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TMI Blog2015 (1) TMI 154X X X X Extracts X X X X X X X X Extracts X X X X ..... ed also - expenses incurred under different heads during the year under consideration have increased even though the turnover has substantially reduced - there is no connect between turnover and discount allowed - The expenses cannot be held as incurred wholly for purposes of business - No evidences rather not even details have been made available - No specific defect in the order of the CIT(A) could be pointed out by the assessee – thus, the order of the CIT(A) is upheld – Decided against assessee. - ITA No. 1522/Ahd/2011 - - - Dated:- 17-10-2014 - Shri Mukul Kr. Shrawat And Shri N. S. Saini,JJ. For the Petitioner : None (Written Submission) For the Respondent : Shri Nimesh Yadav, Sr. DR ORDER Per Shri N. S. Saini, Accountant Member: This is an appeal filed by the assessee against the order of the Commissioner of Income-tax (Appeals)-VI, Surat dated 02.02.2011. The sole ground of appeal taken by the assessee reads as under:- The learned CIT (Appeals)-IV, Surat erred in law as well as on facts while confirming the order of the ITO, Ward 6(4), Surat making lump- sum disallowance of administrative expenses to the extent of ₹ 9,54,684/-. 2. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... timation, presumption, assumption, lump-sum and adhoc basis, which is not tenable in law. The assessee, for the year under appeal, offered appreciably high trading results so far as the GP ratio and NP ratio is concerned and there is no reason to make disallowance arbitrarily which is on the face of it very much on higher side. As a result of such arbitrary and adhoc disallowance, the net profit ratio would come to 2.71%, which is about 3 times more than the NP ratio 0.67 accepted by the Assessing Officer in the immediate earlier assessment year 2006-07 while making assessment u/s 143(3) of the Act. 7. On the other hand, the DR supported the orders of the lower authorities. 8. We have gone through the written submissions filed by the assessee and heard the DR and gone through the material available on record. In the instant case, the Assessing Officer observed that the assessee has claimed ₹ 38,18,734/- under the head Administrative Expenses . According to the Assessing Officer, as the assessee could not produce any bills and vouchers in support of the above expenditure claimed by it and therefore he disallowed the 25% of such expenses, which worked to ₹ 9,54,684 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,07,7667- and it appears that no appeal has been filed against this order. It is therefore seen that no evidence / details for the current year have been provided, that comparison with preceding year shows that the expenses made during the year were excessive and that disallowances had been made in the preceding years which appear to have been accepted by the appellant . Therefore, in absence of details and the circumstances mentioned above, the addition made is confirmed. This ground of the appellant fails. 10. Before us, the assessee in his written submissions submitted as under:- The appellant would like to submit as under:- (1) The assessee being the individual is engaged in the business of dealership of Cell Force and other related items super stockiest for Cell Force under his proprietary concern M/s Swastik Oil Traders. There is no change in the business activity during the year under appeal as that of in the earlier years. The books of accounts were regularly maintained and duly audited in compliance to the provisions of Section 44 AB of the Act. The return of income of the year under appeal has been filed on 23-03-2009 showing the total taxable income at ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00% 6.60% N.P. ratio 0.58% 0.67% 1.47% Your honours, all the above details of turnover, Gross Profit and Net Profit in terms of amount and percentage to turnover along with the audit report of the earlier years were furnished before the lower authorities, but unfortunately, bent upon the lump sum disallowance of the genuine business expenses for the year. Kindly see page 43 to 52 of appeal papers showing the trading results of the consecutive three years. (More particularly on page No. 43 and 49 of appeal papers). Unfortunately, both the lower authorities have failed to consider in the right and proper perspectives the very nature of the business of dealership of Cell Force and its items for which the profit of margin is very low, while the businessmen has to bear the fixed nature of administrative expenses. Your honours will certainly appreciate that the salary and commission expenses paid to the employees employed on fixed terms of employment are on the fixed basis and not based on the commission earned as presumed by the CIT (Appeals). In the assessment order as well as in the CIT (Appeals) order, your honours will certainly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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