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TMI Blog2016 (8) TMI 1276X X X X Extracts X X X X X X X X Extracts X X X X ..... ock of asset ignoring that said loss claimed as revenue loss is capital in nature as also admitted by Assessee. 2 . L'd CIT(A) has erred in law and in facts and circumstances of the case in deleting the disallowance of traveling expenses amounting to Rs. 24210/-as no documentary evidence was filed by assessee during the asstt. proceedings to prove that the said expenses were for purpose of business . 3. L'd CIT(A) has erred in law and in facts and circumstances of the case in deleting the disallowance of depreciation on new car amounting to Rs. 38742 made by A.O without appreciating the fact that the date of registration of the said car was 8/4/2004 i.e after closing of previous year. 4. L'd CIT(A) has erred in law and in facts and circumstances of the case in directing AO to allow depreciation on insurance premium capitalised in respect of new car as assessee company failed to prove that the car was put to use in the previous year under consideration. 5. L'd CIT(A) has erred in law and in facts and circumstances of the case in deleting the disallowance of Rs. 7395l-made by AO on account of car maintenance expenses. 6. L'd CIT(A) has erred in law and in facts a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e made by A.O Out of Staff Welfare expenses to the tune of Rs. 24903/-. 16. L'd CIT(A) has erred in law and in facts and circumstances of the case in deleting the disallowance of Rs. 118726/- made by A.O Out of Electricity expenses pertaining to electricity meter installed at premise No.2300, Subzi Mandi without taking into account the fact that the there is no mention of such address in the return of income, Audit report, bill issued, letter head of the assessee or any other documents . 17. L'd CIT(A) has erred in law and in facts and circumstances of the case in deleting the addition amounting to Rs. 122000/- made by A.O on account of Legal charges. 18. L'd CIT(A) has erred in law and in facts and circumstances of the case in deleting the addition amounting to Rs. 263025/-made b A.O on account of bogus Salary expenses. 19. L'd CIT(A) has erred in law and in facts and circumstances of the case in deleting the addition amounting to Rs. 43,895/- made by A.O on account of repairs and maintenance. 20. L'd CIT(A) has erred in law and in facts and circumstances of the case in deleting the addition amounting to Rs. 300000/- made by A.O on account of Interest and fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Income-tax Act, 1961." 4. Briefly stated the facts of this case are : assessee filed the return of income at Rs. 36,70,360/- on 29.10.2004. Shri T.S. Kakkar, CA/AR of the assessee put in appearance during scrutiny proceedings and filed necessary details. Assessee is into the business of sale and purchase of gold and diamond jewellery. A survey operation was conducted under section 133A of the Incometax Act, 1961 (for short 'the Act') on 31.10.2003 leading to the recovery of unaccounted excess stock and in this regard, assessee surrendered a sum of Rs. 30,18,369/- and admitted to declare it as an additional income for assessment year 2004-05. Excess unaccounted cash of Rs. 5,00,030/- was also recovered which the assessee agreed to declare as additional income for AY 2004-05. 5. From the P&L account, it is noticed that a sum of Rs. 5,166/- has been debited on account of loss on sale of asset which the assessee has failed to explain and as such not allowed by the AO and added back to the income of the assessee. 6. Assessee debited a sum of Rs. 24,210/- to the P&L account on account of travelling expenses regarding visit of Shri Jagdish Lal Bhasin, Director along with his wife, S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bank after selling a car but the assessee has failed to submit registration certificate of the said car. Consequently, the AO made an addition of Rs. 2,50,000/- being an unexplained credit. 12. AO further noticed from the copy of account of Shri Ankush Bhasin in the books of assessee company that a sum of Rs. 7,50,000/- was given to the assessee company by Shri Ankush Bhasin. AO also noticed another credit entry of Rs. 90,000/- on 16.03.2004 given by Shri Ankush Bhasin to the assessee company. On failure of the assessee company to furnish bank statement of Shri Ankush Bhasin along with documentary evidence AO made an addition of Rs. 8,40,000/- to the income of the assessee. 13. AO noticed from the copy of account of Shri Jagdish Lal Bhasin in the books of the assessee that the amount of Rs. 5,00,000/-, Rs. 30,000/- and Rs,3,45,000/- was given by Shri Jagdish Lal Bhasin to the assessee company on 06.08.2003, 21.08.2003 and 27.03.2004 respectively and out of which, Rs. 3,45,000/- was received by Shri Jagdish Lal Bhasin in respect of Family Health Plan from Global Trust Bank and on failure of the assessee to prove the remaining amount, an addition of Rs. 5,30,000/- was made to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... So, the said unascertained and unaccrued provision was made on the penultimate date of accounting to reduce the additional income declared. AO came to the conclusion that it was a case where an expense of Rs. 1,22,000/- has been claimed but corresponding tax on the income is to be paid even after lapse of about 33 months from the date of provision and thereby disallowed the same. 20. During the year under assessment, the AO disallowed the amount of Rs. 2,63,025/- on account of bogus salary expenses on the ground that name of six persons, namely, Bijender Singh and others are not appearing in the list during the survey proceedings. 21. Assessee claimed an amount of Rs. 71,619/- on account of repair and maintenance. In the immediate preceding year, an amount of Rs. 43,774/- was claimed. Details of expenses along with copies of bill were called for. On failure of the assessee to prove the genuineness of the transaction amount of Rs. 43,895/-, out of the total amount of Rs. 71,619/-, has been disallowed. 