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TMI Blog2017 (5) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... from assessment year 2008-09 onwards. The A.O. issued notice u/s 148 for the assessment year 2008-09 to 2011-12, requiring the assessee to file return of income. In response to notice, the assessee has filed its return of income for the assessment year 2008-09 to 2011-12 on 19.3.2012. The cases have been selected for scrutiny and accordingly notice u/s 143(2) & 142(1) of the Act were issued. In response to notices, the authorized representative of the assessee appeared from time to time and furnished the details called for. The assessment has been completed u/s 143(3) r.w.s. 147 of the Act, on 25.3.2013 by making certain disallowances towards expenditure and other additions. 3. Aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). The assessee has challenged all the additions made by the A.O. The assessee has filed elaborate written submissions and argued that the A.O. was erred in disallowing certain expenditure on the ground that the assessee has failed to produce bills and vouchers, despite the fact that the assessee has furnished books of accounts and other bills and vouchers along with ledger extract to prove the genuineness of expenditure. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the commission payment exceeds the prescribed limit provided u/s 194H of the Act, for deduction of tax at source. The A.O. further observed that the assessee has produced only ledger extract copies of various expenditure, however, failed to substantiate the expenditure with bills and vouchers. The assessee also failed to produce wage register/muster roll for labour charges to prove the genuineness of expenditure. Therefore, opined that the assessee failed to prove the expenditure with necessary evidences and hence, made disallowance of 1/5th of labour charge payments for the assessment year 2008-09 to 2011-12. In so far as conveyance and travelling charges, sales commission and business promotion expenditure, the A.O. observed that the assessee failed to produce complete details of expenditure with necessary supporting evidences. Therefore, made adhoc disallowance of expenditure under the head 'conveyance and travelling charges, sales commission and business promotion expenses. 7. It is the contention of the assessee that it has produced bills and vouchers in support of all expenses before the A.O. The assessee further contended that the A.O. has disallowed the expenditure for wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e fails to bring on records any evidences to prove the findings of fact recorded by the CIT(A) is incorrect. We further observed that except stating that the records for the impugned assessment years has been destroyed during Hudh Hudh cyclone, the assessee has failed to furnish any cogent reasons for not furnishing relevant bills and vouchers before the lower authorities. Therefore, we are of the view that the CIT(A) has rightly set aside the issue to the file of the A.O. for verification of expenditure. Hence, we uphold the findings of the CIT(A) with regard to the disallowance of labour charges, conveyance and travelling expenses, sales commission and business promotion expenses. 9. The assessee has made an alternative plea to the effect that in respect of labour charges, the CIT(A) has confirmed additions of Rs. 4,25,000/- which was disallowed by the A.O. u/s 40(a)(ia) of the Act, for failure to deduct TDS u/s 194C of the Act. The assessee further stated that the expenditure incurred towards payment of sub contractors has been paid within the end of the financial year, therefore, in view of the special bench decision of ITAT, Visakhapatnam in the case of Merylin Shipping & Tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, the said vehicle has been owned by one of the Director of the company but not the assessee. The assessee contended that though the vehicle is in the name of the director of the company, it has been used in the business of the assessee, therefore, the assessee is eligible for depreciation and interest on vehicle loan. In support of his arguments filed necessary evidences in the form of board resolution passed by the company, evidencing authorizing the directors to buy the vehicle in their personal name. 13. Having heard both the sides and considered materials on record, we find that the assessee has claimed depreciation on vehicles, which was owned by one of the Director of the company but not the assessee. Though the Act does not prescribe ownership of asset in the name of the assessee for claiming depreciation, assessee failed to prove the use of such vehicle in the business of the assessee. Therefore, we are of the view that the assessee failed to prove the use of vehicle in the business of the assessee, which is mandatory for claiming depreciation on any assets. Similarly, in respect of interest on vehicle loan, for the similar reasons, the A.O. has disallowed interest paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ash balances on various dates. On perusal of the chart filed by the assessee, we find that the highest negative cash balance appeared on 13th August, 2010. Once the peak negative cash balance as on 13.8.2010 is treated as unexplained income of the assessee, then it will take care subsequent negative cash balances. Therefore, we are of the view that the A.O. was erred in making additions towards all the negative cash balances appeared on various dates. Accordingly, we direct the A.O. to arrive at peak negative cash balance for the purpose of addition towards negative cash balance in cash book. Therefore, we set aside the issue to the file of the A.O. and direct the A.O. to verify the details filed by the assessee to arrive at peak negative cash balance for the purpose of addition.
16. In the result, the appeals filed by the assessee in ITA Nos.626 to 629/Vizag/2014 for the assessment years 2008-09 to 2011-12 are partly allowed for statistical purposes and appeals filed by the revenue in ITA Nos.636 to 639/Vizag/2014 for the assessment years 2008-09 to 2011- 12 are dismissed.
The above order was pronounced in the open court on 28th Apr'17. X X X X Extracts X X X X X X X X Extracts X X X X
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