COL AMARJIT D NAGI,MUMBAI vs. ASST CIT CEN CIR 20,

These are the appeals filed by the assessee against the order of CIT(A) for the assessment year 2005-2006 & 2007-2008 in the matter of order passed u/s. 143(3)/153A of the IT Act. 2. The following grounds have been taken by the assessee:- A.Y.2005-2006

The Ld. Asst. Corn of Income Tax added a sum of Rs.15, 07,761/ of credits found in the bank statements as follows:- a. Global Trust Bank (Oriental Bank of Commerce) Rs 3,56,969/- b. Central Bank of India - Overdraft. against Fixed Deposit Rs 11,50,792/- 6. Addition was confirmed by CIT(A) against which assessee is in further appeal before us.

We have considered rival contentions and found from record that the account was jointly held by assessee with his wife Mrs. Chandra Nagi. Credit amount pertains to the sales/receipt of Hiring and other receipts. Copy of bank account summary and bank statement was filed with lower authorities. Central Bank of India Overdraft account No 303766 Rs.11,50,576/- is an overdraft account against the fixed deposits. The fixed deposits were held in the name of Col Amarjit Nagi and Mrs. Chandra Nagi. The Fixed deposits were made out of the retirement benefits received at the time of retirement. Since Mrs. Chandra Nagi was carrying out her business in her personal name, in order to sustain her business, the overdraft has been availed against the deposit to support her. The overdraft against deposit has been availed by the assessee. However, the account has been jointly held by Col Amarjit Nagi and Mrs. Chandra Nagi. The operation in the accounts pertains to Mrs. Chandra Nagi and she has declared the amount 4 & 1051/Mum/2014 Col. Amarjit D. Nagi deposited in the account as her job work/ contract receipt is her profit and loss account and also the expenses incurred by her in this account. It appears that lower authorities have not properly appreciated the documentary evidences as discussed above with regard to the fixed deposit made with the bank out of the retirement benefits. In the fitness of things, we restore the matter back to the file of the AO for deciding afresh. We direct accordingly.

During the assessment year 2007-08, the AO found that the assessee had debited expenses aggregating to Rs. 29,88,615/- to the Profit & Loss a/c for the relevant assessment year, however the Id. AClT disallowed 25% of the claims amounting to Rs. 7,47,153/-. In an appeal filed before CIT(A), the Hon. CIT (Appeals) on perusal of evidences gave a relief in the case of Direct Expenses- Artists and Artisans Rs 10,87,777/- and the relief @' 25 % i.e Rs. 2,70,970/- were allowed. However, payments made for Purchase of Materials of Rs.9,31,920/-and Indirect expenses Rs 9,72,817/- were disallowed on the ground that the appellant could not substantiate the claim and adhoc disallowance of Rs.4 76,184/- ~25 % in respect of expenses of Rs 19,04,737/-' was confirmed.

We have considered rival contentions and found that with regard to disallowance of 25% of expenses of Rs.29,88,615/ - claimed by the assessee in the P&L account, the evidences furnished by the assessee before lower authorities were as follows: The Assessee gave the breakup of expenses as Purchase of Materials Rs.9,31,920/- 5 ITA No.1050/Mum/2014 & 1051/Mum/2014 Col. Amarjit D. Nagi Direct Expenses-Artists & Artisans Rs.10,87,777/- Indirect Expenses Rs.9,72,817/- 10. Adhoc disallowance of Rs 6,29,618/- being 25% of the total liabilities (loan & current Liabilities) of Rs. 25,18,473/ - shown in the balance Sheet was made. We found that before the lower authorities assessee submitted the following breakup; Unsecured Loans - Rs. 5, 70,380/- Sundry Creditors - Rs. 6,29,985/- Provisions - Rs. 13, 18,108/- The assessee further gave a breakup of Rs. 5, 70,380/- as; a. Unsecured Loan Rs 5, 70,380/- are as follows: Metro Cinema Rs.37,500/- Mrs. Chandra Nagi Rs. 5,32,880/ - 11. Amount from Metro Cinema of Rs 37500/-. was an advance received for their work. However, the work could not be completed and the same is pending in this year. Confirmation of loan amount from Mrs. Chandra Nagi was filed.

The Hon. CIT (Appeals) confirmed addition in respect of sundry creditors by observing that assessee could not produce information w. r. t. Sundry creditors and amount received from Metro Cinema.

We have considered rival contentions and found that Additions of Rs 22,61,891/- was made under section 68 of the Income Tax Act, 1961 in respect of credit entries found in the assesses bank account statements. The Assessee gave the breakup as under:-

In the result, appeals are allowed in part for statistical purposes.