ITAT restricts disallowances to 10% in absence of sufficient documentary evidences

Dheeraj Thakran Vs ITO (ITAT Delhi)

Conclusion: Since the gifts in the instant case were received from parents, brother and spouse, respectively and the father had withdrawn substantial cash amount from the bank before giving the gift on various dates to his son and the gifts from brother, from mother and from spouse were not huge amounts, therefore, doubting the genuineness of such gifts received from blood relations was not justified. Accordingly, the source deposited in the bank to be out of gifts was accepted.  Since assessee undoubtedly, was a gym trainer and had received rental income from hiring of gym equipments as well as professional income as a trainer, the various expenses claimed by assessee could not be denied completely. At the same time, in absence of sufficient documentary evidences to the satisfaction of the lower authorities, he disallowance was restricted to Rs.53,000/- as against Rs.4,20,000/-made by AO and sustained by CIT(A).

Held: In the instant case, the following issues arose for consideration was AO found that assessee had deposited cash of Rs.32,90,000/- in Oriental Bank of Commerce and Rs.17,50,000/- in Punjab National Bank during the impugned assessment year the details of which were given in the assessment order however,  assessee did not file any reply to explain the source of such cash deposits in the bank account, AO relying on various decisions, made addition of the same to the total income of  assessee. During the course of assessment proceedings, AO noted that assessee had received rental income of Rs.3,30,000/- from M/s NIIT Ltd., during the year. After allowing 30% statutory deduction u/s 24, AO made addition of Rs.31,000/- to the total income of assessee under the head: ‘Income from house property.’ AO further noted that as per 26AS, assessee had received professional income of Rs.4,20,000/- whereas assessee in his return of income had shown income from ‘Business or profession’ at Rs.2,02,468/- out of the total receipt of Rs.7,50,000/-. Since as per form No.26AS, the total receipt was Rs.7,50,000/- and the receipt of Rs.3,30,000/- was rental income, therefore, AO, in absence of filing of any documentary evidence, made addition of Rs.4,20,000/-to the total income of assessee. Thus, AO determined the total income of assesseee at Rs.58,18,620/- as against the returned income of Rs.1,59,620/-. It was held that since the gifts in the instant case were received from parents, brother and spouse, respectively and the father had withdrawn substantial cash amount from the bank before giving the gift on various dates to his son and the gifts from brother, from mother and from spouse were not huge amounts, therefore, doubting the genuineness of such gifts received from blood relations was not justified. Accordingly, the source deposited in the bank to be out of gifts was accepted. Thus, in nutshell, as against the addition of  Rs.50,40,000/-made by the AO and sustained by the CIT(A), an amount of ₹ 49,85,000/- was accepted as explained. Further, since assessee did not have any house property to let out and the rental income was received out of gym equipment’s given on hire to NIIT Ltd., therefore, the addition of Rs.2,31,000/- made by AO and sustained by CIT(A) was not justified. CIT(A) upheld the addition made by AO on the ground that the various expenses claimed by assessee were neither justifiable nor supported by any documentary evidences and these expenses were claimed on imaginary basis. However, it was to be noted that the professional income had not been doubted by the lower authorities. Since assessee undoubtedly, was a gym trainer and had received rental income from hiring of gym equipments as well as professional income as a trainer, the various expenses claimed by assessee could not be denied completely. At the same time, in absence of sufficient documentary evidences to the satisfaction of the lower authorities, the claim of Rs.5,29,355/- as expenses of various kind could not be accepted in full. Considering the totality of the facts, disallowance of Rs.53,000/- on estimate basis out of the various expenses shown at Rs.5,29,355/- would meet the ends of justice. Therefore, the disallowance was restricted to Rs.53,000/- as against Rs.4,20,000/-made by AO and sustained by CIT(A).

FULL TEXT OF THE ITAT JUDGEMENT

This appeal filed by the assessee is directed against the order dated 11^th March, 2016 of the CIT(A)-I, Gurgaon, relating to the assessment year 2011-12.

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