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TMI Blog2015 (10) TMI 2244X X X X Extracts X X X X X X X X Extracts X X X X ..... ition on account of disallowance out of consumable stores expenses and that on account of disallowance out of raw material expenses. - Decided in favour of assessee. Disallowance out of free sample expenses and on account of value of goods returned by customers to the assessee - CIT(A) deleted addition - Held that:- These additions were made by the A.O. on an estimated basis. In this regard, it is seen that the A.O had himself accepted giving of free samples to be a part of the assessee’s business. So much so, the A.O had himself allowed 50% of the expenses concerning free sample given. In fact, the disallowance for the other 50% was not based on any clear justification or reasoning. Thus, this disallowance was clearly without application of mind by the A.O. Likewise, the A.O took 25% of the sale value of the good returned, to make the addition of ₹ 29,000/-. This was also without any basis and without any application of mind. Therefore, the learned CIT(A) was correct in deleting these additions. - Decided in favour of assessee. Disallowance out of job work expenses - CIT(A) deleted addition - Held that:- The rates of the job work of the assessee were not compared with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ., concerning the difference in the accounts. However, no further enquiry had been made. Still, the amounts were added without considering that since the difference was on account of opening balances, no addition could be made in the year under consideration. All these factors were duly taken into consideration by the learned CIT(A) while ordering the addition to be deleted. Finding no error here also, the action of the learned CIT(A) is confirmed. - Decided in favour of assessee. Disallowance out of payment made to internal auditor - CIT(A) deleted addition - Held that:- No comments were offered by the A.O. The learned CIT(A) found the genuineness of the expenses to have not been doubted by the A.O. The payment was also not found to have been made to any related person. The factum of TDS having been made and deposited also went in favour of the assessee. The certification/ confirmation by Sh. Daljit Singh also remained unchallenged. It was all these points which led the learned CIT(A) to delete the addition made. This deletion is also upheld.- Decided in favour of assessee. - I.T.A. No. 01 (Asr)/2014 - - - Dated:- 23-9-2015 - Sh. A. D. Jain, Hon ble Judicial Member F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned CIT(A) deleted the additions. Aggrieved, the Department in appeal before me. 4. I have heard the parties and have perused the material on record. Each of these additions are dealt with as follows. The books of account of the assessee were rejected without pointing out any defect therein. The unrebutted observation of the learned CIT(A) in this regard is that the observations made by the A.O. were of a general nature. This is found to be correct. No specific defects have been pointed out by the A.O. for rejecting the books of account. Only the expenses of the year were compared with those of the proceeding year. The explanation offered by the assessee with regard to the expenses, was rejected by the A.O without passing a reasoned order with regard thereto. The A.O made his own analysis, which the assessee was not even confronted with. Moreover, the genuineness of the expenses was never doubted. The A.O based his finding merely on his observation that the expenses were more than those incurred during the year. It was on these findings that the learned CIT(A) held the A.O to be not justified in rejecting the books of account of the assessee. Anyway, this action of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es was not challenged by the A.O. Therefore, finding no error therewith, I uphold the action of the learned CIT(A) in deleting the addition of ₹ 1,59,912/- on account of disallowance out of consumable stores expenses and that of ₹ 22,62,430/-, on account of disallowance out of raw material expenses. 6. The A.O also made addition of ₹ 1,37,500/- on account of disallowance out of free sample expenses and of ₹ 29,000/-, on account of value of goods returned by customers to the assessee. These additions were made by the A.O. on an estimated basis. In this regard, it is seen that the A.O had himself accepted giving of free samples to be a part of the assessee s business. So much so, the A.O had himself allowed 50% of the expenses concerning free sample given. In fact, the disallowance for the other 50% was not based on any clear justification or reasoning. Thus, this disallowance was clearly without application of mind by the A.O. Likewise, the A.O took 25% of the sale value of the good returned, to make the addition of ₹ 29,000/-. This was also without any basis and without any application of mind. Therefore, the learned CIT(A) was correct in deleting t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the expenditure claimed. Therefore, the learned CIT(A) is perfectly justified in deleting this addition also. This deletion is also confirmed. 9. The A.O also made disallowance of ₹ 2,02,267/- out of purchase expenses. The assessee had shown purchases of ₹ 2,02,267/- from M/s Flint Group India Pvt. Ltd. between 2.7.2006 to 4.9.2006/- through eight bills of different amounts. However, no payment was made to the company during the year. No explanation having been offered by the assessee in this regard and no evidence having been brought, the A.O made the addition. The learned CIT(A) asked the assessee to produce a copy of the return filed for Asst. Year 2008-09 along with audit report and computation of income, so as to verify the balance outstanding in the case of M/s Flint Group India Pvt. Ltd., as also to verify the assessee s claim made in assessee s written submissions and the application filed for admission of additional evidence, whereby, it was submitted that the assessee had produced the original bills before the A.O, but the A.O had objected that copies of the bills had not been provided for the A.O s record. The assessee had sought to place photocopies of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see in his ledger account but assessee has shown ₹ 1,40,724.49 (Dr.) in his party account. The assessee attributed this difference to opening balance at ₹ 18182.41 and ₹ 4924/- on account of a bill not entered by party. However, the explanation is not endorsed by the said party so the difference of ₹ 13258.41 is added to assessee s income. Penalty proceedings u/s 27(1) (c) for inaccurate of income are being initiated separately. Addition: ₹ 13258.41 (ii) M/s Gee Kay internation: The said party has shown credit balance of ₹ 3,58,205.33 in the name of the assessee whereas the assessee has shown debit balance of ₹ 5,17,037.33. Out of this assessee attributed difference of ₹ 58,834/- towards opening balance and ₹ 100000/- on a/c of post dated cheque of ₹ 1,00,000/- dated 16.04.2007. The assessee could not explain the reasons for difference of ₹ 58,834/- in opening balance. So the same is added to assessee s income. Penalty proceedings u/s 271 (1) (c ) for furnishing inaccurate particulars of income are being initiated separately. Addition: ₹ 58,834/- (iii) M/s. Kunwar Overases: T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat in spite of nearly very little business activities in second half of the F.Y 2006-07 i.e. relevant period and keeping in view last year s claim under Audit fee head at ₹ 23,260/- only this claim of ₹ 60,000/- from the business is highly exaggerated. In the totality of facts and circumstances, the claim under this head is restricted to ₹ 15,000/- only and balance ₹ 4,50,000/- is added to assessee s income. Penalty proceedings u/s 271(1)(c) for furnishing particulars of income are being initiated separately. Addition ₹ 45,000/- 15. Before the CIT(A), the assessee submitted that on the payment made to Sh. Daljit Singh, TDS was duly made and deposited; that Sh. Daljit Singh had also filed a confirmation [ which was placed before the learned CIT(A)]; that the provisions of section 40A (b) of the Act cover an internal audit also. 16. Here also, in the remand report, no comments were offered by the A.O. The learned CIT(A) found the genuineness of the expenses to have not been doubted by the A.O. The payment was also not found to have been made to any related person. The factum of TDS having been made and deposited also went in favour of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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