Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, MUMBAI BENCH “SMC” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI SANDEEP SINGH KARHAIL
PER OM PRAKASH KANT, AM This appeal by the assessee through the legal heir, has been preferred against the order dated 03/04/2019 passed by the Ld.
Late Shri Mohan Raj Chhajed Late Shri Mohan Raj Chhajed 2 ITA No. 193/Jodh/2019
Commissioner of Income of Income-tax (Appeals)-1, Jodhpur [in short 1, Jodhpur [in short ‘the Ld.
CIT(A)’] for assessment year 2012 ] for assessment year 2012-13, raising following grounds: 13, raising following grounds:
On the facts and circumstances of the case, the lea On the facts and circumstances of the case, the lea On the facts and circumstances of the case, the learned Commissioner of Income Tax (Appeal) erred in confirming the Commissioner of Income Tax (Appeal) erred in confirming the Commissioner of Income Tax (Appeal) erred in confirming the order of Ld. Assessing Officer without appreciating that the order of Ld. Assessing Officer without appreciating that the order of Ld. Assessing Officer without appreciating that the Assessing Officer erred in rejecting the books of accounts Assessing Officer erred in rejecting the books of accounts Assessing Officer erred in rejecting the books of accounts U/s.145(3) without pinpointing out any discrepancies in Audited U/s.145(3) without pinpointing out any discrepancies in Audited U/s.145(3) without pinpointing out any discrepancies in Audited Books of Accounts U/s.44AD, moreover, when the complete books f Accounts U/s.44AD, moreover, when the complete books f Accounts U/s.44AD, moreover, when the complete books of accounts were produced during the course of assessment. of accounts were produced during the course of assessment. of accounts were produced during the course of assessment. 2. 2. On the facts and circumstances of the case and law, the learned 2. On the facts and circumstances of the case and law, the learned 2. On the facts and circumstances of the case and law, the learned Commissioner of Commissioner of Income Tax (Appeal) erred in confirming the Income Tax (Appeal) erred in confirming the order passed by order passed by the learned Assessing Officer Us.143(3) of the Officer Us.143(3) of the Income Tax Act after rejection of books U/s.145(3) Income Tax Act after rejection of books U/s.145(3) Income Tax Act after rejection of books U/s.145(3) without appreciating that as required U/s.145(3) the Assessment Order appreciating that as required U/s.145(3) the Assessment Order appreciating that as required U/s.145(3) the Assessment Order can only be can only be passed U/s.144 and therefore the assessment is bad in passed U/s.144 and therefore the assessment is bad in law and needs to be s law and needs to be set aside. 3. 3. On the facts and circumstances of the case, the learned 3. On the facts and circumstances of the case, the learned 3. On the facts and circumstances of the case, the learned Commissioner of Income Tax Commissioner of Income Tax (Appeal) erred in confirming the (Appeal) erred in confirming the turnover being less than Rs.60,00,000/ turnover being less than Rs.60,00,000/-, the maximum addition if maximum addition if any had to be restricted to 8% of the Net Profit U/s.44AD. any had to be restricted to 8% of the Net Profit U/s.44AD. any had to be restricted to 8% of the Net Profit U/s.44AD. 4. 4. On the facts and circumstances of the case, the learned On the facts and circumstances of the case, the learned On the facts and circumstances of the case, the learned Commissioner of Income Tax Commissioner of Income Tax (Appeal) failed to appreciate that (Appeal) failed to appreciate that once the addition is made on the rejection of books once the addition is made on the rejection of books of accounts estimating gross profit, there could be no further addition but he estimating gross profit, there could be no further addition but he estimating gross profit, there could be no further addition but he proceeded with making further additions on other aspects. proceeded with making further additions on other aspects. proceeded with making further additions on other aspects. 5. On the facts and circumstances of the case, the learned On the facts and circumstances of the case, the learned On the facts and circumstances of the case, the learned Commissioner of Income Tax Commissioner of Income Tax (Appeal) erred in confirming the (Appeal) erred in confirming the
Late Shri Mohan Raj Chhajed Late Shri Mohan Raj Chhajed 3 ITA No. 193/Jodh/2019
addition of Rs.6,21,102/ addition of Rs.6,21,102/- on account of shortage on account of shortage of Gwar commodity without appreci commodity without appreciating that the said stock was booked ating that the said stock was booked as shortage as shortage in the current year as the same was received short. in the current year as the same was received short. 6. 6. On the facts and circumstances of the case, the learned 6. On the facts and circumstances of the case, the learned 6. On the facts and circumstances of the case, the learned Commissioner of Income Tax Commissioner of Income Tax (Appeal) erred in confirming the (Appeal) erred in confirming the addition of Rs.18,791/ addition of Rs.18,791/- on account of excess stock of Chana of of Chana of around 876 kgs. When the same were already recorded in the around 876 kgs. When the same were already recorded in the around 876 kgs. When the same were already recorded in the books of accounts and the profit thereof was included in the accounts and the profit thereof was included in the accounts and the profit thereof was included in the trading results. trading results. 7. 7. On the facts and circumstances of the case, the learned On the facts and circumstances of the case, the learned On the facts and circumstances of the case, the learned Commissioner of Income Tax Commissioner of Income Tax (Appeal) erred in confirming the l) erred in confirming the addition of Rs.3,75,000/ addition of Rs.3,75,000/- on account of transactions entered on transactions entered on Thok-khata basis without appreciating that same were khata basis without appreciating that same were khata basis without appreciating that same were regular business hedge transactions entered to safe guard the interest of business hedge transactions entered to safe guard the interest of business hedge transactions entered to safe guard the interest of Appellant's Appellant's business from undue price fluctuations prevalent in fluctuations prevalent in the Gwar commodity rather the Gwar commodity rather than transfer of profits. 8. 8. On the facts and circumstances of the case, the learned 8. On the facts and circumstances of the case, the learned 8. On the facts and circumstances of the case, the learned Commissioner of Income Tax Commissioner of Income Tax (Appeal) erred in confirming the (Appeal) erred in confirming the disallowance of Rs.1,68,262/ disallowance of Rs.1,68,262/- on account of certain interes certain interest free advance, without appreciating that the Appellant was having advance, without appreciating that the Appellant was having advance, without appreciating that the Appellant was having sufficient interest free funds from which the said advances were sufficient interest free funds from which the said advances were sufficient interest free funds from which the said advances were made and therefore made and therefore did not require any disallowance… did not require any disallowance…
