RAJENDRAKUMAR BHANUPRASAD DAVE,MUMBAI vs. ITO 21(1)(4), MUMBAI

None appeared on behalf of the assessee and hence we proceed to dispose of the appeal ex-parte, without the presence of the assessee.

We heard learned DR and perused the record. The assessee filed return of income for the year under consideration declaring a total income of Rs.2.12 lakhs. His return of income was selected for scrutiny. However the assessee did not appear before the assessing officer despite issuing many notices to him. Hence the assessing officer completed the assessment to the best of his judgement u/s 144 of the Act by making various additions. In the appellate proceedings, the assessee filed certain details and hence the first appellate authority called for a remand report from the assessing officer. On the basis of remand report, the first appellate authority granted partial relief to the assessee. Still aggrieved, the assessee has filed this appeal.

The first issue relates to the addition of Rs. 46,176/- sustained by the Ld CIT(A). The assessee had introduced a sum of Rs.35.46 lakhs in his capital account. The assessee could furnish evidence to the extent of Rs. 35 lakhs and hence the first appellate authority granted relief to the extent of Rs. 35 lakhs and confirmed the addition of balance amount of Rs. 46,176/-.

We heard learned DR on this issue and perused the record. We notice that the assessee has been working in Kenya and has brought a sum of Rs.35 lakhs from there. Hence the Ld CIT(A) has deleted the addition to that extent. Since the assessee has proved the sources of major amount of contribution, i.e., Rs. 35 lakhs, we are of the view that there is no reason to suspect the sources of remaining amount of Rs. 46,176/-. The very fact that he was working in Kenya, in our view, sufficiently explains the sources of the small amount of Rs.46,176/- referred above. It is pertinent to note that the provisions of sec. 68 uses the word “may”, meaning thereby an option is given to the AO not to assess the cash credit also. In these set of facts, we are of the view that the small amount of Rs.46,176/- referred does not call for an addition. Accordingly we set aside the order of learned C I T (A) passed on this issue and direct the assessing officer to delete the addition.

The next issue relates to disallowance of 25% of various expenses claimed by the assessee. Before the assessing officer as well as before learned CIT(A), the assessee did not furnish details of the document to support the expenses. Hence, in our view also, the addition is called for. However we are of the view that the disallowance of 25% is on the higher side. Accordingly we modify the order of learned CIT(A) and direct the assessing officer to sustain the addition to the extent of 10% of impugned expenses.

The next issue urged by the assessee relates to deduction claimed under section 80C of the Act. The learned CIT(A) disallowed the claim on the ground that the assessee has failed to furnish any evidence to support the claim. In the interest of natural justice, we are of the view that the assessee should be provided with an opportunity to furnish the evidences in support of the claim for deduction under section 80C of the Act. Accordingly we set aside the order passed by learned CIT(A) on this issue and restore the same to the file of the assessing officer for considering the same afresh. We also direct the assessee to furnish the evidences in support of his claim for deduction u/s 80C of the Act.

In the result, the appeal filed by the assessee is treated as allowed for statistical purposes.