Mir Singh Vs ITO (ITAT Delhi)
No Proof of Loan Genuineness – Rs.10 Lakh Addition Confirmed, But Expense Relief Granted; ITAT Delhi Grants Partial Relief – GP & Loan Additions Sustained, Expense Disallowances Deleted
Assessee, an individual, filed appeal against order of CIT(A) confirming multiple additions made in scrutiny assessment. AO had assessed total income at Rs.31,98,300/- against returned income of Rs.8,62,610/- by making additions on account of low gross profit, unsecured loan, certain expenses & adhoc disallowances.
On gross profit, AO applied GP rate of 4% & added Rs.8,08,245/- noting discrepancy in purchases vis-à-vis Form 26AS. CIT(A) sustained addition, holding that Assessee’s trading results were unreliable. Tribunal found no infirmity & upheld addition.
On unsecured loan of Rs.10,00,000/-, Assessee claimed it was interest-free from a retired Govt. employee, supported by PAN & passbook. Tribunal held that mere furnishing of PAN & partial records did not prove creditworthiness or genuineness. In absence of lender’s bank statement, Assessee failed to discharge burden u/s 68. Hence, addition was confirmed.
On expenses, AO had disallowed rebate on sales (Rs.1,64,219/-) & rent (Rs.1,66,340/-). Tribunal observed that rebates/discounts are normal trade practice & rent was backed by receipts. Hence, both disallowances were deleted.
On adhoc disallowance of Rs.45,882/- (5% of expenses), Tribunal held that expenses were wholly business-related & no personal element was shown. Therefore, it also deleted this disallowance, granting full relief.