Briefly stated facts of the case are that assessee was stated facts of the case are that assessee was stated facts of the case are that assessee was engaged in trading of grain, oilseeds, ‘Gwar’, ‘Chana’ and other pulses under his ading of grain, oilseeds, ‘Gwar’, ‘Chana’ and other pulses under his ading of grain, oilseeds, ‘Gwar’, ‘Chana’ and other pulses under his proprietary firm namely proprietary firm namely ‘M/s Mohanraj Chajjer’, Pali , Pali (Rajasthan). The assessee also shown purchases of agriculture produces from the The assessee also shown purchases of agriculture produces from the The assessee also shown purchases of agriculture produces from the
Late Shri Mohan Raj Chhajed Late Shri Mohan Raj Chhajed 4 ITA No. 193/Jodh/2019
farmers/dealers and then sold in the open market and also earned farmers/dealers and then sold in the open market and also earned farmers/dealers and then sold in the open market and also earned commission income from sale of agriculture produces. For the year commission income from sale of agriculture produces. For the year commission income from sale of agriculture produces. For the year under consideration, the assessee filed return of income on under consideration, the assessee filed return of income on under consideration, the assessee filed return of income on 22/09/2012 declaring total income of 22/09/2012 declaring total income of ₹2,43,160/- -. The return of income when filed by the filed by the assessee was selected for the scrutiny assessee was selected for the scrutiny any statutory notices under the Income tutory notices under the Income-tax Act, 1961 (in short , 1961 (in short ‘the Act’) were issued and complied with. During assessment proceeding the were issued and complied with. During assessment proceeding the were issued and complied with. During assessment proceeding the Assessing Officer observed various defects/discrepancie observed various defects/discrepancies in the observed various defects/discrepancie books of accounts maintained by the assessee and therefore books of accounts maintained by the assessee and therefore books of accounts maintained by the assessee and therefore invoking section 145(3) of the invoking section 145(3) of the Act, rejected books of accounts of the , rejected books of accounts of the assessee and applied gross assessee and applied gross profit at the rate of 22.19% ( profit at the rate of 22.19% (the rate which was declared in the immediately preceding asse was declared in the immediately preceding asse was declared in the immediately preceding assessment year) on the sales during the year u on the sales during the year under consideration and computed nder consideration and computed gross profit accordingly at gross profit accordingly at ₹16,41,583/- as against gross profit of as against gross profit of ₹5,91,785/- declared by the assessee on gross turnover of declared by the assessee on gross turnover of declared by the assessee on gross turnover of ₹54,10,425/-. The Assessing Officer Assessing Officer also made addition addition for shortage
Late Shri Mohan Raj Chhajed Late Shri Mohan Raj Chhajed 5 ITA No. 193/Jodh/2019
of Gwar (₹9876/- kgs) which was valued at kgs) which was valued at ₹6,21, 6,21,102/-. The Assessing Officer also made addi also made addition for excess ‘Chana’, sold ( tion for excess ‘Chana’, sold (₹876/- Kgs) during the year under consideration amounting to Kgs) during the year under consideration amounting to Kgs) during the year under consideration amounting to ₹18,791/-. The income of ₹3,75,000/ 3,75,000/- shown by the assessee from thok from thok-khata (wholesale account), which has been found by the AO as , which has been found by the AO as , which has been found by the AO as without actual delivery and without any documentary evidence in the form actual delivery and without any documentary evidence in the form actual delivery and without any documentary evidence in the form of purchase/sale bills or any monetary transactions, of purchase/sale bills or any monetary transactions, of purchase/sale bills or any monetary transactions, thus, the Assessing Officer held the amount of held the amount of ₹3,75,000/- as diversion of income to sister concern and therefore accordingly made addition. income to sister concern and therefore accordingly made addition. income to sister concern and therefore accordingly made addition. The Assessing Officer Assessing Officer also disallowed interest amounting to also disallowed interest amounting to ₹1,68,262/- out of the interest expenditure of out of the interest expenditure of ₹ ₹5,99,818/- for interest-free advances to relatives. In this manner free advances to relatives. In this manner free advances to relatives. In this manner, the Assessing Officer after allowing after allowing deduction under Chapter VI-A, A, assessed total income at ₹24,76,120 120/-. The assessee could not succeed before the . The assessee could not succeed before the Ld. CIT(A) and therefore, he is therefore, he is before the Tribunal by way of raising by way of raising the grounds as reproduced above. reproduced above.
Late Shri Mohan Raj Chhajed Late Shri Mohan Raj Chhajed 6 ITA No. 193/Jodh/2019
Before us a paper book Before us a paper book has been filed on behalf of the assessee been filed on behalf of the assessee containing pages 1 to 92. containing pages 1 to 92.
The ground No. 1 to 4 are in respect of addition for gross profit The ground No. 1 to 4 are in respect of addition for gross profit The ground No. 1 to 4 are in respect of addition for gross profit made by the Assessing Officer Assessing Officer.
In ground No. 1 1 the assessee has challenged rejection of boo rejection of books of accounts. According to the assessee no discrepancies have been of accounts. According to the assessee no discrepancies have been of accounts. According to the assessee no discrepancies have been pointed out in the audited books of accounts. The pointed out in the audited books of accounts. The pointed out in the audited books of accounts. The Ld. counsel supported the ground and submitted that except few bonafide supported the ground and submitted that except few bonafide supported the ground and submitted that except few bonafide errors, no discrepancies have been pointed out by the no discrepancies have been pointed out by the Assessing no discrepancies have been pointed out by the Officer and therefore he is not justified in rejecting books of and therefore he is not justified in rejecting books of and therefore he is not justified in rejecting books of accounts of the assessee accounts of the assessee, invoking section 145(3) of the invoking section 145(3) of the Act. The Ld. DR on the other hand submitted that the on the other hand submitted that the Assessing Officer Assessing Officer has duly pointed out defects/discrepancies in quantitative tally of various pointed out defects/discrepancies in quantitative tally of various pointed out defects/discrepancies in quantitative tally of various agriculture products in the audit report agriculture products in the audit report vis-à-vis regular books of regular books of accounts.
