9911796707
TMI Blog2013 (6) TMI 566X X X X Extracts X X X X X X X X Extracts X X X X ..... nses claimed under head Purchase and also erred in resorting to enhancement by way of disallowing a further sum of Rs. 67,02,331/- thereby restricting the expenditure to the sum of Rs 1,45,333/- that behalf are absolutely arbitrary, unwarranted and perverse. 2. FOR THAT the Ld. Commissioner of Income Tax (Appeals) Asansol acted illegally in upholding the impugned disallowance made by the Ld. Income Tax Officer, Ward 2(2), Asansol in the sum of Rs. 2,56,145/- being 10% of the expenses claimed under head Wages and thereafter erred in resorting to enhancement by way of disallowing a further sum of Rs.23,11,313/- which resulted in excess of the entire claim of expenditure made under that head and the purported action resorted to on that behalf is wholly capricious, unreasonable and perverse. 3. FOR THAT the Ld. Commissioner of Income Tax (Appeals) Asansol erred in upholding the Impugned disallowance made by the Ld. Income Tax Officer, Ward 2(2), Asansol aggregating to an amount of Rs. 1,22,976/- being 20% of the expenses claimed under heads Travelling & Conveyance Other Indirect expenses, Entertainment and Telephone & Mobile and further erred in resorting to enhancement by way of dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es etc. The AO during the course of assessment proceedings made various disallowances and additions as under: (i) 10% of expenses claimed under the head purchases were disallowed at a sum of Rs.7,60,963/- (ii) 10% of expenses under the head wages at Rs.2,56,145/- (iii) 20% of expenses claimed under the head travelling and conveyance , other indirect expenses, entertainment and telephone and mobile at Rs.1,22,976/-. (iv) Further addition of Rs.1,04,529/- being unexplained investment u/s. 69 of the Act. (v) Further addition of Rs.4,08,960/- on account of undisclosed drawings. 4. The disallowances made by AO and enhancement made by CIT(A) is as under:- Expenses Accounts Head Expenses debited as pr P&L A/c Disallowed by AO Percentage Enhanced by CIT(A) Total expenses disallowed Opening stock & WIP Purchase Wages Travelling & Conveyance Other Indirect Expenses Entertainment expenses Telephone & Mobile Expenses Salary & Wages Interest on Loan Other expenses 617,052.00 7,608,627.00 2,561,458.00 186,970.00 85,685.00 215,685.00 125,636.00 187,540.00 280,588.00 359,292.00 12,228,533.00 760,963.00 256,145.00 37,394.00 17,137.00 43,137.00 25,127.00 Nil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n account of personal drawings by the AO at Rs.4,08,960/- assessee explained that this amount of Rs.6,20,757/- was transferred in this account is not correct. Actual amount transferred is Rs.4,45,460/- to this account from current account no.094010200011060 and subsequently it was transferred to his current account. Other cash deposit was made by withdrawn of cash from Oriental Bank of Commerce, Asansol Branch vide A/C No. CC1033. That assessee is an Electrical Contractor of WBSEB and other government organization, so he has to perform his job all over West Bengal in different sites. Since Oriental Bank has no infrastructure for immediate transfer of funds in different area, assessee was constrained to deposit cash in this account and made payment to parties for immediate transfer of funds. As such there was no concealment of account from any part of the assessee. CIT(A) apart from confirming the additions enhanced the assessment on account of disallowance of expenses at Rs.9,59,309/- unproved purchases was added in entirety that at Rs.67,02,331/-. Even the CIT(A) has enhanced the addition on account of unproved wages expenditure at Rs.23,11,313/- that means the entire wages are di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an ad hoc basis, rejecting the book results." and Tribunal considered the application of profit at 5.35% at para 3 of its order as under: "In the course of assessment proceedings the A.O. found that even bills produced as evidence of purchases did not have any reference or bill numbers while expenditure in respect of items like labour charges entered in the cash book did not tally with the vouchers produced as evidence of payments. No stock register was maintained. No payment certificates as evidence of earnest money and security were produced by the assessee. When asked to explain these issues, the assessee submitted to the A.O. that the accounts were duly audited and that the auditor had gone through all the bills vouchers and relevant papers. However, the assessee found it difficult to collect the relevant papers from various sites for production before the A.O. The assessee further submitted that the work was carried at various locations, papers were destroyed by "natural climate" or the ignorance of illiterate workers. Since bulk of the papers required by the A.O. had been produced the assessee requested the A.O. to consider this as compliance. The A.O. however rejected the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceed upon definite basis or data as in the case of an assessment after enquiry, but the enquiry is summary unlike the case of a normal assessment. The assessment is to be based on materials to the extent to which the materials are discovered. In other words, the Assessing Officer, while making a best judgment assessment, should make an intelligent, well-grounded estimate. Such estimate must be based on adequate and relevant materials. If more than one method or approach is possible, any alternative method can be resorted to estimate the quantum in a best judgment assessment. The quantum to be made in a best judgment assessment should be rational and fair in all circumstances of the case. 8. From the above discussion, we are of the view that a reasonable estimate can be made and the assessee might have made purchases without procuring bills and might have avoided sales tax and other government dues. It means that assessee might have earned a little higher profit than earlier years. We have seen that Tribunal has confirmed the application of net profit at 5.35% in earlier year i.e. in AY 2003-04. Keeping in view net profit of earlier years, we are of the view that a reasonable n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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