2014 (4) TMI 22 - AT - Income Tax

Disallowance of 50% of hamali charges and local loading charges Held that - The assessee s business definitely calls for engagement of labour and hamali - the assessee has maintained self-made vouchers which by themselves may not offer any credibility but if the same is verified with the Acquittance Register, it might prove the veracity of the assessee s claim thus, the addition made is set aside and the matter is remitted to the AO for fresh reconsideration Decided in favour of Assessee. Commission from local sales Held that - Neither the AO nor the CIT(A) have been able to bring on record any evidence in support of such addition - the statement of a partner alone cannot form the basis for any addition, but corroborative evidence has to be found to make and sustain an addition - In the absence of any corroborative evidence, the statement of a partner alone cannot form the basis for making the addition Decided in favour of Assessee. Difference in sundry credits Documentary evidences not considered - Held that - The issue also should be remitted back to the AO for verification of the assessee s contentions and if it is found that it is a double addition and is on account of a mistake occurring in the books of account, then the AO is directed to delete the addition Decided in favour of Assessee.

Summary

Issues:
1. Disallowance of 50% of hamali charges and local loading charges
2. Addition of commission from local sales
3. Difference in sundry creditors
4. Addition on account of difference in closing stock of gunny bags

Issue 1: Disallowance of 50% of hamali charges and local loading charges
The assessee, a partnership firm trading in coconut and copra, claimed expenses for hamali and loading charges. The AO disallowed 50% of the claimed amount, stating the vouchers were self-made. The assessee argued that the Acquittance Register, impounded during a survey, supported the claim. The ITAT remanded the issue to the AO to consider the Acquittance Register for verification, emphasizing the need for credible evidence to support expenditure claims.

Issue 2: Addition of commission from local sales
The AO relied on a partner's statement during a survey to add commission from local sales. However, no corroborative evidence was presented. The ITAT held that a partner's statement alone cannot justify an addition without supporting evidence. Consequently, the addition was deleted due to lack of substantiating proof.

Issue 3: Difference in sundry creditors
The contention was a reciprocal mistake in the books of account, resulting in double addition. The ITAT directed a remand to the AO to verify the claim and delete the addition if it was a mistake. The issue was allowed for statistical purposes pending verification.

Issue 4: Addition on account of difference in closing stock of gunny bags
The AO made an addition based on total sales of gunny bags without considering loose sales. The ITAT found the addition improper and directed a remand to the AO for re-evaluation based on the remand report. The addition was considered against the principles of natural justice, and the issue was remanded for further assessment.

In conclusion, the ITAT partially allowed the assessee's appeal for statistical purposes, remanding various issues back to the AO for proper consideration in accordance with the law.