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TMI Blog2014 (6) TMI 287X X X X Extracts X X X X X X X X Extracts X X X X ..... fabrics which have a tendency of elongation on processing. It was submitted that this is proved by the Gate Passes received from mills. It was further claimed that the fabric at the time of sale was measured tight and this results in about 2% excess yield. It was also submitted that the assessee had honestly shown his excess yield in its books of account and through sales have been recorded increasing its profits. The Assessing Officer disbelieved this explanation of the assessee on the ground that this would amount to cheating customers and against business ethics and enquiries with M/s. Pioneer Syntex Private Limited, through whom 80% processing of the assessee was done, revealed that there was actual shrinkage of 1.31% on processing. The Assessing Officer, therefore, concluded that the assessee made sales out of unaccounted purchases. He considered the average sale price and book gross profit to determine the investment in unaccounted purchases which worked out at Rs 10,81,573/- and the same was added to the total income of the assessee as unexplained expenditure u/s. 69C of the Act. 4. On appeal filed by the assessee against this order of the Assessing Officer, the Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. On appeal, the Commissioner of Income Tax (Appeals) deleted the above addition by observing that the entire sale value was shown by the assessee as its income and even when the view of the Assessing Officer is taken as correct, then also as the assessee had not claimed any deduction in respect of alleged purchases, the assessee has shown more income, and therefore, question of making further addition does not arise. 7. Before us, the Departmental Representative supported the order of the Assessing Officer but could not point out any specific error in the order of the Commissioner of Income Tax (Appeals). We find that no material could be brought on record by the Revenue to show that the assessee had actually made any investment in purchases which was not recorded in its books of account. In absence of any such material, we do not find any good reason to interfere with the order of the Commissioner of Income Tax (Appeals). It is confirmed. The ground of appeal of the Revenue is dismissed. 8. Ground no. 2 of the appeal is directed against the order of the Commissioner of Income Tax (Appeals) deleting the addition of Rs 2,02,129/- on account of unaccounted stock found during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer during the course of statement itself within a few days of survey on arrival from Delhi. Therefore, the Commissioner of Income Tax (Appeals) observed that in his opinion the statement of the assessee u/s. 131 of the Act which was also supported by evidence ought to have been considered by the Assessing Officer as against the statement of a representative. According to the Commissioner of Income Tax (Appeals), it was not open to the Assessing Officer to rebut the claim and show by way of enquiries that the statement made or evidences produced in support thereof were false. The Assessing Officer chose to rely on the statement of the assessee's representative to the exclusion of assessee's own statement and evidences. The Commissioner of Income Tax (Appeals) observed that in view of the discussions made, it is held that the stock difference is reconciled and there was no excess stock with the assessee. Therefore, he deleted the addition. 11. We have heard the rival submissions and perused the orders of lower authorities and material available on record. In the instant case, during the course of survey conducted on 31.01.2006, stock of Rs 7,30,782/- was found on physical verifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o actually paid by the assessee before survey were not properly recorded in the books of account. In the above circumstances, we do not find any good reason to interfere with the order of the Commissioner of Income Tax (Appeals). It is confirmed. The ground of appeal of Revenue is dismissed. 15. Ground no. 3 of the appeal is directed against the order of Commissioner of Income Tax (Appeals) deleting the addition of Rs 1,03,836/- made on account of interest expenses u/s. 40A(2)(b) of the Act. 16. The brief facts of the case are that the Assessing Officer observed that the interest was paid at the rate of 12% to persons mentioned u/s. 40A(2)(b) of the Act. He considered it as unreasonable because cash credits were available at 9% to 10%. In reply to show cause notice, the assessee submitted before the Assessing Officer that bank loan rates range from 15% to 18% and involved further expenses in the nature of insurance premium, visit charges, valuation charges, document charges, stamp duty etc. and therefore, unsecured loan on 12% interest was reasonable. It was also submitted that this does not create any charge on the assessee. The reply did not find favour with the Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome Tax Department itself pays interest at the rate of 15% per annum on the refund granted to the assessee after the completion of the assessment u/s. 244 of the Act. Therefore, we do not find any infirmity in the order of the Commissioner of Income Tax (Appeals). It is confirmed. The ground of appeal of the Revenue is dismissed. 22. Ground no. 4 of the appeal is directed against the order of Commissioner of Income Tax (Appeals) restricting the addition of Rs 46,670/- made on account of disallowance of various expenses of Rs 93,340/-. 23. The brief facts of the case are that the Assessing Officer made addition of Rs 93,340/- on account of disallowance out of various expenses like telephone expenses, petrol expenses, vehicle repair and maintenance expenses, car insurance, car depreciation and office expenses. According to the Assessing Officer, no log book/register is maintained by the assessee for usage of vehicle. Office expenses related to coffee/tea, cold drink etc. for which no vouchers had been prepared. The Assessing Officer disallowed 20% of the expenses as being nonbusiness in nature. 24. On appeal, the Commissioner of Income Tax (Appeals) observed that the assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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