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TMI Blog2014 (10) TMI 500X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenses disallowed – Proper vouchers not furnished – Held that:- CIT(A) rightly was of the view that the AO had made addition of ₹ 1,00,000/- being disallowance of expenses debited under the head ‘salary’ on the ground that no salary/attendance register was maintained - Further, salary paid to family members was on the higher side in comparison to other employees - assessee has furnished copy of account salary in the ledger of the appellant - AO has not brought any adverse material evidence on record to suggest that the salary paid to family members was excessive - On the other hand, the assessee has not maintained vouchers in respect of payment of salary - no separate salary register/attendance register/muster roll have been maintained by the assessee - assessee has not furnished nature of duties performed by the employees with reference to educational qualification - Keeping in view the fact that salary paid to staff has been allowed by the AO in the preceding years, therefore, it would be reasonable and justified if the addition is restricted to ₹ 50,000 - the disallowances made by the CIT(A) was on the reasonable expenditure after considering in detail the reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s appeals filed by the Revenue Assessee are directed against the order of ld. CIT(A)-Muzaffarnagar, dated 27/06/2012 for A.Y. 2009-10. 2. Brief facts of the case are that the assessee had filed her return of income declaring net income of ₹ 6,67,770/-. The assessment was completed at a total income of ₹ 18,70,550/-, inter-alia, making addition of ₹ 8,54,080/- on account of low GP; ₹ 2,50,950/- on various disallowances; ₹ 10,875/- on account of difference in closing balance in respect of some creditors; and ₹ 81,500/- on account of low house hold withdrawals. 3. Ld. CIT(A) partly allowed the assessee s appeal in respect of above disallowances/additions. 3.1 Being aggrieved with the order of ld. CIT(A) the Department is in appeal before us and has taken following grounds of appeal: 1. On the facts and in the circumstances of the case, the CIT(A) has erred in law in deleting the addition of ₹ 7,11,260/- out of ₹ 8,54,080/- made by the AO on account of low Gross Profit by applying the GP rate of 9.7% as against 12% applied by the Assessing Officer by ignoring the fact that in the case of Smt. Amrit Rani Prop. M/s Niranjan D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 3,09,24,363/- as against 7.78% declared by the assessee and worked out the GP addition at ₹ 13,04,080/-. He pointed out that assessee had disclosed ₹ 4,50,000/- to cover up the discrepancy in stock at the time of survey u/s 133A of the I.T. Act and, therefore, the addition was restricted to ₹ 8,54,080/-. Ld. CIT(A) had called for a remand report on the submissions made by the assessee and the AO had submitted its remand report vide letter dated 18th May, 2012. The AO in remand report had relied on various decisions of Hon ble Courts in support of trading addition to which assessee had filed rejoinder which has been reproduced in ld. CIT(A) s order in para 3.1.1. 4.2 After considering the assessee s submissions in detail, ld. CIT(A) concluded that GP is to be estimated @ 9.7% and on that basis computed the addition of ₹ 1,42,820/- as under: Total Turnover ₹ 3,09,24,363/- GP @ 9.7% ₹ 29,99,663/- Less GP declared ₹ 24,06,843/- Less amount surrendered Rs. 4,50,000 /-Rs. 28,5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) 71,773/- No voucher/evidence produced 75,000/- b) Shop Expenses b) 46,424/- by assessee. c) Customer Welfare c) 22,309/- Details of persons purposes d) Generator Expenses d)15,000/- And traveling not given. e) Packing Expenses e)16,591/- f) Travelling Expenses f) 58,186/- 3. Salary 9,32,100/- a) Salary/Attendance Register not 1,00,000/- maintained . b) salary paid to family members ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of expenses debited under the head salary on the ground that no salary/attendance register was maintained. Further, salary paid to family members was on the higher side in comparison to other employees. On the other hand the appellant has contended that salary paid in terms of percentage of sales is lower by 0.17%. Further, it has been contended that the individual salary paid to family members was lower than the salary payable to a clerk of a bank/State Government/any corporate house. The appellant has furnished copy of account salary in the ledger of the appellant. It is observed that the AO has not brought any adverse material evidence on record to suggest that the salary paid to family members was excessive. On the other hand, the appellant has not maintained vouchers in respect of payment of salary. Further, no separate salary register/attendance register/muster roll have been maintained by the appellant. Furthermore the appellant has not furnished nature of duties performed by the employees with reference to educational qualification. Keeping in view the fact that salary paid to staff has been allowed by the AO in the preceding years, therefore, it would be reasonable a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s difference in closing balance shown by Varundev Overseas (P) Ltd. (Rs. 5450/-) and Bemi Tex (Rs. 5,425/-). On the other hand, the appellant has contended that the appellant was allowed at an agreed rate of discount by the creditors, subject to the condition that the payment was made within time. In view of the above, the appellant accounted for the discount at the time of making payments and also raised a debit note to the concerned party. Some of the parties account for the cash discounts on the date of issuing bills itself without mentioning the same on the purchase bills. As such, the payment of bills outstanding at the end of the year were made by the appellant in the next year, the discount/rate difference was accounted for by the appellant. As per the appellant the copy of account of next year i.e. 2010-11 of the above referred two parties were submitted to the AO during the course of assessment proceedings wherein the aforesaid amounts stood debited on the date of payment made. The appellant has furnished copies of account of the aforesaid two parties as on 31.03.2010 wherein the amount of ₹ 5,450/- has been debited on 01.05.2009 in the account of Varundev Overseas P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that the AO was not justified in making addition of ₹ 81,500/-. The same is directed to be deleted. Ground No. 11 is allowed. 18. Having heard both the parties, we do not find any reason to interfere with the order of ld. CIT(A) because the findings of ld. CIT(A) that assessee had not significantly contributed towards withdrawals of household expenses as family members had substantially contributed towards the family requirements have not been controverted by Department. We, accordingly, confirm the order of ld. CIT(A). 19. In the result, the Department s appeal is dismissed. 20. Now, we take up the ITA No. 5206/D/2012. The assessee has taken following grounds of appeal: 1. Because the ld. CIT(Appeals) has grossly erred in law and on facts in applying GP rate of 9.7% as against 9.24% declared by the appellant and thereby confirming part addition of ₹ 1,42,820/- in the income of the appellant. 1.1 Because the AO did not find any discrepancy in the books of accounts and, therefore, the ld. CIT(Appeals) was wholly unjustified in applying the GP rate of 9.7% (as against 12% by Assessing Officer) instead of 9.24% declared by the appellant. 1.2 Becau ..... X X X X Extracts X X X X X X X X Extracts X X X X
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