (A) is erred in confirming the addition of Rs.5,26,350 made by the AO by disallowing 25% of the expenditure. 3. the learned CIT (A) is erred in confirming the addition of Rs.10.00 lakhs made by the AO disbelieving the cash credit received from Shri T.R. Papalal.
4. Any other ground that may be urged at the time of hearing”.
5. Having heard both the parties who relied upon their contentions made before the respective authorities below, I find that the expenditure has been disallowed by the AO because some of the bills and vouchers did not contain the names or signatures of the relevant persons. However, I am of the opinion that the disallowance of 25% of the total expenditure is very high. of 2018 Vandana Reddy Alva Hyderabad.
Therefore, I direct the AO to restrict the disallowance to 10% of the total expenditure i.e. Rs.21,05,401/-.
With regard to the cash credit received from the assessee’s father and the assessee’s failure to furnish confirmation letter from her father in the proceedings before the authorities below, the assessee explained that she was not in talking terms with her father and therefore, was not able to produce confirmation letters. However, the assessee has filed paper book and the additional evidence in which she has filed the copies of the suit filed by the assessee’s father against the assessee before the Civil Court wherein the assessee’s father had clearly shown Rs.10.00 lakhs as receivable from the assessee. Thus, the assessee has been able to prove prima facie as it is a loan from her father. Since the evidence is filed for the first time before the Tribunal, I deem it fit and proper to remand this issue to the file of the AO with a direction to verify and if the assessee’s father has filed the civil suit for the amount of Rs.10.00 lakhs, which is the subject matter of addition before us, then the same should be accepted by the AO and no addition is to be made.
In the result, assessee’s appeal is partly allowed for statistical purposes. Order pronounced in the Open Court on 8th January, 2020.