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TMI Blog2012 (10) TMI 507X X X X Extracts X X X X X X X X Extracts X X X X ..... t brought out in assessment order in support of the addition. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs..27,67,869 representing unproved expenditure, inspite of the fact that the assessee did not produce the books of accounts and the primary evidence to support the claim that these expenses were incurred wholly and exclusively for business purpose. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance of Rs..39,21,948, representing sundry creditors and other liabilities which were not proved to be live & existing liabilities, despite sufficient opportunities given during the assessment proceedings. 5. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs..7,05,861 pertaining to expenses on kitchen equipments, disregarding the finding in the assessment order that the above expenses were of capital nature and therefore ineligible for deduction while computing the total income." 2. The assessee is a private limited company and is having major source of income from Hotel and Auditorium, Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the manner in which in his opinion income would be properly deducted. But the assessment must be a fair and honest estimate and not arbitrary or capricious [see CIT v McMillan & Co 33 ITR 182 (SC), CIT vs A. Krishnaswami Mudallar 53 ITR 122 (SC) and Kachwala Gems vs JCIT 288 ITR 10 (SC)]. The A.O. estimated the income making the following additions totalling Rs..1,51,67,787 to the income returned : 1) Repairs and maintenance Rs..4429684 2) Rent and contract receipts Rs..2786277 3) Interest expenses Rs..7472 4) Legal and professional charges Rs..548426 5) Excess expenditure Rs..2767869 6) Expenditure u/s. 14A Rs..250 7) Sundry credits for expenses Rs..3921948 8) Expenses on Kitchen equipments Rs..15167787 The appellant has contested all the additions listed above. I take them one by one. Repairs and maintenance 9. The appellant claimed following expenses under repairs and maintenance; Computers & typewriters 2,51,561 Building 22,89,606 Plant and machinery 18,69,759 Electrical installation 7,61,878 Furniture & Fixture 8,44,431 Total 60,17,235 The appellant explained to the A.O. that the above expenses were purely revenue in nature on account of wear a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emand report, the A.O. contends that the appellant has only submitted reconciliation with the books of accounts without furnishing relevant extract, copies of books of accounts in order to show that they were offered to tax. He points out that the appellant has reconciled only a total sum of Rs.2576265 as against Rs.2786277 subject matter of addition. In the rejoinder letter dt. 11-2-2011 the appellant submits that the A.O. did not ask in course of the remand proceedings to furnish any further details or explanation, It pleads that the addition should be deleted. 10.4 I have considered the issue. The disputed receipts are less than the income from room rent, etc credited to the P&L A/c. The appellant had given invoice wise details of the receipts to the extent of Rs.2576267 as pointed out by the A.O. The AC. chose not to make any query to the appellant. In these circumstances it cannot be held that these invoices were issued out of books. However, the appellant has not furnished any explanation or material for the balance sum of Rs.210012. I therefore, restrict the addition to this extent. The appellant gets relief of Rs.2576267. Interest expenses 11. The appe4lant claime ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsultancy charges, electricity, printing & stationery, linen, power & fuel, license fees, laundry expenses, florist charges, internet, commission on sale, credit card service charges, liquor purchase and non-veg purchase. Tabulating them in the assessment order, the AO observed that the expenses incurred in the current year exceeded by Rs.2767869. Observing further that the expenses could not be verified in the absence of books accounts, he added the entire sum of Rs.27,67,869 to the income returned. 16. Being aggrieved, the appellant submits that all the expenses are fully supported by bills, vouchers etc. The A.O. failed to appreciate that the total turnover for the current year had increased from Rs.5,60,44,680 last year to Rs.6,33,79,060 this year which showed a quantum jump of Rs.73,34,381 representing 13% hike in turnover. It submitted that this increase was not possible without corresponding increase in expenses as it runs a hotel hiring rooms, banquet hall and auditorium. The appellant submits that there was no disproportionate increase in expenses in the current year so as to make the impugned disallowance. In the remand report, the AC reiterates the stand taken i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng them from the appellant. He has not controverted that the liabilities were paid in the next year. There is no basis for sustaining the addition of Rs.39,21,948. I delete the same. Expenses on Kitchen equipments 22. The appellant claimed deduction of expenditure of Rs.7,05,861 incurred on kitchen equipments. The AO observed that the nomenclature itself suggested that expenditure was capital in nature. Observing further that no books of accounts or bills/vouchers were produced, he disallowed the deduction and added Rs.7,05,861 to the income of the appellant. 23. Being aggrieved, the appellant submits that the impugned expenditure was on purchase of knife, gas lighter, spoon, dinners set, etc. It furnished the list of items purchased along with name and address of the vendors with amount in the Annexure to the Statement of Facts and pleaded that the addition made be deleted. As usual, the AO merely reiterates the stand taken in the assessment order without utilizing the opportunity given to him to examine the materials after verifying them from the appellant. The appellant has also same contention to make as in other cases above. I also have no material to sustain the addition. ..... 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