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TMI Blog2017 (1) TMI 860X X X X Extracts X X X X X X X X Extracts X X X X ..... the Rules. The Tribunal had,in the AY.2009-10, upheld the disallowance because the assessee itself had offered for it. - Decided in favour of the assessee Bogus purchases - Held that:- We find that the assessee had made payment of ₹ 2.76 lakhs to VE, that in the statement before the VAT authorities it had admitted to have issued bogus bills, that the assessee had produced the purchase bills and copies of the bank statement showing the payments made by it to VE,that cross examination of VE was not allowed to the assessee though it had made a specific request for it. The issue can be decided against the AO and in favour of the assessee only on this count,as the principles of natural justice were violated. The settled principles of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce u/s. 14 A read with Rule 8D 2 (iii) of the Income Tax Rules,1962(Rules),amounting ₹ 3.68 lakhs.During the assessment proceedings,the AO found that assessee had earned dividend income of ₹ 2,000/-,that it had not claimed it as exempt income,that it had not made any disallowance u/s.14A while computing the total income.Accordingly,he directed the assessee to explain as to why the expenses attributable to earning of exempt income should not be disallowed u/s.14 A R.w.r.8D of the Rules. After considering the submissions of the assessee the AO made disallowance under the heads interest expenditure (Rs.30.49 lakhs) under rule 8D (2)(ii) and administrative expenses (Rs.3.68 lakhs) under rule 8D(2)(iii)of the Rules. 2.1. Aggrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e head interest expenditure. With regard to the administrative expenses of ₹ 3.68 lakhs,the FAA held that the Tribunal had upheld the said disallowance while deciding the appeal for the AY.2009-10. 2.2. During the course of hearing before us,the Authorised Representative(AR)stated that there was no justification for upholding the administrative expenditure,that the assessee had offered the said disallowance while filing the return for the AY.2009-10,that no expenditure was incurred or claimed by the assessee for the exempt income during the year under consideration,that confirma -tion of disallowance by the FAA should be deleted.The Departmental Representative(DR) supported the order of the F AA. 2.3. We find that assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the head furniture and fixtures,that the payment for the said purchases were made to banking channels,that the transactions were carried in normal course of business and the quantum of transaction was negligible having regard to the turnover of the assessee. In view of the smallness of the transaction and with the view to curtail letigation and cost to be incurred on litigation it agreed to offer depreciation of ₹ 14,098/- for taxation provided that no penalty proceedings would be initiated by the Department.The AO observed that VE had been declared as hawala dealer by the Department of VAT,Government of Maharashtra,that the name of the said party was appearing in the website of the VAT Department,that VE had admitted in its statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfirmation letter from the said party had not been placed on record. Finally, he upheld the order of the AO. 3.3. During the course of hearing before us,the AR stated that the assessee had purchased goods from VE,that it had made payments by issuing account payee cheques, that the assessee had asked for cross-examination of the supplier of the goods, that the AO did not allow cross-examination in spite of the request made,that there was no allegation of receiving that the money by the assessee from the purchasers, that provisions of section 69C were wrongly invoked,that the FAA had ignored the bills issued by the supplier and the bank statement of the assessee while deciding the appeal.The DR supported the order of the FAA and stated t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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