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TMI Blog2012 (7) TMI 797X X X X Extracts X X X X X X X X Extracts X X X X ..... he facts and in the circumstance of the case and in law, the ld. CIT(A) has erred, in deleting the addition of Rs.1,10,125/-, made by the A.O. on account of rebate and discount, without appreciating the facts of the case." 3. The facts, in brief, are that in this case return for income for the assessment year 2005-06 declaring NIL income was filed on 24.10.2005. The assessee is engaged in the business of dying, finishing & printing work of Art Silk Grey Fabrics. The case was picked up for scrutiny and the assessment was framed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the 'Act'). Thereby the Assessing Officer, after discussing the case and examining the details filed by the assessee, made additions on account of disallowance u/s 40(a)(ia) of the Act of Rs.2,64,101/-, addition of Rs.1,24,012/- on account of work in progress and purchases treated as bogus of Rs.5,55,415/-. The assessee, feeling aggrieved by the order of the Assessing Officer carried the matter before ld. CIT(A), who confirmed the disallowance of Rs.2,64,101/- as was made on account of disallowance u/s 40(a)(ia) of the Act. However, Ld. CIT(A) deleted the addition made on account of work in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Delhi in the case of CIT Vs. Mahavir Aluminum Ltd. (supra) observed that paragraph 23, 1.3 of the guidance note itself make it clear that whenever any adjustment is made in the valuation of inventory, this will affect both, the opening as well as the closing stock. Further, it was observed by Hon'ble High Court that if any adjustment is required to be made by statute, the effect of same should be given irrespective of opening consequence for tax purpose. Section 145A of the Act begin with a non-obstante clause and therefore, to give effect to Section 145A of the Act, if there is a change in closing stock as on March, 31, 1999 there must necessarily be a corresponding adjustment made in the opening stock as on April, 1998. We find that Ld. CIT(A) while dealing with this issue observed as under:- "The assessee submitted the statement/work in process of opening stock as well as the closing stock. The A.O. did not consider the work in process of work in stock. The Hon'ble Supreme Court in its decision in the case of CIT Vs. British Paint India Ltd. (supra) specifically stated that recalculating the value of the opening stock and closing stock by adding overhead expenditure, I have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. Agarwal Enterprise. The assessee submitted the copies of accounts of M/s. Agarwal Enterprise for the F.Y 2004-05. 2005-06 and 2006-07. The assessee shown the payments by account payee's cheques to the tune of Rs.12,02,240/- to M/s. Agarwal Enterprise in the F.Y. 2005-06 and submitted the copy of bank statements for proving the cheques clearance. The assessee further submitted the copies of bill, which shown and which were not shown in the accounts. The assessee further submitted the copies of delivery challans and weighing slips. All these material shows that the assessee had shown aH the purchase bills while M/s. Agarwal Enterprise has not shown cash sales bills. M/s. Agarwal Enterprise has allowed rebate and discount amounting to Rs.1,10,125/- when one truck of lignite valuing to about Rs.20,000/- who will give rebate and discount of about 5 trucks. I have carefully considered both the positions. I do not think that any disallowance could be made from the cash purchase as bogus and nonverifiable. Regarding rebate and discount amounting to Rs.1,10,125/- the assessee states who will give such a huge amount as rebate and discount, but it is done for making adjustment of acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l amount exceeded Rs.20,000/-. Moreover, it was noticed from 22.10.2004 the assessee had shown purchase bill numbers from Sl. No.185 of 196 and from 10.01.2005 the Sl. No. of the bills start from 209. This showed certain discrepancies in the bills. The bills started from Sl. No.209 dated 10.01.2005 onwards only finds space in the account of supplier M/s Agrawal Enterprises. In such circumstances, the cash purchases claimed to have been made by the assessee was not verifiable. We find that Ld. CIT(A) has recorded that the material produced in the form copies of bills which were recorded into the books of assessee but were not recorded into the accounts of M/S Aggrawal Enterpries. He further recorded that the assessee has submitted the copies of delivering challans and weighing slips. On the basis of material placed before him he came to conclusion that the assessee had shown all the purchase bills while M/S Aggrawal Enterprise has not shown all the purchases bills while M/S Aggrawal Enterprises has not shown cash sales. This finding is not controverted by Revenue by placing the material evidence. In this view of the matter we do not find any infirmity of the order of Ld. CIT(A) the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urce when the aggregate value of contract exceeds Rs. 50,000/- in a financial year. Up to 30-09-2004, the assessee was not liable to deduct tax u/s. 194C since no payment in excess of Rs. 20,000/- was made to a single person as was the law till that date. However, after 01.10.2004, the law was amended to provide deduction of tax when aggregate value of contract exceeds Rs. 50,000/- in a financial year. On verification of the both these two accounts it is noticed that the assessee has made payment to the following parties which is liable for deduction of tax u/s 194C of the I.T Act but still not deducted and paid to Govt. account, as per Sec. 22(1) of the I.T. Act. In view of the above, the transportation charges paid on which the TDS has not been made and not deposited in the Govt. A/C are liable to be disallowed u/s. 40a(is) of the I.T. Act." 17. Further Ld. CIT(A) has decided this issue as under:- "During the proceedings before me, the assessee explained that the transportation expenses were actually incurred and Xerox copies of all the bills were submitted. The assessee explained its case vide its letter dated 12-12-2007 and 24-12-2007 and vide submission dated 11-08-2008. M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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