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TMI Blog2014 (7) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... the above, ground Nos. 2,3, 7, 8 and 9 are dismissed as not pressed. 3. Ground No.4 relates to CIT (A) sustaining an addition of Rs. 10 lakh on account of low gross profit, un-vouched expenses, unexplained expenses and valuation of stock. 4. Briefly the facts are, the assessee is an individual engaged in the business of manufacture and sale of castor oil and cotton oil. For the impugned assessment year, he filed the return of income declaring total income of Rs. 7,58,300/-. During scrutiny assessment proceedings, the Assessing Officer after examining the trading and Profit & Loss a/c noticed that on a total turnover of Rs. 33,06,60,497/- the assessee had declared gross profit of Rs. 34,90,041/- which works out to 1.06%. Considering it to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure including the addition made on account of low gross profit. 6. The leaned AR submitted before us that the assessee has not only maintained regular books of accounts but all expenditures are supported by genuine vouchers and bills and therefore without finding any defect or discrepancy in the books of accounts or any deficiency in them the Assessing Officer and the CIT (A) were not justified in making additions/ disallowance purely on estimation. It was submitted that the Assessing Officer without rejecting the books of accounts has resorted to estimation of profit. The CIT (A) was also not justified in sustaining an addition of Rs. 10 lakh on estimation by erroneously observing that books of accounts of the assessee were rejected by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer has rejected the books of accounts and the expenditure claimed by the assessee are not supported by bills and vouchers. However, considering the claim of the assessee that all the expenditures are supported by genuine bills and vouchers and books of accounts have been correctly maintained which can be proved by the assessee, we are inclined to remit the matter to the file of the Assessing Officer for verifying it again. If the assessee is unable to prove the expenditure claimed and the profit declared with proper evidence, the Assessing Officer is free to draw his own conclusion on the basis of materials available on record. However, the assessee must be given adequate opportunity to represent his case. This ground of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when every petrol pump and fuel station provides credit to its regular clients, fuel is sold on cash only to occasional purchases, but for regular clients credit sales are provided by every fuel station. He was of the opinion that there is no reason why the payment has been made in the middle of night when the cheque could be given in day time. He therefore sustained the addition. 11. The learned AR submitted that the CIT (A) has arrived at his conclusion by totally misconceiving the facts by observing that the assessee has made payments to Petrol Pump towards purchase of petrol and diesel. The learned AR submitted that on the contrary, the assessee has paid the amount towards purchase of firewood which is used by the assessee as fuel in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstances:- i) 15th May, 2008 Rs. 24,700 ii) 19th October, 2008 Rs. 26,100 iii) 24th Oct. 2008 Rs. 20,600 All other payments made in cash are below Rs. 20,000/-. On a perusal of ledger extract, copies of which are placed at pages 36 to 38 of the paper book, the contention of the learned AR appears to be correct. For instance, it appears that the Assessing Officer has clubbed together payments made on 8th Aril, 2008 and 9th April, 2008 to treat it as single payment of Rs. 20,500 so as to bring it within the purview of section 40A(3). When other instances of clubbing of payments made on successive days are also filed from the ledger extracts. Therefore, in our view the Assessing Officer cannot club together payments made on two different d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f an amount of 50% of Rs. 50,000 i.e., Rs. 25,000/-. Since the assessee has not added back the amount of Rs. 1 lakh debited to Profit & Loss a/c in the computation of income and straightaway claimed 50% thereof towards deduction from the total income he added back an amount of Rs. 1,25,000/- to the returned income of the assessee. The assessee challenged he addition in appeal before the CIT (A) . 16. Before the CIT (A) it was contended by the assessee that the amount of Rs. 1 lakh debited to the Profit & Loss a/c was actually paid by the assessee though the receipt was in the name of two persons. The CIT (A) after considering the submission of the assessee directed the Assessing Officer to verify the receipt and allow the claim if the rece ..... X X X X Extracts X X X X X X X X Extracts X X X X
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