Late Shri Mohan Raj Chhajed Late Shri Mohan Raj Chhajed 7 ITA No. 193/Jodh/2019
We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused We have heard rival submission of the parties and perused relevant material on record relevant material on record. We find that Assessing Officer Assessing Officer in para 4.1 of the assessment order has listed the discrepancy of 4.1 of the assessment order has listed the discrepancy of 4.1 of the assessment order has listed the discrepancy of quantitative tally in the audit report vis quantitative tally in the audit report vis-à-vis regular books of vis regular books of accounts. For ready reference relevant para of the assessment order For ready reference relevant para of the assessment order For ready reference relevant para of the assessment order is reproduced as under: is reproduced as under:
4.1 Further, during the examination of books of accounts, various her, during the examination of books of accounts, various her, during the examination of books of accounts, various discrepancies were found which has been discussed as under: discrepancies were found which has been discussed as under: discrepancies were found which has been discussed as under: i. Difference in Quantitative details of Agri Produce i.e Gwar and Difference in Quantitative details of Agri Produce i.e Gwar and Difference in Quantitative details of Agri Produce i.e Gwar and Chana in Audit Report and Regular books of account. Chana in Audit Report and Regular books of account. Chana in Audit Report and Regular books of account. ii. Discrepancy found in S Discrepancy found in Sales of Gwar. iii. Various Agricultural produced has been purchased directly from Various Agricultural produced has been purchased directly from Various Agricultural produced has been purchased directly from the Agriculturist but No documentary evidences i.e. purchase the Agriculturist but No documentary evidences i.e. purchase the Agriculturist but No documentary evidences i.e. purchase bills, Identity i.e. name and addresses of the suppliers, rate of the bills, Identity i.e. name and addresses of the suppliers, rate of the bills, Identity i.e. name and addresses of the suppliers, rate of the produces, etc., were maintained so that genuinen produces, etc., were maintained so that genuineness of quantity ess of quantity of the agricultural produce purchased, could be verified. of the agricultural produce purchased, could be verified. of the agricultural produce purchased, could be verified. iv. The assessee has sold Gwar on Thok Khata basis. Here it is The assessee has sold Gwar on Thok Khata basis. Here it is The assessee has sold Gwar on Thok Khata basis. Here it is pertinent to mention that multiple transaction of the Gwar pertinent to mention that multiple transaction of the Gwar pertinent to mention that multiple transaction of the Gwar (purchase and sale) of same quanity was made but in the entire (purchase and sale) of same quanity was made but in the entire (purchase and sale) of same quanity was made but in the entire process there was no movement of stock was noticed. The stock rocess there was no movement of stock was noticed. The stock rocess there was no movement of stock was noticed. The stock was still lying in the godawn of the assessee. No purchase and was still lying in the godawn of the assessee. No purchase and was still lying in the godawn of the assessee. No purchase and sell bill were raised, not a single monetary transaction has been sell bill were raised, not a single monetary transaction has been sell bill were raised, not a single monetary transaction has been
Late Shri Mohan Raj Chhajed Late Shri Mohan Raj Chhajed 8 ITA No. 193/Jodh/2019
occurred. In absence of any monetary transactions, purchase bill, occurred. In absence of any monetary transactions, purchase bill, occurred. In absence of any monetary transactions, purchase bill, sale bills, genuinity of these transaction could not be established. sale bills, genuinity of these transaction could not be established. sale bills, genuinity of these transaction could not be established. 6.1 Further, we find that we find that Assessing Officer has pointed has pointed out the discrepancy in purchase discrepancy in purchase/sales and closing stock of Gwar. The /sales and closing stock of Gwar. The Assessing Officer has reproduced the quantities as per the aud has reproduced the quantities as per the audit has reproduced the quantities as per the aud report and as per the ledger account of sales. For ready reference, the ledger account of sales. For ready reference, the ledger account of sales. For ready reference, said table is reproduced as under: said table is reproduced as under:
6.2 We find that during assessment proceeding, the assessee find that during assessment proceeding, the assessee find that during assessment proceeding, the assessee himself accepted that 40,000 KG Gwar was sold in preceding himself accepted that 40,000 KG Gwar was sold in preceding himself accepted that 40,000 KG Gwar was sold in preceding assessment year, whereas same assessment year, whereas same could not be recorded in the could not be recorded in the computer and books of accounts, which are the basis of the audit computer and books of accounts, which are the basis of the audit computer and books of accounts, which are the basis of the audit report. The assessee admitted this mistake of wrong quantitative report. The assessee admitted this mistake of wrong quantitative report. The assessee admitted this mistake of wrong quantitative tally in audit report. Similarly tally in audit report. Similarly, the assessee explained discrepancy in the assessee explained discrepancy in
Late Shri Mohan Raj Chhajed Late Shri Mohan Raj Chhajed 9 ITA No. 193/Jodh/2019
of closing stock as due closing stock as due to shortage of Gwar because to shortage of Gwar because same dried up due to hot weather. No satisfactory explanation in respect of the weather. No satisfactory explanation in respect of the weather. No satisfactory explanation in respect of the shortage was provided. Similarly, excess sale of Chana was found by shortage was provided. Similarly, excess sale of Chana was found by shortage was provided. Similarly, excess sale of Chana was found by the Assessing Officer Assessing Officer, which the assessee attempted to explain as attempted to explain as increase in weight due to moisture. ight due to moisture. The assessee also did not The assessee also did not provide few purchase bills/sales bills and identity of the suppliers in provide few purchase bills/sales bills and identity of the suppliers in provide few purchase bills/sales bills and identity of the suppliers in case of purchase of agriculture produces. case of purchase of agriculture produces.
6.3 We find that Ld. CIT(A) upheld the rejection of the books of We find that Ld. CIT(A) upheld the rejection of the books of We find that Ld. CIT(A) upheld the rejection of the books of accounts observing as under: accounts observing as under:
“4.2 I have gone through the facts of the case, assessment order/remand I have gone through the facts of the case, assessment order/remand I have gone through the facts of the case, assessment order/remand report, the appellant’s submissions and rejoinder on the AO’s report. I find report, the appellant’s submissions and rejoinder on the AO’s report. I find report, the appellant’s submissions and rejoinder on the AO’s report. I find that the appellant had not provided purchase bills and sale bills, identity of that the appellant had not provided purchase bills and sale bills, identity of that the appellant had not provided purchase bills and sale bills, identity of the supplier, rate of purchase in the supplier, rate of purchase in respect of purchasing agricultural respect of purchasing agricultural produces. In the instant case, the AO had pointed out specific discrepancies produces. In the instant case, the AO had pointed out specific discrepancies produces. In the instant case, the AO had pointed out specific discrepancies as difference in quantitative details of agri produce in audit report and as difference in quantitative details of agri produce in audit report and as difference in quantitative details of agri produce in audit report and regular books of account. Therefore, in absence of the same the tradi regular books of account. Therefore, in absence of the same the tradi regular books of account. Therefore, in absence of the same the trading activities could not reflect true and correct position of business and hence activities could not reflect true and correct position of business and hence activities could not reflect true and correct position of business and hence the trading results shown by the assessee is not reliable. The AR contended the trading results shown by the assessee is not reliable. The AR contended the trading results shown by the assessee is not reliable. The AR contended that the AO himself had confirmed that the proper books were submitted that the AO himself had confirmed that the proper books were submitted that the AO himself had confirmed that the proper books were submitted and the Purchase Invoices and and the Purchase Invoices and confirmations thereof. since the Appellant confirmations thereof. since the Appellant had submitted the Audited Accounts along with Audit Report and therefore had submitted the Audited Accounts along with Audit Report and therefore had submitted the Audited Accounts along with Audit Report and therefore
Late Shri Mohan Raj Chhajed Late Shri Mohan Raj Chhajed 10 ITA No. 193/Jodh/2019
without pinpointing out the mistake as to completeness of books or non without pinpointing out the mistake as to completeness of books or non without pinpointing out the mistake as to completeness of books or non- compliance with the Accounting Standard as required U/s. 145(3), the compliance with the Accounting Standard as required U/s. 145(3), the compliance with the Accounting Standard as required U/s. 145(3), the rejection of the books is invalid and also the trading addition made on the rejection of the books is invalid and also the trading addition made on the rejection of the books is invalid and also the trading addition made on the basis of rejection of the books applying the gross profit rate of the previous basis of rejection of the books applying the gross profit rate of the previous basis of rejection of the books applying the gross profit rate of the previous AY is invalid.
