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TMI Blog2014 (6) TMI 105X X X X Extracts X X X X X X X X Extracts X X X X ..... iew that the notices issued by the AO were served on the concerned parties which establishes identity of the parties - The assessee produced ledger accounts, bills and payment details before the AO which establish the genuineness of the transaction - the assessee could not be held responsible for non-receipt of replies from the parties when the assessee provided all the related evidences - in any case, the confirmations were received though belated and copy was submitted which takes care of the reason for disallowance - the disallowance was made by the AO on a wrong footing – revenue could not produce any material to show further steps taken by the AO to verify the genuineness of purchases even when no reply was received from the suppliers though no summons or notices were duly served upon them – it cannot be inferred that the purchases were bogus – the order of the CIT(A) is upheld – Decided against Revenue. Restriction of disallowance of business expenses – Telephone and vehicle expenses – Held that:- The disallowance was made by the AO because of inability of the assessee to produce vouchers in respect of above expenses - no material was brought on record by the Revenue to sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of supply of labour etc. was also filed. In support of labour wage expenses, daily wages register for workers, photocopy of letter requesting issue of gate pass for labour, labour register, statement of EPF were submitted. Photocopies of bills for transportation expenses, tractor rent and payment confirmation etc. were also submitted. Comparative statement of expenses with earlier years was also provided. It was shown that fabrication expenses reduced from 0.45% in Assessment Year 2006-07 to 0.18% in the year under reference. Miscellaneous expenses, tractor rent were shown to be comparable with preceding years. It was also submitted that the assessee had not changed its method of accounting and the books were subjected to tax audit. 7. The Assessing Officer was of the opinion that the assessee had not been able to furnish documentary evidences of rendering of services, nature of work done and has not been able to establish the total volume of work done in terms of cubic metres of earth moved. According to him, the assessee should have produced certificates from engineers overseeing the work regarding quantum of work done. The Assessing Officer was of the view that the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30,41,608/- which worked out to Rs 6,08,321/-. In this way, he made total disallowance of Rs 33,73,566/- on the ground that assessee could not furnish any documentary evidence for rendering of services, nature of work done and could not establish the total volume of work done in terms of cubic metres of earth removed and that the assessee had not produced certificate from engineers overseeing the work regarding the quantum of work done and that the assessee in his opinion, could not establish which particular expenses were incurred for what purposes. On appeal, the CIT(A) restricted the disallowance to Rs 3,00,000/- on the ground that the Assessing Officer rejected the books of account on the ground that evidences regarding rendering of services and co-relation of expenses with volume of work done has not been established by the assessee without asking the assessee to carry out such exercise and therefore drawing adverse conclusion was not correct. He observed that in the instant case, this aspect cannot be inferred from the details of bills raised by the assessee on his principals and the bill actually raised by the suppliers and these details are not required to be maintained in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -do- M.S. Wire Rs 1,08,123 Total Rs 6,09,008 The Assessing Officer issued notice u/s 133(6) to the above parties. No confirmations/replies were received. The assessee was given opportunity to explain the same. The assessee did not comply. Therefore, the Assessing Officer opined that the claim of purchases of Rs 6,09,008/- was not genuine, and the Assessing Officer disallowed 25% of the purchases of Rs 6,09,008/- and thereby made addition of Rs 1,52,252/- to the income of the assessee. 13. On appeal, the CIT(A) deleted the disallowance by observing as under: I have gone through the facts of the case. It is seen that notices issued by the A.O. had been served on the concerned parties. This establishes the identity of the parties. The appellant had produced the ledger accounts, bills and payment details before the A.O. which establish the genuineness of the transactions. In my opinion, the appellant cannot be held responsible for non-receipt of replies especially when he has provided all related evidences. In any case confirmation was received, though belated, and a copy has been submitted which takes care of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penses and telephone and vehicle expenses. 18. We have heard the rival submissions, perused the orders of lower authorities and material available on record. We find that the Assessing Officer disallowed 20% out of office expenses Rs 8,729/, petrol expenses Rs 13,450/- and travelling expenses Rs 61,496/- totalling to Rs 83,675/- and thereby made disallowance of Rs 16,735/- and made a disallowance of 20% out of POS Telephone Exp. Rs 1,66,848/-, vehicle expenses Rs 17,409/- totalling to Rs 1,84,257/- and thereby made disallowance of Rs 36,851/-, in this way he made a total disallowance of Rs 53586/-. On appeal, the CIT(A) sustained disallowance 10% of the above expenditure and allowed relief at the rate of 10% of the expenditure. 19. Both the parties are in appeal before us against the aforesaid order of the CIT(A). 20. We find that the disallowance was made by the Assessing Officer because of inability of the assessee to produce vouchers in respect of above expenses. The assessee has not disputed the above fact. Further, no material was brought on record by the Revenue to show the basis on which the Assessing Officer made the disallowance at the rate of 20%. 21. Furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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