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Income Tax Appellate Tribunal, DELHI BENCH SMC NEW DELHI
Before: SHRI B.P. JAIN
ORDER This appeal of the assessee arises from the order of learned CIT(A)- XIX, New Delhi, vide order dated 28th November, 2014 for the assessment year 2010-11.
The assessee has raised as many as six grounds of appeal. The effective grounds are in fact three grounds, i.e., in ground no.1 there is adhoc disallowance of Rs.73,875/-, in ground no.2 addition in respect of interest paid amounting to Rs.4,86,345/- and in ground no.3 addition in respect of sundry creditors amounting to Rs.2,570,032/-. It is pertinent to reproduce the order of the AO which in fact is without application of mind and without giving opportunity to the assessee and without making any inquiry as under: “ITR 4 has been filed on 23.09.2010 declaring total income at Rs.679390. Subsequently notice u/s.143(2) was issued and served upon as the case was selected for scrutiny with the approval of CCIT, Delhi-XII and in response Shri Pramod Kumar Gupta CA and Shri Manoj Kumar Gupta CA attended from time to time and furnished necessary details including P&L a/c, Balance sheet and report u/s. 44AB of the Act. During the previous year the assessee was a wholesale dealer of medicine under the name and style of Bandhu Medicos. Total income on the basis of details furnished and after discussion is arrived at as under: Property Income D-48/2, Gali No.5, New Govind Pura. SOP Intt. Paid on HBA. (-) 57042 Business Income Net profit as per P & L a/c 842007 In the computation it has been taken at Rs.830761 and for the mismatch in letter dated 19.11.2012 has clarified that there is no difference as assessee has shown 207770 as Misc. income in the P&L a/c which includes 11246 bank and other interest which had been deducted from business income and shows separately as other income in the computation. From the detail of other income as on 31.3.2010 no such figure of Rs.11246 is apparent. In the circumstances the income is taken as per P & L a/c. Add 1/4th out of car depreciation as Personal element is not ruled out 7479/- 1/4th out of car insurance 1373 1/4th out of vehicle maintenance 43157 1/4th out of carriage inward and Outward being of unverifiable nature on estimate disallowed. 1,00,000 1/4th out of Telephone exp. being for personal value 32679 Other sources Intt. as shown in computation of total income. 11246 Minor income u/s.64 as shown 9429 From the ledger a/c of drawing Intt. from SCB India Built has been shown at Rs.486345 which is in the nature of income hence included 486345 For house hold expenses cash has been withdrawn @8500 PM totalling to Rs.102000 which is in adequate looking to the slandered and size of the family. It isestimated at 3,00,000 for the year resultingin addition of Rs.198000. 198000 addition of Rs.198000 198000 Addition on a/c of Sundry creditor The assessee has not furnished the confirmations in respect of the following Sundry creditors:-
S.No. Name of the Party Amount 1. Balaji Enterprises Rs.910,768/- 2. Haryana Pharmaceuticals Rs.3337852/- 3. Win Medicare Rs. 9979/- 4. Aarti Enterprises Rs.551,456/- 5. Aditya Medisales RS.313,171/- 6. Aditya Medisales Limited Rs.45,251/- 7. Alkem Laboratories Ltd. Rs.4,068/- 8. Arihant Pharmaceuticals Rs.283520/- 9. Curatio Health Care Pvt. Ltd. Rs.14926/- 10. Emcure Pharmaceuticals Ltd. Rs.3,492/- 11 Eris Life Scinces Pvt. Ltd. Rs.9,225/- 12. Gennova Diopharmaceuticals Ltd. Rs.1613/- 13. Kapbro Pharma (P) Ltd. Rs.66794/- 14. Merck Ltd. Rs.12240/- 15. Nathsons Pharmaceuticals P Ltd. Rs.4306/- 16. Panaces Biotech Ltd. P0004 Rs.361938/- 17. Ruchi Networks Rs.6,259/- 18. `S.S. Enterprises Rs.8376/- 19. Steadfast Medishield Pvt. Ltd. Rs.17107/- Total Rs.2962341/- An amount of Rs.2962341/- is added to the income of the assessee in respect of unexplained sundry creditors as discussed above. Rs.2962341/- Gross Income Rs.4637014 Less u/s. 80C & D as claimed Rs.1,15,000/- Total Income Rs.4522014 (R/o) Rs.4522010”
3. As regards adhoc disallowance of Rs.10,84,688, the learned CIT(A) observed that there was adhoc disallowance for non availability of the bills and vouchers on account of car insurance, vehicle maintenance, carriage inward and outward and telephone expenses whereas nothing has been mentioned by the AO about non verification and without asking for the vouchers has come to the conclusion that the personal element is not ruled out. In such circumstances, the AO cannot pass such orders and such orders are held to be against the law and addition accordingly is directed to be deleted.
4. As regards the disallowance of Rs.4,86,345/- similar additions have been made by the AO without making any verification, any inquiry or giving any opportunity to the assessee and accordingly the additions so made and confirmed by the learned CIT(A) is bad in law and is directed to be deleted.
5. As regards the additions of Rs.25,70,032/-, on the similar lines as above the additions made is directed to be deleted.