Here, I refer to the decision of Hon'ble Rajasthan High Court in the case of Here, I refer to the decision of Hon'ble Rajasthan High Court in the case of Here, I refer to the decision of Hon'ble Rajasthan High Court in the case of Narendra Kumar Chaturvedi vs. CIT (2014] 41 taxmann.com 238 a Kumar Chaturvedi vs. CIT (2014] 41 taxmann.com 238 a Kumar Chaturvedi vs. CIT (2014] 41 taxmann.com 238 (Rajasthan) wherein it was held that where Tribunal having considered (Rajasthan) wherein it was held that where Tribunal having considered (Rajasthan) wherein it was held that where Tribunal having considered entire material on record, confirmed a part of addition made to assessee's entire material on record, confirmed a part of addition made to assessee's entire material on record, confirmed a part of addition made to assessee's taxable income, no substantial question of law arose from taxable income, no substantial question of law arose from taxable income, no substantial question of law arose from said order of Tribunal.
The Hon'ble ITAT Rajkot Bench 'E' in the case of ITO vs. Smt. Jayaben K. The Hon'ble ITAT Rajkot Bench 'E' in the case of ITO vs. Smt. Jayaben K. The Hon'ble ITAT Rajkot Bench 'E' in the case of ITO vs. Smt. Jayaben K. Ghelani (2017] 79 taxmann.com 249 (Rajkot Ghelani (2017] 79 taxmann.com 249 (Rajkot - Trib.) held that where Trib.) held that where assessee failed to produce relevant books of account in scrutiny assessment, assessee failed to produce relevant books of account in scrutiny assessment, assessee failed to produce relevant books of account in scrutiny assessment, Assessing Offi Assessing Officer was justified in rejecting book results and making cer was justified in rejecting book results and making addition on estimation basis under section 145(3). The relevant findings of addition on estimation basis under section 145(3). The relevant findings of addition on estimation basis under section 145(3). The relevant findings of Hon'ble ITAT are reproduced as under: Hon'ble ITAT are reproduced as under:-
In the light of the above, if we examine facts of the present case, 10. In the light of the above, if we examine facts of the present case, 10. In the light of the above, if we examine facts of the present case, then it would then it would reveal that the ld.CIT(A) has erred in observing that reveal that the ld.CIT(A) has erred in observing that section 145(3) could not be applied in this case, because, AO could section 145(3) could not be applied in this case, because, AO could section 145(3) could not be applied in this case, because, AO could not examine records as these accounts were not produced before not examine records as these accounts were not produced before not examine records as these accounts were not produced before him. In our opinion section 145(3) contemplates that the AO can him. In our opinion section 145(3) contemplates that the AO can him. In our opinion section 145(3) contemplates that the AO can to estimate the income, if he is unable to deduce true result resort to estimate the income, if he is unable to deduce true result to estimate the income, if he is unable to deduce true result from the accounts or other details. Strictly, books were not from the accounts or other details. Strictly, books were not from the accounts or other details. Strictly, books were not produced before the AO, and it was not rejection of books as such, produced before the AO, and it was not rejection of books as such, produced before the AO, and it was not rejection of books as such, but impliedly it is estimation of income as per section 145(3) of the but impliedly it is estimation of income as per section 145(3) of but impliedly it is estimation of income as per section 145(3) of Act. The ld.CIT(A) has not considered any of these aspects, viz. why Act. The ld.CIT(A) has not considered any of these aspects, viz. why Act. The ld.CIT(A) has not considered any of these aspects, viz. why
Late Shri Mohan Raj Chhajed Late Shri Mohan Raj Chhajed 11 ITA No. 193/Jodh/2019
there is a decline in GP, why assessee does not want to scrutinise its there is a decline in GP, why assessee does not want to scrutinise its there is a decline in GP, why assessee does not want to scrutinise its books of accounts from the AO. Therefore, considering all these books of accounts from the AO. Therefore, considering all these books of accounts from the AO. Therefore, considering all these aspects, we are of the view that the order of the CIT(A) is not aspects, we are of the view that the order of th aspects, we are of the view that the order of th sustainable. Total addition cannot be deleted. As observed in the sustainable. Total addition cannot be deleted. As observed in the sustainable. Total addition cannot be deleted. As observed in the foregoing paragraphs that income even after rejection of books can foregoing paragraphs that income even after rejection of books can foregoing paragraphs that income even after rejection of books can be estimated on some guess work. It is to be estimated keeping in be estimated on some guess work. It is to be estimated keeping in be estimated on some guess work. It is to be estimated keeping in view surrounding facts and circumstances. view surrounding facts and circumstances. In the present case, the In the present case, the assessee herself has shown GP at 4.21% in the immediately assessee herself has shown GP at 4.21% in the immediately assessee herself has shown GP at 4.21% in the immediately preceding year. Therefore, the AO ought to have adopted GP nearby preceding year. Therefore, the AO ought to have adopted GP nearby preceding year. Therefore, the AO ought to have adopted GP nearby this figure and not at 20%. The assessee in her submission before this figure and not at 20%. The assessee in her submission before this figure and not at 20%. The assessee in her submission before the ld.CIT(A) has expressed the rate of the ld.CIT(A) has expressed the rate of at 4.25%. Thus, taking into at 4.25%. Thus, taking into consideration written submissions filed by the assessee before the consideration written submissions filed by the assessee before the consideration written submissions filed by the assessee before the ld.CIT(A) and other material, we deem it appropriate that ends of ld.CIT(A) and other material, we deem it appropriate that ends of ld.CIT(A) and other material, we deem it appropriate that ends of justice would be met, if the gross profit is being calculated at the justice would be met, if the gross profit is being calculated at the justice would be met, if the gross profit is being calculated at the rate of 5.5% (five point f rate of 5.5% (five point five percent) of the total turnover. With the ive percent) of the total turnover. With the above observation, order of the ld.CIT(A) is set aside and the AO is above observation, order of the ld.CIT(A) is set aside and the AO is above observation, order of the ld.CIT(A) is set aside and the AO is directed to recalculate the addition by applying GP at 5.5% (five directed to recalculate the addition by applying GP at 5.5% (five directed to recalculate the addition by applying GP at 5.5% (five point five percent) of the total turnover. The appeal of the Revenue point five percent) of the total turnover. The appeal of the Revenue point five percent) of the total turnover. The appeal of the Revenue is partly allowed for statistical purpose. ly allowed for statistical purpose.
