9911796707
TMI Blog2014 (7) TMI 387X X X X Extracts X X X X X X X X Extracts X X X X ..... aining the change of business profile, Increase in Call Centre Income and also by furnishing necessary statements and vouchers before the authorities - AO and CIT(A) erred in resorting to mathematical jugglery so as to deny the expenditure claimed by the assessee. There is no basis for A.O. disallowance of the so called inflated expenditure and CIT(A) also did not apply his mind in restricting the amount on an adhoc basis - he should have examined the contentions of the assessee and proved that they are not correct - Without doing anything on record, this sort of disallowance of expenditure claimed by the assessee cannot be accepted or justified – thus, the so-called disallowance of expenditure resorted by the AO is cancelled – thus, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l income of ₹ 45,38,643. During the assessment proceedings, the Assessing Officer held that certain expenditure had been inflated by the assessee. He found that in the earlier year, the profit margin was 18% of gross receipts whereas in the year under appeal, it fell down to 0.2% of the gross receipts. He accordingly came to the conclusion on the basis of accounts made in the earlier years that the expense s were inflated. For these reasons and taking into account various discrepancies noticed in the books of account, the Assessing Officer disallowed expenditure to the tune of ₹ 2,92,04,439, as against expenditure claimed by the assessee of ₹ 8,80,29,702, and completed the assessment on a total income of ₹ 3,37,43,08 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on record with the relevant case law. There is no dispute with reference to the fact that A.O. issued show cause notice with reference to the so called inflation in salary expenditure, which the assessee has justified by furnishing various details. Without any further notice, the A.O. calculated the percentage of expenditure on domestic turnover in earlier year and arrived at the so called expenditure which assessee could have spent for earning the income during the year. Accordingly, out of the total claim of expenditure, he determined the domestic expenditure at 80% of the turnover and disallowed the expenditure. This sort of backward calculation, in the absence of any allegation about non-maintenance of books, non-furnishing of vouche ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee also supports the contentions, we need not go into to analyzing the various principles. Suffice to say, that A.O s action cannot be justified on the facts of the case. Accordingly, disallowance is deleted. Grounds are allowed. 7. Facts and circumstances of the case leading to the issue involved in these appeals, being identical to those considered by the Tribunal for the assessment year 2005-06, following the above decision of the Tribunal for the assessment year 2005-06, we delete even the addition of ₹ 2,20,00,000 sustained by the CIT(A). Accordingly, grounds of the assessee against the addition sustained are allowed, and the grounds of the Revenue against the relief granted are rejected. 8. In the result, appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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