ITO 33(3)(1), MUMBAI vs. RATANLAL B. GANDHI, MUMBAI

Per D.T. GARASIA, Judicial Member:

“Ground no.2 a) Unexplained investments in Flat The appellant has made payments to the seller by account payee cheques, details, of which are placed on record. As regards cash payment of Rs.47,110/-, the same is for stamp duty and registration and is covered by the withdrawals made by the appellant from his bank account. This sub-ground is therefore allowed. b) Adhoc disallowance of expenses The appellant has not been able to give any detail of the various expenses incurred alongwith any documentary evidence. In the absence of any such details on record, I am of the view that the AO is justified in making an adhoc disallowance of 50% of the expenditure claimed. This sub-ground is therefore dismissed. c) Credits in bank Before the AO, the appellant has submitted the mode in which he carries on his business and also explained how monies are received from friends and relatives as unsecured loans which are used for payments for giving security to seller of the property. The unsecured loans are supported by confirmations and ledgers. Other credits include cash deposits supported by corresponding cash withdrawals, loan from bank/NBFC supported by ledgers and brokerage income. The brokerage income is separately offered as Business Income by the appellant. I have carefully reviewed the submission of the appellant. It is a fact that the balance sheet of the appellant has not reflected the loans taken. It is also on record that all the credits in the bank statement stand explained. I am inclined to give the assessee the benefit of a defective balance sheet made by professionals on whom he relied. In view of the above findings I rule in favour of the assessee and allow this sub-ground of appeal. Ground no.3 It is noticed from the records available before me that the returned total income of the appellant was Rs.1,37,010/-. I direct the AO to consider the correct returned total income while giving effect to the appeal order. This ground of appeal is allowed on technical ground. Ground no.5

3 Shri Ratanlal B. Gandhi This ground concerns the levy of Interest u/s 234B, 234C and 234D of the Income Tax Act, 1961. The levy of interest under the said sections are consequential and requires no adjudication. 5. In the result, the appeal is partly Allowed.”

6. Matter carried to the Ld. CIT(A) and the Ld. CIT(A) has considered the same and partly allowed by observing as under: “Ground no.2 b) Unexplained investments in Flat The appellant has made payments to the seller by account payee cheques, details, of which are placed on record. As regards cash payment of Rs.47,110/-, the same is for stamp duty and registration and is covered by the withdrawals made by the appellant from his bank account. This sub-ground is therefore allowed. b) Adhoc disallowance of expenses The appellant has not been able to give any detail of the various expenses incurred alongwith any documentary evidence. In the absence of any such details on 4 Shri Ratanlal B. Gandhi record, I am of the view that the AO is justified in making an adhoc disallowance of 50% of the expenditure claimed. This sub-ground is therefore dismissed.

c) Credits in bank Before the AO, the appellant has submitted the mode in which he carries on his business and also explained how monies are received from friends and relatives as unsecured loans which are used for payments for giving security to seller of the property. The unsecured loans are supported by confirmations and ledgers. Other credits include cash deposits supported by corresponding cash withdrawals, loan from bank/NBFC supported by ledgers and brokerage income. The brokerage income is separately offered as Business Income by the appellant. I have carefully reviewed the submission of the appellant. It is a fact that the balance sheet of the appellant has not reflected the loans taken. It is also on record that all the credits in the bank statement stand explained. I am inclined to give the assessee the benefit of a defective balance sheet made by professionals on whom he relied. In view of the above findings I rule in favour of the assessee and allow this sub-ground of appeal. Ground no.3 It is noticed from the records available before me that the returned total income of the appellant was Rs.1,37,010/-. I direct the AO to consider the correct returned total income while giving effect to the appeal order. This ground of appeal is allowed on technical ground. Ground no.5 This ground concerns the levy of Interest u/s 234B, 234C and 234D of the Income Tax Act, 1961. The levy of interest under the said sections are consequential and requires no adjudication. In the result, the appeal is partly Allowed.” 5.