In the instant case, the AO had pointed out specific defects in the books of In the instant case, the AO had pointed out specific defects in the books of In the instant case, the AO had pointed out specific defects in the books of accounts such as there was difference in quantitative details of agri accounts such as there was difference in quantitative details of agri accounts such as there was difference in quantitative details of agri Produce i.e. Gwar and Chana in Audit Report and Regular books of account. Produce i.e. Gwar and Chana in Audit Report and Regular books of account. Produce i.e. Gwar and Chana in Audit Report and Regular books of account. Besides that, various Agricultural produced were purchased directly from Besides that, various Agricultural produced were purchased directly from Besides that, various Agricultural produced were purchased directly from the Agriculturist but No documentary evidences i.e. purchase bills, Identity the Agriculturist but No documentary evidences i.e. purchase bills, Identity the Agriculturist but No documentary evidences i.e. purchase bills, Identity i.e name and addresses of the suppliers, rate of the produces, etc., had been i.e name and addresses of the suppliers, rate of the produces, etc., had been i.e name and addresses of the suppliers, rate of the produces, etc., had been maintained by the appellant maintained by the appellant.
In my view, the above grounds as also the various facts, as mentioned in the In my view, the above grounds as also the various facts, as mentioned in the In my view, the above grounds as also the various facts, as mentioned in the assessment order, were sufficient enough to invoke the provisions of section assessment order, were sufficient enough to invoke the provisions of section assessment order, were sufficient enough to invoke the provisions of section
Late Shri Mohan Raj Chhajed Late Shri Mohan Raj Chhajed 12 ITA No. 193/Jodh/2019
145(3) of the Act. I, therefore, conclude and hold that the AO was well 145(3) of the Act. I, therefore, conclude and hold that the AO was well 145(3) of the Act. I, therefore, conclude and hold that the AO was well justified, both on facts and justified, both on facts and in law, in applying the provisions of section in law, in applying the provisions of section 145(3) of the Act. The ground nos. 1 to 4 of this appeal are dismissed. 145(3) of the Act. The ground nos. 1 to 4 of this appeal are dismissed. 145(3) of the Act. The ground nos. 1 to 4 of this appeal are dismissed.” 6.4 In view of the defect/deficiencies pointed out by the In view of the defect/deficiencies pointed out by the Assessing In view of the defect/deficiencies pointed out by the Officer, which have been partly accepted by the assessee also, we do , which have been partly accepted by the assessee also, we do , which have been partly accepted by the assessee also, we do not find any error in the order of the Ld. CIT(A) in sustaining the not find any error in the order of the Ld. CIT(A) in sustaining the not find any error in the order of the Ld. CIT(A) in sustaining the rejection of books of accounts in the case of the assessee. T rejection of books of accounts in the case of the assessee. T rejection of books of accounts in the case of the assessee. The ground No. one of the appeal is ground No. one of the appeal is accordingly dismissed. accordingly dismissed.
In ground No. 2 2, the assessee has raised the issue that once , the assessee has raised the issue that once section 145(3) has been invoked, the assessment could have been ion 145(3) has been invoked, the assessment could have been ion 145(3) has been invoked, the assessment could have been only passed under section 144 of the only passed under section 144 of the Act, whereas the , whereas the Assessing Officer has passed assessment under section 143(3) of the has passed assessment under section 143(3) of the has passed assessment under section 143(3) of the Act and therefore assessment is bad in law. therefore assessment is bad in law.
We have heard rival submis We have heard rival submission of the parties on the issue in sion of the parties on the issue in dispute and perused the relevant medical record sed the relevant medical record. The . The Ld. counsel of the assessee has claimed that in view of section 145(3) of the the assessee has claimed that in view of section 145(3) of the the assessee has claimed that in view of section 145(3) of the Act, assessment should have been passed assessment should have been passed under the section 144 of the the section 144 of the
Late Shri Mohan Raj Chhajed Late Shri Mohan Raj Chhajed 13 ITA No. 193/Jodh/2019
Act rather than unde under section 143(3) of the Act Act. The relevant provisions of section 145(3) are reproduced as under: section 145(3) are reproduced as under: section 145(3) are reproduced as under:
“145(3) Where the Assessing Officer is not satisfied about the correctness Where the Assessing Officer is not satisfied about the correctness Where the Assessing Officer is not satisfied about the correctness or completeness of the accounts of the assessee, or where the method of or completeness of the accounts of the assessee, or where the method of or completeness of the accounts of the assessee, or where the method of accounting provided in sub provided in sub-section (1) [has not been regularly followed by section (1) [has not been regularly followed by the assessee, or income has not been computed in accordance with the the assessee, or income has not been computed in accordance with the the assessee, or income has not been computed in accordance with the standards notified under standards notified under sub-section (2)], the Assessing Officer may make section (2)], the Assessing Officer may make an assessment in the manner an assessment in the manner provided in section 144]. 9. On perusal of the above provisions, it is evident perusal of the above provisions, it is evident perusal of the above provisions, it is evident that when section 145(3) is invoked, the section 145(3) is invoked, the word “may” has been mentioned for word “may” has been mentioned for making assessment in the manner provided under section 144 of the making assessment in the manner provided under section 144 of the making assessment in the manner provided under section 144 of the Act. The section 145(3) does not specify that scrutiny The section 145(3) does not specify that scrutiny assessment The section 145(3) does not specify that scrutiny post invoking section 145(3) post invoking section 145(3) should be passed under section 144, should be passed under section 144, but it only mention for assessment of income but it only mention for assessment of income but it only mention for assessment of income in the manner provided in section 144 of the provided in section 144 of the Act. The section 144 prescribe . The section 144 prescribe for taking into account all relevant material on record taking into account all relevant material on record taking into account all relevant material on record for making assessment of total income or loss by the assessment of total income or loss by the Assessing Officer Assessing Officer to the best of his judgement and then determine the sum payable by the best of his judgement and then determine the sum payable by the best of his judgement and then determine the sum payable by the
Late Shri Mohan Raj Chhajed Late Shri Mohan Raj Chhajed 14 ITA No. 193/Jodh/2019
assessee on the basis of such assessment. assessee on the basis of such assessment. Thus mandate of the Thus mandate of the section that assessment post invoking of section 145(3) section that assessment post invoking of section 145(3) section that assessment post invoking of section 145(3) should be in the manner of assessment u/s 144 of the Act. the manner of assessment u/s 144 of the Act. In view of the above, In view of the above, the ground of the appeal of the assessee that order should have been the ground of the appeal of the assessee that order should have been the ground of the appeal of the assessee that order should have been passed under section 144 of the passed under section 144 of the Act, is without any basis and , is without any basis and accordingly dismissed. accordingly dismissed.
