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TMI Blog2012 (11) TMI 219X X X X Extracts X X X X X X X X Extracts X X X X ..... he circumstances of the case, the Ld. CIT(A) has also erred in deleting the addition of Rs. 4,90,000/- made by the AO in the trade account when no books of account and supporting documents had been produced by the assessee during the assessment proceedings. (iv) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has further erred in deleting the addition of Rs. 3,10,000/- on account of income undisclosed sources. (v) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 3,10,000/- on the basis of additional evidence produced before him without following the procedure prescribed under Rule 46A of the Income Tax Rules, 1962. (vi) The appellant craves for leave to add or amend the grounds of appeal before the appeal is heard and disposed off. (vii) It is prayed that the order of the Ld. CIT(A) be set -aside and that of the AO be restored." 3. Ground Nos.1 & 2 raised by the revenue are interconnected. The revenue contended that CIT(A) erred in deleting the addition of Rs.1,22,600/- on account of expenditure, under the head 'discount ' in a situation, where the assessee do not maintain books of ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the trading account or from the P&L account as far as computation of taxable income is concerned. Moreover, from the details filed the appellant has rightly clamed this expenditure. The addition of Rs. 1,22,600/- made by the AO is ordered to be deleted. This ground of appeal is allowed." 3 (iii) We have carefully perused the rival submissions and the findings of the lower authorities. The findings recorded by the AO, that discount should be reduced from the sales and not charged to Profit & Loss Account, is not tenable, having regard to the accounting norms. The discount is an expenditure, which can either be reduced from sales or it can be charged to Profit & Loss Account. The assessee, has filed details of expenditure, on account of discount paid by him. Ld. CIT(A), has considered the issue and allowed the impugned expenditure as the assessee had filed details of such expenditure to prove the eligibility thereof. However, it is seen that evidence and details, filed by the assessee, has not been confronted to the AO, within the meaning of Rule 46A of the Income Tax Rules, 1962. In view of this, the issue is restored to the file of the AO, to adjudicate the issue afresh, as p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngly, the assessee gets partial relief. This ground of appeal of the revenue is partly allowed. 5. In Ground Nos. 4 & 5, it has been contended by the revenue that on the facts and circumstances of the case, CIT(A) erred in deleting addition of Rs.3,10,000/-. It was further contended that procedures laid down in Rule 46A, were not followed. Findings of the CIT(A) are reproduced hereunder : "9. Ground No. 4 of appeal is regarding addition of Rs.3,10,000/- as income from undisclosed sources. The AO has mentioned that the appellant has shown an unsecured loan of Rs.3,10,000/- from M/s H.N. Saree as on 31.03.2006 whereas as per the copy of the account the same is shown as debtor for the same amount. The AO therefore made addition of this amount to the returned income. The counsel for the appellant on the other hand has argued that M/s H.N. Saree is a debtor and not creditor and there is no mistake in its account and the balance sheet, The counsel filed copy of account of party in its books of account and also copy of its own account in the books of M/s H.N. Saree in this regard. I find force in the arguments of the counsel that M/s HN Saree is a debtor and has been correctly shown in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant has given advances of Rs. 10,50,000- for non-business purposes out of which Rs.5 lacs have been advanced to Ankur Fabrics, Rs.5 lacs have been advanced to Sh. Kuljit Singh and Rs.50,000- to Sterling Holiday Resort The AO held that since these advances are for non-business activity and no supporting evidence has been furnished, he disallowed interest @ 12% on these advances and made addition of Rs.1,26,000-. The counsel on the other hand argued that the advance of Rs.5 lacs given to Ankur Fabrics had been received in the next year and it was an advance for purchase of a shop which is part of the business activity. The counsel argued that the other two advances to Sh. Kuljit Singh M/s Sterling Holiday Resorts are bad debts and there is no chance of recovery. Hence interest has not been charged being bad debts and moreover, these advances are out of own capital of the appellant. On careful consideration, the arguments of the counsel are found to be without merit. The appellant has not proved that the loans and advances of Rs. 10,50,000- are for business purposes. Having received the advance in the next year from Ankur Fabrics and the other two advances being bad debts do not make ..... X X X X Extracts X X X X X X X X Extracts X X X X
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