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TMI Blog2014 (11) TMI 646X X X X Extracts X X X X X X X X Extracts X X X X ..... of CIT(A), the assessee is now in appeal before us and has raised following grounds: "1. That the order passed is against the principal of natural justice and without jurisdiction and therefore it should be cancelled or set aside to the file of the learned AO. 2. That the learned CIT(A) has erred in law and facts by confirming disallowance of loss of Rs. 2,11,82,046/-.Since the appellant has incurred the losses and the accounts are audited including giving quantitative details and there is no evidence with the department that there is suppression of profit and therefore the learned AO should be directed to allow the said loss in full. 3. That the learned CIT(A) has erred in law and facts by confirming the addition of Rs. 1,54,84,837/- under section 68 of the Act. Since the appellant has furnished full details of the said loans (including with Name & Address & PAN) in the 3CD report, no additions as income is to be made and therefore the learned AO should be directed to not to make the additions u/s.68 of the Act. 4. That the learned CIT(A) has erred in law and facts by confirming the disallowance of claim of revenue expenses of Rs. 3,10,49,616/-, Since the appellant has incurr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee over the past three years, the A.O. noticed that there was a drastic fall in the gross profit earned by the assessee. The assessee was asked to explain and substantiate the fall in gross profit. The A.O. noted that the assessee failed to produce relevant books of account or furnished the necessary explanation. In the absence of any evidence to justify the fall in gross profit, the gross profit earned by the assessee in the current year was treated as Nil. 7. Aggrieved by the order of A.O., the assessee carried the matter before the CIT(A). CIT(A) upheld the order of A.O. by holding as under: "4.2 I have considered the reply of the assessee. In absence of any details and non-production of books of accounts and in view of the fact that there is nothing to show as to how manufacturing expenses have increased to the extent, I find no reason to interfere with the finding of the Assessing Officer." 8. Aggrieved by the order of CIT(A), the assessee is now in appeal before us. Before us, ld. A.R. submitted that since the accounts are audited and in the absence of any evidence about suppression of profit, the loss should not have been rejected. He, therefore, submitted that the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port, otherwise, the figure should have been mentioned. It is apparent that auditor has not at all verified this fact in the circumstances merely on the basis of tax audit report it cannot be accepted that deposits are genuine. Addition made by the Assessing Officer is confirmed." 13. Aggrieved by the order of CIT(A), the assessee is now in appeal before us. Before us, ld. A.R. reiterated the submission made before the CIT(A). He, therefore, submitted that the addition made by the A.O. be deleted. Ld. D.R., on the other hand, pointed to the fact that before the A.O., the assessee did not place any material in support of its contention, further even before CIT(A), no material has been placed by assessee about the deferred payments. In view of the aforesaid facts, the A.O. was fully justified in confirming the addition. 14. We have heard the rival submissions and perused the material on record. We find that before A.O. and CIT(A), assessee did not furnish any details about deferred payment credits. We further find that CIT(A) while confirming the addition has noted that even in audit report of the assessee no details about the borrowings have been mentioned. Before us, also assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion that it had already made the disallowance. Since the aforesaid submission has not been examined by A.O., we feel that this factual aspect needs re-examination. We, therefore, remit the matter back to the file of A.O. for ascertaining the factual position. If the submission of ld. A.R. is found correct, then the addition made be deleted. The assessee is also directed to submit all the required details before A.O. In case, the assessee fails to furnish the required details, A.O. is free to decide the matter on the basis of material on record. Thus, this ground of assessee is allowed for statistical purposes. 20. Fifth ground of appeal is with respect to the disallowance of claim of claims, rebate & reversal of claim of Rs. 3,92,66,819/-. 21. During the course of assessment proceeding, A.O. observed that assessee has claimed Rs. 3,92,66,819/- as "claims, rebate & reversal" of claims. The assessee was asked to submit the detailed break up and justify the allowability. A.O. noted that assessee has failed to submit any explanation or justification for the allowability and only submitted break up. The A.O. also noted that similar claims made by the assessee were rejected in A.Y. 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls to furnish the required details, A.O. shall be free to decide the matter on the basis of material available on record. Thus, this ground of assessee is allowed for statistical purposes. 25. Sixth ground of appeal is with respect to the disallowance of claim of writing off of Rs. 64,504/-. 26. During the course of assessment proceeding expenses under the head 'office expenses' including amount of Rs. 65,504/-, which was on account of sundry balances written off. In the absence of any details or evidence furnished by the assessee, A.O. disallowed the same. 27. Aggrieved by the order of A.O., the assessee carried the matter before the CIT(A). CIT(A) upheld the order of A.O. by holding as under: "8.2 I may point out that despite several opportunities no details were furnished even at the time of appellate proceedings. Therefore, the claim has been rightly disallowed by the Assessing Officer." 28. Aggrieved by the order of CIT(A), the assessee is now in appeal before us. Before us, ld. A.R. reiterated the submission made before the CIT(A). He further submitted that the issue is covered in assessee's favour by the decision of Apex Court in the case of TRF Ltd. (supra). On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e carried the matter before the CIT(A). CIT(A) upheld the order of A.O. by holding as under: "9.2 I have carefully considered the submissions made. It may be pointed out that assessee does not have any surplus funds for so many years and assessee's capital have been wiped out because of losses. It is also seen that similar disallowance was confirmed by Ld. CIT(A) in A.Y. 2001-02 vide order dated 6/12/2004 in appeal No. CIT(A)-V/ACIT(OSD)- 1/93/2004-05. In view of above, disallowance is confirmed. 33. Aggrieved by the order of CIT(A), the assessee is now in appeal before us. Before us, ld. A.R. submitted that assessee had not diverted interest bearing funds to acquire the shares of subsidiaries and the investments were made out of own funds and not borrowed funds. Ld. D.R., on the other hand, supported the order of A.O. and further submitted that as per provisions of Section 14A, the expenditure incurred for earning exempt income has to be disallowed. He further submitted that Bombay High Court in case of Godrej Boyce vs. DCIT 328 ITR 81 (Bom) has held that though Rule 8D is applicable from 2008-09 but prior to A.Y. 2008-09, reasonable expenditure needs to be disallowed. 34. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mission about the availability of the funds, no details or the cash flow has been submitted by the assessee. Before us, even the details of the amount since when it is outstanding has not been furnished. In view of the aforesaid facts, we find no reason to interfere with the order of CIT(A). Thus, this ground of assessee is dismissed. 40. Ninth ground of appeal is with respect to the disallowance of Rs. 5,24,421/- on hire charges. 41. AO noticed that Assessee had paid hire charges of Rs. 5,24,421/- to Blue Bell Finance Ltd for plant and machinery. AO noticed that while deciding the issue in AY 1995-96 A.O had made inquiries and due to non-existence of plant and machinery the A.O had disallowed the depreciation on the said plant and machinery and also disallowed the payment of hire charges as being non genuine. For similar reasons and following the earlier years order, the AO in the present year disallowed the payment. 42. Aggrieved by the order of AO, the assessee preferred appeal before CIT(A). CIT(A) held that the facts in the current year are identical to that of AY 1999-2000, He therefore following the order of AY 1999-2000 confirmed the order of AO. Aggrieved by the order o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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