In ground No. 3 3 the assessee has raised the issue that addition he assessee has raised the issue that addition should have been restricted should have been restricted at the rate of 8% on sales on sales in terms of section 44AD of the Act Act.
The Ld. counsel Ld. counsel of the assessee submitted that turnover of the of the assessee submitted that turnover of the assessee being less than assessee being less than ₹60 lakh, which is prescribed for opting 60 lakh, which is prescribed for opting presumptive tax under section 44 A.D. of the tax under section 44 A.D. of the Act, the the maximum rate of 8% of the net profit of 8% of the net profit should be applied on the sales of the assessee should be applied on the sales of the assessee for estimating profit. The . The Ld. counsel submitted that in the case of submitted that in the case of the assessee net profit should be restricted to see net profit should be restricted to 8% 8% and no other addition should be made. The addition should be made. The Ld. DR on the other hand opposed on the other hand opposed
Late Shri Mohan Raj Chhajed Late Shri Mohan Raj Chhajed 15 ITA No. 193/Jodh/2019
those arguments and submitted that assessee himself and submitted that assessee himself has not filed and submitted that assessee himself return of income under presump return of income under presumptive tax in terms of section 44AD tive tax in terms of section 44AD and therefore no benefit of the said provision can be allowed to the fore no benefit of the said provision can be allowed to the fore no benefit of the said provision can be allowed to the assessee.
We have heard submission of the both side and perused the We have heard submission of the both side and perused the We have heard submission of the both side and perused the paperbook filed by the assessee. In the paperbook assessee has file paperbook filed by the assessee. In the paperbook assessee has file paperbook filed by the assessee. In the paperbook assessee has filed audit report in Form No. 3CD required under section 44 audit report in Form No. 3CD required under section 44 audit report in Form No. 3CD required under section 44AB of the Act. A copy of said For Form No. 3CD is available on page 4 to 14 of the No. 3CD is available on page 4 to 14 of the paperbook. In clause 10 paperbook. In clause 10 of the form (page 4 paperbook) of the form (page 4 paperbook), a specific information has been reported as as been reported as to whether the profit and loss to whether the profit and loss account include any profit and gains assessa account include any profit and gains assessable on ble on presumptive basis i.e. 44AD. In answer to the said information, basis i.e. 44AD. In answer to the said information, basis i.e. 44AD. In answer to the said information, “No” has been mentioned. Thus it is clear that, the assessee has not availed benefit mentioned. Thus it is clear that, the assessee has not availed benefit mentioned. Thus it is clear that, the assessee has not availed benefit of presumptive taxation scheme under section 44AD of the of presumptive taxation scheme under section 44AD of the of presumptive taxation scheme under section 44AD of the Act. In circumstances, the request of the assessee for assessing the in request of the assessee for assessing the income request of the assessee for assessing the in in terms of section 44AD in terms of section 44AD of the Act cannot be accepted. cannot be accepted. While
Late Shri Mohan Raj Chhajed Late Shri Mohan Raj Chhajed 16 ITA No. 193/Jodh/2019
making addition, the gross profit rate declared by the assessee in making addition, the gross profit rate declared by the assessee in making addition, the gross profit rate declared by the assessee in preceding assessment year has been applied on the turnover of the preceding assessment year has been applied on the turnover of the preceding assessment year has been applied on the turnover of the assessee during the year under consideration, which is one of the ring the year under consideration, which is one of the ring the year under consideration, which is one of the best estimate that could have been made in the case of the assessee. ould have been made in the case of the assessee. ould have been made in the case of the assessee. Therefore, we do not find any error in the order of the we do not find any error in the order of the we do not find any error in the order of the lower authorities in sustaining the disallowance in sustaining the disallowance. The ground No. ground No. 3 of the appeal of the assessee peal of the assessee is accordingly dismissed.
In ground No. 4 4, the assessee has raised the issue that once , the assessee has raised the issue that once addition has been made estimating gross profit addition has been made estimating gross profit, no further addition , no further addition is required to be made. made.
We have heard rival submission of the We have heard rival submission of the parties o parties on the issue in dispute. The Ld. counsel Ld. counsel submitted that no addition in respect of submitted that no addition in respect of shortage of Gwar or excess of Chana should have been made shortage of Gwar or excess of Chana should have been made shortage of Gwar or excess of Chana should have been made specifically. In our opinion, the discrepancy in quantitative tally is specifically. In our opinion, the discrepancy in quantitative tally is specifically. In our opinion, the discrepancy in quantitative tally is the reasons on the basis of which books of acc the reasons on the basis of which books of account have been ount have been rejected and trading results rejected and trading results of current year have been estimated in have been estimated in
Late Shri Mohan Raj Chhajed Late Shri Mohan Raj Chhajed 17 ITA No. 193/Jodh/2019
view of trading results view of trading results of preceding assessment year preceding assessment year. In such circumstances, making separate addition for shortage or excess of circumstances, making separate addition for shortage or excess of circumstances, making separate addition for shortage or excess of any particular item of trading is not required when books of any particular item of trading is not required when books of any particular item of trading is not required when books of accounts have been rejected accounts have been rejected and gross profit has been estimated. gross profit has been estimated. We accordingly set aside the finding of the Ld. CIT(A) We accordingly set aside the finding of the Ld. CIT(A) We accordingly set aside the finding of the Ld. CIT(A) of sustaining the addition of ₹6,21,102/ 6,21,102/- for shortage of ‘Gwar’ commodity and addition of ₹18,791/ 18,791/- on account of access stock of cess stock of ‘Chana’ commodity. The ground No. . The ground No. 4 of the appeal the assessee of the appeal the assessee is accordingly allowed. accordingly allowed.
The ground No. The ground No. 5 and 6 of the appeal also stands allowed in peal also stands allowed in view of our finding in ground view of our finding in ground No. 4 of the appeal.
The ground No. The ground No. 7 is in respect of confirming addition of ct of confirming addition of ₹3,75,000/- on account of transactions entered into a thok on account of transactions entered into a thok-khata on account of transactions entered into a thok basis.
