Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DELHI BENCHES ‘G’, NEW DELHI
Before: Ms. Sushma ChowlaDr. B. R. R. Kumar
ORDER
Per Dr. B.R.R. Kumar, Accountant Member:
The present appeal has been filed by the assessee against the order of ld. CIT(A)-2, Gurgaon dated 31.03.2016.
Following grounds have been raised by the assessee:
1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the addition to the extent of Rs. 10,00,000/- out of total unsecured loan of Rs.37,00,000/- and that too by recording incorrect facts and findings and without observing the principles of natural justice.
2. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the addition to the extent of Rs. 10,00,000/- on account unsecured loan is bad in law and against the facts and circumstances of the case.
3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in rejecting the books of accounts of assessee u/s 145(3) of Income Tax Act, 1961.
Sandeep Kataria 4. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in estimating the net profit at Rs.27,81,150/- and that too @50% of total receipts after rejecting the books of accounts of assessee without any basis, material and evidences on record.
5. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in estimating the net profit at Rs.27,81,150/- and that too @50% of total receipts is bad in law and against the facts and circumstances of the case.
6. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not granting the benefit of telescoping.”
Addition of unsecured loans Rs.10,00,000/-:
During the assessment proceedings, the Assessing Officer observed that the balance sheet of the assessee has shown an amount of Rs.37,00,000/- under the head “unsecured loan”. The AO called for the details on various dates, however no compliance was made before the AO except the affidavit of Sh. Lakhpat Singh Kataria, the father of the assessee and copy of the PAN card. Since, no details have been furnished before the AO, an addition of Rs.37,00,000/- has been made to the total income of the assessee on account of unsecured loans received. During the proceedings before the ld. CIT (A), it was clarified that an amount of Rs.27,00,000/- out of Rs.37,00,000/- pertain to earlier assessment years and hence the same was deleted. The ld. CIT (A) confirmed the amount of Rs.10,00,000/- holding that the assessee could not prove the genuineness of the transaction on the grounds that the father of the assessee has not filed any return of income for the year, was not assessed to tax and the amount has been received by the appellant was in fact a joint account operated in the name
Sandeep Kataria of the assessee and his father. Aggrieved the assessee filed appeal before us against the confirmation of Rs.10,00,000/- by the ld. CIT (A).
During the argument, the ld. AR filed the copy of the affidavit purportedly signed by the Sh. Lakhpat Singh Kataria which was undated by the deponent and a copy of the PAN card. The ld. AR has also produced the copy of A/c No. 20241779285 of the assessee in Allahabad Bank for the period 22.06.2008 to 31.12.2008. It was argued that the father of the assessee Sh. Lakhpat Singh Kataria has expired on 15.04.2013 and in view of the affidavit given by Sh. Lakhpat Singh Kataria confirming the issue of loan, the addition needs to be deleted.
Rebutting the arguments, the ld. DR submitted that the affidavit is a self-serving document and the copy filed in the paper book is not even notarized, hence its validity is highly questionable. It was argued that mere submission of PAN number doesn’t prove the genuineness and creditworthiness of the loan party. The fact that the certificate dated 25.06.2016 issued by the bank Manager confirms that the account is maintained by the assessee which in turn goes to prove that the amounts have indeed been unaccounted.
Heard the arguments of both the parties. We have gone through the documents filed before us from the page nos. 1 to 48 of the paper book. The bank statement has also been perused. There has been one credit of Rs.23,72,500/- on 13.08.2008 and the amounts have been transferred and withdrawn to self on 14.08.2008 and 18.08.2008. The closing balance as on 31.12.2008 was Rs.27,820/-. There were no Sandeep Kataria major transactions except one on 15.11.2008 which is a corresponding entry to transfer of money on the same date. Hence keeping in view, the entire facts and circumstances of the case it can be said that the assessee could not prove the genuineness of the amount of Rs.10,00,000/- received as unsecured loan. Hence, we decline to interfere with the order of the ld. CIT (A) on this ground. The appeal of the assessee on this ground is dismissed.
Estimation of business profits of the current year:
Owing to non submission of evidences, the Assessing Officer has disallowed 50% expenses out of the total gross receipts of the assessee of Rs.55,62,300/-. The ld. CIT (A) confirmed the disallowance of Rs.27,81,150/-. During the arguments before us, the ld. AR argued that there was no rationale to disallow 50% of the gross receipts by the revenue authorities and argued that the pre-requisite for rejection of the books of accounts u/s 145(3) and estimation of the income is totally against the provisions of the Act. The ld. AR submitted that the profit @12% has been determined by the order passed u/s 143(3) for the assessment year 2016-17. The incomes for the assessment years 2009-10 and 2010-11 declared by the assessee shown a net profit of 5% on the turnover.
The ld. DR argued that in the absence of any details forthcoming from the assessee the estimation is the only way to determine the profits of the business.
Heard the arguments of both the parties and perused the material available on record.
Sandeep Kataria 10. We find that the assessee could not submit the details of expenses owing to misplacement of the data by the previous consultant. That was the reason as to why they could not produce the same even during the remand proceedings before the AO. We have gone through the record and find that the assessee has shown major expenses under two heads namely commission & salary expenses, the other expenses being advertising, repair & maintenance, sales promotion etc. and these expenses have also been shown to have incurred in cash. Even the names of the person to whom the commission/salary has been paid and the purpose has not been expounded by the assessee. The profit rate of the assessee for the subsequent years determined by the revenue is also considered. After considering the facts, we feel that the interest of justice would be well served by estimating the profits of the assessee @20% as against 50% determined by the ld. CIT (A). This ground of appeal of the assessee is treated as partly allowed.
In the result, the appeal of the assessee is partly allowed. Order Pronounced in the Open Court on 27/04/2020.