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TMI Blog2012 (8) TMI 361X X X X Extracts X X X X X X X X Extracts X X X X ..... and estimated the GP, therefore, it would subserve the interest of justice if the addition is restricted to the extent of profit estimated by the AO - direct AO to restrict the addition to the extent of Rs.16,25,424 and delete all other disallowances - we hereby direct the AO to verify whether excess receipt has been offered to tax in next year, if so, the relief in accordance with law may be granted in favour of assessee - partly in favour of assessee. - ITA No.603/Ahd/2009 - - - Dated:- 15-6-2012 - Shri, A.K.Garodia, and Shri Kul Bharat, JJ. Appellant Shri D.K.Parikh, AR Respondent Shri B.L. Yadav, SR-DR O R D E R PER Kul Bharat, Judicial Member:- This present appeal is filed by the assessee directed against the order of Ld. Commissioner of Income-tax(Appeals)-II, Surat dated 07-11-2008 for the assessment year 2005-06. The assessee has raised the following grounds of appeal:- 1. That the CIT(A) erred in rejecting the claim of assessee for acceptance of book result u/s. 145. 2. That the CIT(A) erred in confirming the addition of Rs.16,42,541/- on account of bogus purchases. 3. That the CIT(A) erred in confirming estimation of closing stock of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,76,788/- d) on account of undisclosed contract receipt at Rs.4,02,019/- e) disallowance of interest of Rs.95,191/- f) disallowance of testing fees at Rs.1,43,535/- g) disallowance of interest accrued at Rs.4,500/- Thus, total disallowances of Rs.30,08,774/- was made by Assessing Officer. Against the assessment order, assessee preferred an appeal before Ld. CIT(A). The Ld. CIT(A) after considering the facts and circumstances of the case partly allowed the appeal of assessee. 3. The assessee, now dissatisfied with the order of Ld. CIT(A) has filed this present appeal before us. 4. All the grounds are inter-connected, therefore all the grounds are taken up except grounds No.1 and 7 Ld. Authorized Representative for the assessee submitted that he is directed by the assessee not to press ground No.1 and 7. Accordingly, ground No.1 and 7 are dismissed as not pressed. 5. It is transpired from the record that the Assessing Officer has rejected the books of account of the assessee and applied the Gross Profit (GP) @ 19.06% which was average rate of the preceding two years. The AO therefore took a view that the addition of Rs.16,25,424/- was required to be made. However, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account of the assessee, the Assessing Officer may make an assessment in the manner provided in Section 144 of the Act. Further Section 144 mandates that the Assessing Officer after taking all relevant material which the Assessing Officer has gathered of the total income or loss to the best of his judgment and determine a sum payable by the assessee on the basis of such assessment. In this case, Assessing Officer estimated the GP and took a view that an addition of Rs.16,25,424/- was required to be made. However, he did not make such addition in view of other disallowances made in the same order. Since, books of account, bills and vouchers etc., could not be produced because it is claimed that these are destroyed in flood, no disallowance can be made on the basis of non-existent books. The disallowance of purchases is on the basis of high ratio of purchase to contact receipts. The same stands taken care in GP addition. The additions on account of closing stock and u/s. 69C of the Act are on this basis that there is no purchase in some months and ratio of purchase to gross receipt is high. The second aspect is taken care in GP addition. The absence of purchases in a few months can b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es I was not required to deduct tax U/s. 194J. So no question of disallowance of Testing Fee us. 40(i)(ia) r.w.s. 194J of the Act. Besides enclosing herewith certificate from M/s. Kunal Const. Co. that they are not the authority to collect Testing Fee. From the above, it is evident that the contention of the assessee was that he was a sub-contractor and payment of testing fee was reimbursement of expenses to main contractor. The submission of the assessee was that he made payment of testing fee to the government laboratory through main contractor. In other words, the contention of the assessee he had only reimbursed the expenses to M/s Kunal Contractor but had not paid any amount directly to the government laboratories. This aspect of matter was not examined by Ld. CIT(A) who had gone on the proposition that since the contentions of the assessee was that he made payment to government laboratories therefore, tax was no deductible. In this view of matter, we are of the opinion that Ld. CIT(A) erred in appreciating the facts in right perspective. Therefore, the addition confirmed by him in respect of non-deduction of tax on the payments made to main contractor as reimbursement ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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