Late Shri Mohan Raj Chhajed Late Shri Mohan Raj Chhajed 18 ITA No. 193/Jodh/2019
The Assessing Officer Assessing Officer noted that assessee sold certain quantity noted that assessee sold certain quantity to related parties without actual delivery or even issuing to related parties without actual delivery or even issuing to related parties without actual delivery or even issuing purchase/sales bills. The Ld. CIT(A) has summarised the finding of purchase/sales bills. The Ld. CIT(A) has summarised the finding of purchase/sales bills. The Ld. CIT(A) has summarised the finding of the Assessing Officer as under:
“6. The ground no. 7 is regarding addition of Rs. The ground no. 7 is regarding addition of Rs. 3,75,000/ 3,75,000/- on account of sales of Gwar on Thok Khata basis. The AO noted that the assessee has of sales of Gwar on Thok Khata basis. The AO noted that the assessee has of sales of Gwar on Thok Khata basis. The AO noted that the assessee has sold 25000 kg. to Mohan Lal Chajer HUF at Rs. 10.00.000/- on Thok Khata sold 25000 kg. to Mohan Lal Chajer HUF at Rs. 10.00.000/ sold 25000 kg. to Mohan Lal Chajer HUF at Rs. 10.00.000/ Basis. Further, Mohan Lal Chajer HUF sold the same to Pankaj Lodha HUF Basis. Further, Mohan Lal Chajer HUF sold the same to Pankaj Lodha HUF Basis. Further, Mohan Lal Chajer HUF sold the same to Pankaj Lodha HUF at ₹11,75,000/ ₹11,75,000/-. Thereafter, Pankaj Lodha HUF sold the same quantity of hereafter, Pankaj Lodha HUF sold the same quantity of gwar to the assessee again. It was noted by the AO that in the entire gwar to the assessee again. It was noted by the AO that in the entire gwar to the assessee again. It was noted by the AO that in the entire transaction, the assessee has earned profit of Rs. 3,75,000/ transaction, the assessee has earned profit of Rs. 3,75,000/ transaction, the assessee has earned profit of Rs. 3,75,000/- (1,75,000 + 2,00,000). He has also noted that the stock of Gwar was no 2,00,000). He has also noted that the stock of Gwar was no 2,00,000). He has also noted that the stock of Gwar was not moved for a single time and also not a single transaction was occurred during the three single time and also not a single transaction was occurred during the three single time and also not a single transaction was occurred during the three stages of sale and purchase. The assessee had not provided any stages of sale and purchase. The assessee had not provided any stages of sale and purchase. The assessee had not provided any documentary evidence i.e. purchase or sale bills, detail of monetary documentary evidence i.e. purchase or sale bills, detail of monetary documentary evidence i.e. purchase or sale bills, detail of monetary transactions. Accordingly, the AO transactions. Accordingly, the AO has made addition of Rs. 3,75,000/ has made addition of Rs. 3,75,000/- in the total income of the assessee. the total income of the assessee.” 18. After considering the submission of the assessee Ld. CIT(A) considering the submission of the assessee Ld. CIT(A) considering the submission of the assessee Ld. CIT(A) rejected the contention of the assessee and upheld the addition rejected the contention of the assessee and upheld the addition rejected the contention of the assessee and upheld the addition observing as under:
“6.2. I have considered the assess 6.2. I have considered the assessment order, appellant's submissions and ment order, appellant's submissions and documents on record. I find that the AO made addition of Rs. 3,75,000/ documents on record. I find that the AO made addition of Rs. 3,75,000/ documents on record. I find that the AO made addition of Rs. 3,75,000/- by
Late Shri Mohan Raj Chhajed Late Shri Mohan Raj Chhajed 19 ITA No. 193/Jodh/2019
observing that the assessee had sold gwar of 25,000 Kg. to non observing that the assessee had sold gwar of 25,000 Kg. to non observing that the assessee had sold gwar of 25,000 Kg. to non-registered firms. In the all three transaction of the same quantity, there was firms. In the all three transaction of the same quantity, there was firms. In the all three transaction of the same quantity, there was no movement of stock and no purchase and sale bills were raised in movement of stock and no purchase and sale bills were raised in movement of stock and no purchase and sale bills were raised in genuineness of the entire transaction. The appellant submitted before me of the entire transaction. The appellant submitted before me of the entire transaction. The appellant submitted before me that the Gwar is that the Gwar is speculative item and its market price goes up and down on speculative item and its market price goes up and down on daily basis therefore he had hedged the therefore he had hedged the stock lying with him to the other stock lying with him to the other parties and this parties and this transaction did not amount to sale or purchase so no bills transaction did not amount to sale or purchase so no bills were generated for were generated for these transactions. The appellant submitted that these transactions. The appellant submitted that during the period of hedge of during the period of hedge of price, the prices were moved upward, price, the prices were moved upward, therefore, the appellant had to shell out the appellant had to shell out the differential price to the third the differential price to the third parties being difference in the rate on the date parties being difference in the rate on the date of hedge and rate on the of hedge and rate on the date of reversal and the payments made on such date of reversal and the payments made on such hedged transactions hedged transactions known as Thok Khata basis is nothing but the cos known as Thok Khata basis is nothing but the cost of safe guarding the safe guarding the interest of appellant due to undue price fluctuations. I am not interest of appellant due to undue price fluctuations. I am not interest of appellant due to undue price fluctuations. I am not inclined with the contention of appellant as he had made multiple transactions the contention of appellant as he had made multiple transactions the contention of appellant as he had made multiple transactions and earned profit of Rs. 3,75,000/ earned profit of Rs. 3,75,000/- but even after the entire transaction, the but even after the entire transaction, the stock was lying in the godown of assessee. During the process of hedge of ying in the godown of assessee. During the process of hedge of ying in the godown of assessee. During the process of hedge of prices, no entries were made in the books of accounts and no any bills or prices, no entries were made in the books of accounts and no any bills or prices, no entries were made in the books of accounts and no any bills or documents were raised by him. The burden lies upon the appellant to documents were raised by him. The burden lies upon the appellant to documents were raised by him. The burden lies upon the appellant to justify his claim but he has failed as no documenta his claim but he has failed as no documentary evidence or purchase ry evidence or purchase and sales bills were produced to establish genuineness of entire bills were produced to establish genuineness of entire bills were produced to establish genuineness of entire transaction. Thus, it is transaction. Thus, it is clear that these transactions were nothing but a clear that these transactions were nothing but a diversion of income of Rs. diversion of income of Rs. 3,75,000/- of the appellant to another sister of the appellant to another sister concern. I find the concern. I find the AO was right in making addition of Rs. 3,75,000/ making addition of Rs. 3,75,000/- for shortage of Gwar and excess stock of shortage of Gwar and excess stock of Chana. The appellant fails on this Chana. The appellant fails on this ground. The ground no. 7 is dismissed. ground. The ground no. 7 is dismissed.”
