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TMI Blog2004 (9) TMI 346X X X X Extracts X X X X X X X X Extracts X X X X ..... der s. 147 in the cases where he had wrongly allowed such claims. 4. The learned Departmental Representative simply relied on the order of the AO. 5. We have heard both the parties and carefully considered the rival submissions. The jurisdiction of the CIT(A) is confined only to the assessment year which is the subject-matter of appeal. He cannot give directions in respect of other assessment years for reopening the assessments under s. 147. On specific query from the Bench, the learned counsel submitted that the AO has not reopened the assessments for the earlier assessment years. Thus, we hold that the learned CIT(A) was not justified in giving directions for reopening the assessments for the earlier years Therefore, we set aside the order of CIT(A) and delete such directions. This ground of appeal is allowed. 6. The second grievance of the assessee is that the learned CIT(A) ought to have annulled the assessment order as the same was passed in violation of express provisions of s. 144A. The Bench asked the learned counsel if there was any material or basis in support of such ground. The learned counsel submitted that there is no such material. We, then, offered him if he w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferent. Besides, summons issued to both the employees at the address given by the assessee were returned by the postal authorities unserved . Even the inquiry made through the Inspector revealed that no such person was residing at the given address. Thus, the AO disallowed the salary of Rs. 48,000 paid to these two employees. The total disallowance of salary was Rs. 75,500. 7.3 The assessee had claimed stationery expenses of Rs. 11,917, in addition to expenses of Rs. 6,000 claimed on covers, forms, etc. The AO observed that the assessee had already claimed expenses on file covers and stationery under the head Office expenses . Thus, he found that the assessee had made a false duplicate claim of Rs. 17,800. He further observed that in two cases, only expenses of Rs. 1,022 and Rs. 1,233 on stationery items had been claimed. The AO restricted the allowance to Rs. 2,000 and disallowed the balance amount of Rs. 9,917. 7.4 The assessee further claimed miscellaneous expenses of Rs. 26,636 under the head Tea, coffee, cold drinks, etc. , for which self-made vouchers were filed. The assessee claimed that these expenses were paid to one Shri Munna Lal Sharma. However, the assessee coul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not been able to successfully meet the observations of the AO. Therefore, I cannot help. Hence, this ground of appeal is rejected. It is immaterial if such claims have been allowed in the earlier years. In fact, if the claims have been allowed by mistake in the earlier years, the AO will please withdraw these claims under s. 14. The case law relied upon by the appellant is not relevant because the claims are fully unjustified. It is also not material if the AO has allowed similar claims in some other cases through mistake. Rather, the AO will be well advised to take necessary action under s. 147 in the cases where he has wrongly allowed such claims as one wrong will not justify another." The assessee is aggrieved by the order of CIT(A). Hence, this appeal before us. 9. The learned counsel for the assessee has drawn our attention to page No. 8 of the paper book which is summary of the written submissions made before the authorities below. He further referred to p. 3 of the paper book which shows comparable position of the expenses claimed and allowed for the asst. yr. 1992-93 and expenses claimed and disallowed by the AO for the asst. yr. 1993-94. He submitted that as against c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al, we have to take into account the facts placed on record and the results of inquiries made by the AO during the course of assessment proceedings. Before deciding this issue it is relevant to point out that the AO has rejected the book results for the reason that the expenses claimed under various heads were not supported by bills and vouchers and, therefore, the AO has completed the assessment by applying provisions of s. 145. We find from the grounds of appeals taken before the CIT(A) that no ground regarding rejection of book results was taken before the CIT(A). Even before us, the assessee has not taken any such issue for rejection of book results. Therefore, the finding of the AO for rejecting the book results has become final. Once the book results are rejected, the AO is duty-bound to make a fair and reasonable estimate based on evidence and material on record and also after taking into account the results of inquiries made by him. This certainly involves some amount of guess work but such guess work should be fair and reasonable based on evidence and material on record. Reliance in this regard is placed on the judgment of the Hon ble Privy Council in the case of CIT vs. L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction of salary of Rs. 48,000 paid to two employees as these remained only self-serving statements. However, we do not find any justification for disallowing salary paid to Shri Islamuddin because he was produced before the AO and he confirmed having received salary of Rs. 30,000. He further stated that he was attending to office work and writing of books of account. The AO was not justified in restricting the allowance to one month for the reason that he had admitted that such books of account could have been written in one month. Thus, we set aside the order of CIT(A) and restrict the disallowance to Rs. 48,000 and allow a relief of Rs. 27,500. 11.1 As regards stationery expenses of Rs. 11,917, we feel that 50 per cent of the same should be allowed as against expenses of Rs. 2,000 allowed by the AO and confirmed by CIT(A). The AO shall work out the disallowance accordingly. 11.2 As regards miscellaneous expenses, we feel that the disallowance of entire expenses would not be justified. Part of the expenses deserves to be allowed. Accordingly, we restrict the disallowance to 50 per cent. 11.3 As regards conveyance and travelling expenses, the assessee has not been able to in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 sustained by the CIT(A). 12.2 An amount of Rs. 17,000 was found in the name of Mohd. Yusuf. He was produced before the AO and confirmed the amount given to the assessee. He was working as a teacher and retired in 1992 and his monthly salary was Rs. 2,000. His family consisted of 6 members and monthly household expenses were admitted to be of Rs. 2,000. Taking into account these facts, the AO made an addition of Rs. 17,000 on the ground that he was not capable of advancing an amount of Rs. 17,000. On appeal, the CIT(A) upheld the addition. 12.3 Looking to the factual position stated above, we are of the opinion that such addition has been rightly made and sustained by the CIT(A) because the creditworthiness of Shri Mohd. Yusuf has not been established, but such addition is subject to our subsequent finding on the alternative plea taken by the assessee. 12.4 An amount of Rs. 17,000 was found in the name of Mukhtiar Ahmed. He was produced before the AO and admitted that he was running a Pan shop and his monthly income was Rs. 1,200. His family consisted of 4 members and monthly household expenses were stated to be Rs. 1,200. Taking into account these facts, the AO made the add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nses, the AO has already disallowed the expenses of Rs. 1,86,559. If the addition of Rs. 1,00,000 is also sustained, the same would amount to double addition. Thus, he submitted that such addition should be deleted. He also relied on the judgment of the Hon ble Rajasthan High Court in the case of CIT vs. Tyarymal Balchand (1987) 62 CTR (Raj) 216 : (1987) 165 ITR 453 (Raj). 14. The learned Departmental Representative, on the other hand, heavily relied on the orders of the authorities below. 15. We have heard both the parties and given our careful consideration to the rival submissions with reference to facts, evidence and material on record. We have already recorded a finding that additions of Rs. 90,000 out of cash credits of Rs. 1,00,000 were justified in principle. But, it is also a fact that these were squared up accounts. Therefore, there is merit in the assessee s submission that only peak credit which works out to Rs. 77,500, on 14 Oct., 1992, was called for. Therefore, the assessee would be entitled to relief of Rs. 22,500 on this account. It is a fact that the amounts introduced in various names were utilized for meeting various expenses. The authorities below have uphe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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