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TMI Blog2012 (7) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... able to conclusively demonstrate that its case falls under the exceptions as provided under Rule 6DD, invoking the provisions of Sec. 40A(3) and disallowed 20% of the payment made in cash as the assessee had made payments aggregating to Rs.2,52,800 by cash/bearer cheque each of which were more than Rs.20,000 - against assessee. Partly confirmation of addition on account of gross profit - Held that:- As the assessee has started dealing in cement business in the present assessment year and the turnover of the assessee increased due to it is an accepted fact that to penetrate into an already existing market, the businessmen has to offer competitive rates - as CIT (A) has granted the relief to the extent of 50% of net profit estimated by A.O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... engaged in the business of trading in hardware and sanitaryware in his proprietary concern by the name of Yamuna Trading Co. He also runs another proprietary concern by the name of Shreeji Transport which is engaged in the business of transportation of bricks, sand etc. The assessee has filed return of income on 20-12-2006 declaring income at Rs.2,67,920/-. Thereafter the case was selected for scrutiny and the assessment was completed on 26- 12-2008 determining the total income at Rs.26,98,620/-after making various additions. 4. 1st ground is with respect to the addition of Rs. 19,67,294/- as being hit by provisions of s. 40(a)(ia) of the Act. 5. During the course of assessment proceeding the A.O. noted that the assessee has debited fre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the order of the A.O. 10. We have heard the rival contentions and perused the material on record. It is an undisputed fact that the assessee has paid freight charges and TDS u/s. 194C was also deductible on the same. The assessee did not deduct TDS before making the payment. Before us it was submitted that the TDS has been paid subsequently and therefore it has complied with the provisions of the Act. However, the lower authorities have not given any finding as to whether the assessee has made all the payments of freight charges before the year end. In the case of Merilyn Shipping Transports vs. ACIT (supra) the Special Bench of the Tribunal has held that only outstanding amount or the provision for expenses (and not the amount alr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh were made out of compulsion. He therefore, urged that the disallowance made u/s. 40(a)(ia) be deleted. 16. The Ld. D.R. on the other hand relied on the order of the A.O. 17. We have heard the rival contentions, perused the records. Before us the assessee has not been able to conclusively demonstrate that its case falls under the exceptions as provided under Rule 6DD. In view of these circumstances we are of the view that no interference is called for in the order of the CIT (A). Therefore, this ground of appeal of the assessee is dismissed. 18. The third ground of appeal of the assessee relates to the addition on account of Gross Profit. It was noted by the A.O. that in the proprietary concern M/s. Yamuna Trading Co., the gross pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out. In the case of the appellant he has entered in a new business that of trading in cement, which works on low margins, resulting in decrease of gross profit percentage. However, it does not explain the decrease in gross profit from 10.18% to 7.37% declared by the appellant in the current year on the same goods traded as in the earlier year. Hence while accepting that gross profit percentage cannot remain constant, in the absence of explanation for fall in gross profit in the business of M/s. Yamuna Trading Co., it is held that truth would lie somewhere in between. Therefore, the addition made by the A.O. of Rs.3,46,578/- is confirmed to the extent of 50% i.e. Rs.1,73,289/- and the balance is directed to be deleted. No justification is s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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