9911796707
TMI Blog1982 (9) TMI 180X X X X Extracts X X X X X X X X Extracts X X X X ..... enses. In respect of these expenses, the ld counsel for the assessee has invited our attention to the following explanation furnished by the assessee in his letter dt. 3rd Sept., 1981 to the ITO in the penalty proceedings; ''(B) Regarding disallowable Rs. 2,248, Rs. 1,000, Rs. 500, Rs. 600, Rs. 300 out of motor cycle, car expenses, travelling expenses, telephone, misc, expenses and electric motor expenses respectively, I have to state as under; (i) The firm has only one car and three motor cycles. These vehicles are exclusively used for business purposes only and the business of the firm is with farmers. It is always necessary to visit nearby villages for collection, advertisement and servicing of electric motors and our branches of satan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submission made on behalf of the assessee. The additions sustained by the AAC are hereby vacated. 3. As regards the ad hoc addition of Rs. 3,000 in the gross profit account, our attention is invited to the comparative position in the machinary spare parts accounts for the year under consideration compared to the three preceding years. It is pointed out that the book result disclosed for the year under consideration is in no way inferior to the results for the earlier years. In the circumstances, in our opinion, we see no reason why the ld ITO and the AAC should have considered it necessary to sustain an addition of Rs. 3,000. it is hereby vacated. 4. The next objection of the assessee is to the order of the AAC holding that the amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment stage. In our opinion, merely because the assessee maintains books of account on mercantile basis in respect of rest of the accounts, this addition should not have been made, particularly, in view of the fact that the very receipt of the amount was of doubtful nature. So long as it is not the case of the ITO that some of the interest received from the customers have not been credited to the books of account, the ITO could not have made such an addition. 6. During the course of the appeal proceedings before the AAC, the AAC found that the ITO after considering the rough trade account and fair books of account added the difference of gross profit between rough and fair trading account which has not been shown by the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... electric motor trading a/c on Ashwin Vadya 30, S.Y. 2031, the said amount of Rs. 1075 had been credited in the account of electric motor repairing a/c and debited in the electric motor a/c as hawala. The said hawala debited is not the purchases but expenses incurred for repairing. There is no difference of purchases between the loose papers and regular account. The purchases have been inflated by Rs. 1,075 and made addition which is unwarranted and should be deleted. 2. As far as suppression of sale is concerned, the amount of two sales bills, which was, in fact, cancelled was taken into consideration, while preparing rough estimate which was subsequently corrected while preparing four trading accounts, i.e., (1) the electric motor and pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 5315 Starter sales 4770 545 3 1040 Main switch sales 910 130 4 615 Meter box sales 525 90 5 2557 Elec spare sales 2197 360 . . 5975 From these tables it can be seen that the sales of three months i.e. Shrawan Bhadrapad and Ashwin in regular fair account has been decreased in each and every account then estimated sales due to cancellation of 2 bills. This can be also observed from total sales of S.Y. 2031, i.e.: Total sales in rough Accounts Total sales in regular a/c Difference between rough & regular i.e. (less in regular) Rs. . Rs. Rs. 2,75611 Elec motor sales 2,70,661 4,950 55,485 Starter sales 55, 940 545 8,751 Main switch sales 8,874 123 4,743 Meter box sales 4,658 85 27,368 Elec sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is 110 which is wrong and also added Rs. 1,430 as suppressed sale totally unwarranted. (a) The difference of two pieces came out due to cancellation of two bills as paragraph No. 2 i.e., rough estimate there is sale of 113 pieces while in fair trading account it is 111. (b) In rough estimate the closing stock is 45 pieces while in regular (fair) account it is 47 pieces. The increasement of two pieces in closing stock is due to cancellation of two bills. In the assessment order of ITO, Rs. 1,430 is added to the total income of an account of suppressed sales due to suppressed sale of one piece (electric motor) which is not warranted. 6. As far as suppression of sale in starter account is concerned. we have to state that during the period ..... X X X X Extracts X X X X X X X X Extracts X X X X
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