Additional CIT v. Ram Manohar Singh

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The Tax Publishers2008 TaxPub(DT) 2049 (Jab-Trib) : (2008) 009 DTR 0491 Additional CIT v. Ram Manohar Singh INCOME TAX ACT, 1961 Assessment - Additions to income -Rejection of books of accounts Assessee was engaged in business of giving machinery on hire to MC' and in transportation of goods of MC. In returned certain income. Assessing Officer rejected assessee's book results on grounds that he had incurred loss in business of transportation of goods of MC which was most improbable and loss might have resulted because of debit of huge bogus expenditure in books of account futher as per assessees books he had withdrawn cash from bank on various dates but bank statement showed said amounts as transfer of amount and also assessees claim of payment of truck hire charges to 108 truck owners on a single day was almost impossible -While assessment A.O estimated much higher income -*Held :* Assessing Officer had not explained what were bogus expenditures debited and all cheques referred to in assessment order were issued for withdrawal of cash from bank account which, due to clerical error on banks part, got noted as transfer in bank statement of assessee and further sufficient material was available with Assessing Officer to test check through field enquiry whether or not assessees recording of hiring of trucks for transportation of MCs goods and payment of hire charges thereon was correct, but instead of doing so, Assessing Officer rejected book results. Therefore, Assessing Officer was not justified. Income Tax Act, 1961 Section 145 Case law analysis :Sumer Chand Jain v. CIT [2007] 292 ITR 241/ 164 Taxman 50 (MP) and CIT v. Mehta Parikh & Co. [1956] 30 ITR 181 (SC). Decision : In favour of assessee. A.Y: 2004-05 INCOME TAX ACT ,1961 Business expenditure -Allowability -Hire charges paid -Assessee had made payment of hire charges as compressor rent to VK and as loader rent to late PSof which he claimed deduction.Assessing Officer disallowed deduction doubting said payments on ground that entire payment received by payees in their bank accounts had been withdrawn in cash; and that ownership of said machineries by VK and PS was doubtful Held : When V and widow of late P had affirmed receipt of hire charges from assessee and, further, assessee had produced on record invoices drawn in respect of sale of machineries in question to VK and late PS, disallowance was not justified. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2008 TaxPub(DT) 2049 (Jab-Trib) : (2008) 009 DTR 0491

Additional CIT v. Ram Manohar Singh

INCOME TAX ACT, 1961

Assessment - Additions to income -Rejection of books of accounts

Assessee was engaged in business of giving machinery on hire to MC' and in transportation of goods of MC. In returned certain income. Assessing Officer rejected assessee's book results on grounds that he had incurred loss in business of transportation of goods of MC which was most improbable and loss might have resulted because of debit of huge bogus expenditure in books of account futher as per assessees books he had withdrawn cash from bank on various dates but bank statement showed said amounts as transfer of amount and also assessees claim of payment of truck hire charges to 108 truck owners on a single day was almost impossible -While assessment A.O estimated much higher income -Held : Assessing Officer had not explained what were bogus expenditures debited and all cheques referred to in assessment order were issued for withdrawal of cash from bank account which, due to clerical error on banks part, got noted as transfer in bank statement of assessee and further sufficient material was available with Assessing Officer to test check through field enquiry whether or not assessees recording of hiring of trucks for transportation of MCs goods and payment of hire charges thereon was correct, but instead of doing so, Assessing Officer rejected book results. Therefore, Assessing Officer was not justified.

Income Tax Act, 1961 Section 145

Case law analysis :Sumer Chand Jain v. CIT [2007] 292 ITR 241/ 164 Taxman 50 (MP) and CIT v. Mehta Parikh & Co. [1956] 30 ITR 181 (SC).

Decision : In favour of assessee.
A.Y: 2004-05

INCOME TAX ACT ,1961

Business expenditure -Allowability -Hire charges paid -Assessee had made payment of hire charges as compressor rent to VK and as loader rent to late PSof which he claimed deduction.Assessing Officer disallowed deduction doubting said payments on ground that entire payment received by payees in their bank accounts had been withdrawn in cash; and that ownership of said machineries by VK and PS was doubtful Held : When V and widow of late P had affirmed receipt of hire charges from assessee and, further, assessee had produced on record invoices drawn in respect of sale of machineries in question to VK and late PS, disallowance was not justified.