Mahesh Nathalal Thakkar Vs DCIT (ITAT Mumbai)
TDS Mismatch Addition Partly Sustained; Godown Rent Treated as Business Income; Ad-hoc Disallowance Reduced to 10%
The Mumbai SMC Bench of the ITAT partly allowed the appeal of the assessee for AY 2014-15, dealing with three additions arising from scrutiny assessment.
On addition based on Form 26AS/TDS mismatch, the Tribunal accepted the assessee’s explanation that substantial receipts from M/s Arvind Laboratories were reimbursements of expenses incurred as a clearing and forwarding (C&F) agent. However, since certain entries could not be fully reconciled, the ITAT restricted the addition to ₹1.67 lakh and granted relief of the balance amount.
Regarding godown rent of ₹1.68 lakh, the ITAT held that the assessee had already offered the net income after adjusting rent paid to godown owners, and such receipts were part of business operations under the C&F agreement. Consequently, no separate addition as income from house property was justified, and the entire addition was deleted.
On ad-hoc disallowance of business expenses, the Tribunal noted that although vouchers were self-made and some personal element could not be ruled out, the assessee’s net profit rate was higher than earlier years accepted by the Revenue. In these circumstances, the ITAT held that a 25% disallowance was excessive and restricted it to 10%, deleting the balance 15%.
Interest under sections 234B and 234D was held to be consequential. Overall, the appeal was partly allowed, granting substantial relief to the assessee.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
