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2019 (6) TMI 292 - ITAT DELHIDisallowance u/s 40 A (3) - payments in cash exceeding ₹ 20,000/- -HELD THAT:- From list of payments made in cash by assessee, it is observed that none of the payments have been made to any particular person exceeding ₹ 20,000/- in a day. Payment has been made by assessee on various dates to various people, except payment made to Lalji Chauha, in the month of March for a sum of ₹ 40,000/- and ₹ 38,714/-, that too, made on different dates. When there is a failure on part of assessee to adhere to requirements of provision of section 44 (A) (3). This provision is a preventive measure and check on tax evasion and flow of unaccounted money, or to check transactions, which are not genuine and may be put as camouflage to evade tax by showing false transactions. However, in the type of business carried out by assessee, cash payments, cannot be eliminated totally. Admittedly revenue is not casting any doubt on genuineness of payments in respect of bills and vouchers placed in paper book. Assessee did not file any details regarding work carried on by these people and urgency that arose to make payments in cash. We are therefore inclined to set aside this issue back to Ld.CIT(A) for proper verification. Assessee is directed to file all details/evidences regarding work carried out by these people required to establish actual cash payment and urgency to make payment in cash. - Decided in favour of assessee for statistical purposes. Disallowance u/s 36 (1) (vii) - bad debt written off - no action to recover the debts - HELD THAT:- After amendment to section 36 (1) (vii), though assessee is only to write off the debts as irrecoverable in its account in order to claim deduction of bad debts, however, evidences of claim to be existing like invoices must be filed. Thus in view of evidences filed by assessee, we allow debts written off by assessee in respect of Mirra and Mirra Industries, Sandeep Industries and Bindal Industries respectfully following decision of TRS Ltd vs CIT [2010 (2) TMI 211 - SUPREME COURT] and debts in respect of other parties stand confirmed. Disallowance of sum for using car of company by directors - AO disallowed 1/5th of maintenance expenses and towards depreciation on 12 cars - Ld.CIT(A) restricted disallowance to 20%, based upon submissions advanced by assessee - HELD THAT:- CIT(A) observed that claim of depreciation was only ₹ 10,67,828/-and disallowance on maintenance of cars should be restricted to cars actually used by directors, sum of ₹ 4,19,262/-and restrict the disallowance at 20% on depreciation claimed and expenses claimed by assessee on cars which were used by directors. Admittedly assessee is not maintaining any log book to prove non-usage of cars by Directors. We, therefore, do not find any infirmity in view taken by Ld.CIT(A). Disallowance of foreign tours - allowable business expense u/s 37(1) - HELD THAT:- As observed that details filed by assessee before authorities below has not been doubted and no further verification has been carried out by authorities below in order to establish any falsity of submissions made by assessee. The details placed in paper book reveals that Sh. Tyagi, director of assessee had admittedly travelled to U.S. during Interwire Trade Exposition. Further since assessee is engaged in manufacturing, supply, commissioning of wire drawing plant and machinery of various metals and their alloys, it cannot be negated that such exhibitions would not be of any use to assessee. As authorities below has on mere surmises made addition, without there being any cogent evidence to establish anything contrary to what has been submitted by assessee, we are inclined to allow the claim of assessee. Disallowance u/s 41 (1) - old advance for purchase of machinery and same was repaid over years since purchase deal did not fructify - HELD THAT:- We do not find any reason to doubt the explanation offered by assessee which is substantiated by account statements placed in paper book unless authorities below produce any evidence to establish that the purchase was bogus. We are therefore not in concurrence with the views of Ld.CIT (A) which is based upon mere surmises and conjunctures. - Decided in favour of assessee Disallowance u/s 40A (2) (b) - HELD THAT:- Disallowance under section 40 A (2) has to be charged on reasonableness of expenditure having regard to fair market value of goods/services or facilities for which payment is made. In the facts of present case, authorities below has not cited any instances based upon which it can be ascertained that payment made by assessee was excessive and/or unreasonable. Ld.AO has not placed on record any instances of a job work carried out in respect of similar product as that of assessee to be a yardstick to form belief that payment made by assessee was excessive and/or unreasonable. Under such circumstances and after going through detailed evidences filed by assessee in the paper book, we are not in agreement with observations of authorities below and addition made deserves to be deleted . Addition of undisclosed closing stock of finished goods - HELD THAT:- CIT (A) proceeded on the footing that goods sold were from part of semi-finished goods and that assessee could not file details of goods sold. From documents placed in paper book, we are of considered opinion that goods sold are verifiable from excise records and semi-finished goods are verifiable from work in progress which was shown at closing of preceding year. We are of opinion that authorities below without verifying all these details merely on some surmises has made the addition. There is no iota of dispute in respect of documents filed by assessee by authorities below. This is a case where Ld. AO has failed to verify details as per records filed by assessee. We are therefore not inclined to uphold view of Ld. CIT (A) and the addition stands deleted.
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