Late Shri Mohan Raj Chhajed Late Shri Mohan Raj Chhajed 20 ITA No. 193/Jodh/2019
We have heard rival submission of the parties on the issue in have heard rival submission of the parties on the issue in have heard rival submission of the parties on the issue in dispute and perused the dispute and perused the order of the lower authorities. authorities. Before us also no documentary evidence in support of the transactions carried also no documentary evidence in support of the transactions carried also no documentary evidence in support of the transactions carried out by the assessee have been filed. In such circumstances, we do out by the assessee have been filed. In such circumstances, we do out by the assessee have been filed. In such circumstances, we do not have any alternative other than confirming the finding of the Ld. not have any alternative other than confirming the finding of the Ld. not have any alternative other than confirming the finding of the Ld. CIT(A) on the issue in dispute. The ground of the appeal of the the issue in dispute. The ground of the appeal of the the issue in dispute. The ground of the appeal of the assessee is accordingly dismissed. accordingly dismissed.
The ground No. The ground No. 8 is regarding addition of disallowance of is regarding addition of disallowance of interest amounting to interest amounting to ₹1,68,262/- on account of sundry sundry advances. The Assessing Officer Assessing Officer noted that assessee paid interest of noted that assessee paid interest of ₹5,99,818/- at the rate of 9% per annum to related parties, whereas at the rate of 9% per annum to related parties, whereas at the rate of 9% per annum to related parties, whereas not charged interest on the advances made to related parties. The interest on the advances made to related parties. The interest on the advances made to related parties. The Ld. Assessing Officer has noted that one of such advance was made has noted that one of such advance was made to Sh Rajendra Chhajer and shown under the head ajer and shown under the head ‘sundry debtors sundry debtors’.
Before the Ld. CIT(A) the assessee submitted that advances to Before the Ld. CIT(A) the assessee submitted that advances to Before the Ld. CIT(A) the assessee submitted that advances to related parties have been made out of interest free funds available related parties have been made out of interest free funds available related parties have been made out of interest free funds available
Late Shri Mohan Raj Chhajed Late Shri Mohan Raj Chhajed 21 ITA No. 193/Jodh/2019
with assessee and not advanced out of the borrowed funds. Ld. with assessee and not advanced out of the borrowed funds. Ld. with assessee and not advanced out of the borrowed funds. Ld. CIT(A) forwarded the submission of the assessee to the arded the submission of the assessee to the Ld. arded the submission of the assessee to the Assessing Officer for his comment. After taking into consideration for his comment. After taking into consideration for his comment. After taking into consideration the comments of the the comments of the Assessing Officer and the rejoinder of the the rejoinder of the assessee, the Ld. CIT(A) rejected the claim of the assessee assessee, the Ld. CIT(A) rejected the claim of the assessee assessee, the Ld. CIT(A) rejected the claim of the assessee observing as under:
“Facts of the case, relied upon by the appellant are different from the facts Facts of the case, relied upon by the appellant are different from the facts Facts of the case, relied upon by the appellant are different from the facts of the case of the appellant. The appellant is paying interest @ 9% on the of the case of the appellant. The appellant is paying interest @ 9% on the of the case of the appellant. The appellant is paying interest @ 9% on the unsecured loans taken by him and on other side he gave interest free unsecured loans taken by him and on other side he gave interest free unsecured loans taken by him and on other side he gave interest free advance. This advance had been g advance. This advance had been given against the fund received from iven against the fund received from sundry trade debtors. It is seen that the appellant has diverted interest sundry trade debtors. It is seen that the appellant has diverted interest sundry trade debtors. It is seen that the appellant has diverted interest bearing funds in giving interest free advances. On overall perusal of the bearing funds in giving interest free advances. On overall perusal of the bearing funds in giving interest free advances. On overall perusal of the case, I find that the appellant could not prove that the advance was giv case, I find that the appellant could not prove that the advance was giv case, I find that the appellant could not prove that the advance was given from non-interest bearing funds. interest bearing funds. Since, the appellant is paying interest mostly @9% on the unsecured loans Since, the appellant is paying interest mostly @9% on the unsecured loans Since, the appellant is paying interest mostly @9% on the unsecured loans so he should have charged interest at the same rate from debtors also. Thus so he should have charged interest at the same rate from debtors also. Thus so he should have charged interest at the same rate from debtors also. Thus it is held that the AO rightly disallowed deemed interest of Rs. it is held that the AO rightly disallowed deemed interest of Rs. it is held that the AO rightly disallowed deemed interest of Rs. 1,68,262/- out of interest expenses of Rs. 5,99,818 @ 9%. on advance given by him. out of interest expenses of Rs. 5,99,818 @ 9%. on advance given by him. out of interest expenses of Rs. 5,99,818 @ 9%. on advance given by him. The addition made by the AO is hereby sustained. The appellant fails on The addition made by the AO is hereby sustained. The appellant fails on The addition made by the AO is hereby sustained. The appellant fails on this issue and this ground is treated as dismissed. this issue and this ground is treated as dismissed.”
Late Shri Mohan Raj Chhajed Late Shri Mohan Raj Chhajed 22 ITA No. 193/Jodh/2019
We find that assessee failed to explain befo find that assessee failed to explain before the Ld. CIT(A) re the Ld. CIT(A) that interest free funds were available with assessee for extending that interest free funds were available with assessee for extending that interest free funds were available with assessee for extending interest-free advances to the related parties. In absence of any such free advances to the related parties. In absence of any such free advances to the related parties. In absence of any such evidences submitted evidences submitted by the assessee, we do not find any error in the assessee, we do not find any error in the order of the Ld. CIT(A) on the order of the Ld. CIT(A) on the issue in dispute and accordingly we issue in dispute and accordingly we uphold the same. The ground uphold the same. The ground No. 8 of the appeal of the assessee of the appeal of the assessee is accordingly dismissed. accordingly dismissed.
In the result, the appeal of the assessee is partly allowed. In the result, the appeal of the assessee is partly allowed. In the result, the appeal of the assessee is partly allowed.
Order pronounced in the Court on ounced in the Court on 27/07/2022. Sd/- Sd/- (SANDEEP SINGH KARHAIL SINGH KARHAIL) (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 27/07/2022 Rahul Sharma, Sr. P.S.
Late Shri Mohan Raj Chhajed Late Shri Mohan Raj Chhajed 23 ITA No. 193/Jodh/2019
Copy of the Order forwarded to Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, //True Copy// (Sr. Private Secretary Sr. Private Secretary) ITAT, Mumbai ITAT, Mumbai