22. Assessee claimed an amount of Rs. 18,74,588/- under the head 'interest and finance charges'. AO noticed that the amount of Rs. 15,17,541/- has been given to M/s. Bhasin Propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition on failure of the assessee to explain as to how the unaccounted cash of Rs. 5,00,000/- was generated having been found during the survey proceedings. Assessee has also failed to get the cash purchases verified as names of the seller were not even mentioned 28. Assessee carried the matter before the ld. CIT (A) who has dismissed the appeal. Feeling aggrieved, the revenue has come up before the Tribunal by challenging the impugned order passed by the ld. CIT (A) by way of filing the present appeal. 29. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. GROUND NO.1 30. AO disallowed an amount of Rs. 5,166/- debited on account of loss of sale of assets on the ground that the same is of capital in nature. However, the same is allowed by CIT (A) by considering the same in the block of assets as per Income-tax law. We are of the considered view that during assessment proceedings, assessee has filed revised depreciation chart which has been rejected by the AO without any reason. CIT (A) has rightly direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prove the element of personal use of the car particularly when the same has been purchased in the name of the company and stated to have been used for the company by the assessee. So, finding no illegality and perversity in the finding returned by the ld. CIT (A), ground no.5 is also determined against the revenue. GROUND NOS.6 & 7 34. AO disallowed the amount of Rs. 11,000/- and Rs. 2,500/- in respect of fee paid in respect of preparation and filing of incometax return and in respect of sales-tax fee respectively which has been allowed by the CIT (A). We again find no illegality and perversity in the findings returned by the ld. CIT (A) on the ground that preparation and filing of income-tax and sales-tax return can only be made by an expert hand i.e. Chartered Accountant whose services are available only on payment. So, ground nos.6 & 7 are determined against the revenue. GROUND NO.8 35. AO made an addition of Rs. 5,00,000/- taken by the assessee as unsecured loan from M/s. Bhawana Jewellers on the ground that the assessee company has failed to prove the capacity of the creditor and the genuineness of the transaction. However, the addition has been deleted by the CIT A) on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Moreover, the documents entertained by CIT (A) in additional evidence were merely to substantiate the affidavit already filed by Smt. Meena Bhasin and was not ordinarily requiring verification. So, finding no illegality or infirmity in the findings returned by ld. CIT (A), ground no.9 is also determined against the revenue. GROUND NOS.10, 11 & 12 37. CIT (A) deleted an addition of Rs. 8,40,000/- made by the AO u/s 68 of the Act by entertaining application for additional evidence. AO had noticed that on 17.07.2003, an amount of Rs. 7,50,000/- was given to assessee company by Shri Ankush Bhasin and another credit entry of Rs. 90,000/- dated 16.03.2004 was also noticed from Shri Ankush Bhasin to assessee company and since the assessee company has failed to furnish bank statement of Shri Ankush Bhasin along with documentary evidence as to the source of receipt of money by Shri Ankush Bhasin, AO made addition of Rs. 8,40,000/- (Rs.7,50,000/- + Rs. 90,000/-). 38. However, during appellate proceedings before the CIT (A), assessee produced sale deed of a flat sold by Shri Ankush Bhasin to Shri Kuldip Singh for Rs. 7,50,000/- on 07.07.2003 and also produced maturity receipt of Kisan Vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13,875/- and Rs. 12,356/- disallowed by the AO being the depreciation claimed by the assessee on photocopy machine and finance charges respectively. AO disallowed the depreciation and fiancé charges on the sole ground that the assessee has failed to get the purchase bill verified during the assessment proceedings. However, during appellate proceedings, assessee proved that photocopier machine was purchased in installment for Rs. 1,11,000/- and purchase bill thereof has been filed with CIT (A). So, the CIT (A) has rightly allowed the depreciation on photocopy machine and finance charges, which needs no interference and consequently ground nos.13 & 14 are determined against the revenue. GROUND NO.15 43. CIT (A) deleted the amount of Rs. 24,903/- being 1/3rd disallowance made by the AO out of the staff welfare expenses incurred by the assessee. AO disallowed 1/3rd of the staff welfare expenses on the ground that only internal vouchers were produced and no single pakka voucher was produced. However, CIT (A) allowed the staff welfare expenses on the ground that in the last year, expenses under this head were Rs. 74,980/- and in view of the nature of assessee's business, disall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of bogus salary expenses. AO made this addition on the ground that salary expenses for six persons were claimed whose names were not appearing in the list of employees furnished by the assessee during assessment proceedings nor the assessee company furnished the photocopies of appointment letter of those employees. However, CIT (A) deleted the addition after perusal of attendance register, salary payment register, provident fund register and ESI record and observed that in the face of aforesaid documents, possibility of omission of including these persons in the list prepared at the time of survey proceedings cannot be ruled out. When the names of the aforesaid six employees are appearing in PF and ESI record prepared in the due course of official duties by the concerned department, the salary bill cannot be treated as bogus. So, the CIT (A) has rightly deleted the addition made on this account, hence ground no.18 is returned against the revenue. GROUND NO.19 47. CIT (A) deleted the disallowance of Rs. 43,895/- made by the AO being the amount claimed to have incurred by the assessee for purchase of electrical goods from M/s. Vishal Electricals and M/s. Krishna Enterprises on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T (A) deleted the addition of Rs. 60,000/- made by the AO on account of sale of car. AO has made the addition merely on the ground that there is over writing in the books of account. However, CIT (A) after perusing the cash receipt and delivery receipt of the sale of the car for Rs. 1,00,000/- and copies of cash book and ledger where the total tally with the figure of Rs. 1,00,000/- deleted the addition, which requires no interference by the Tribunal, hence ground no.22 is also determined against the revenue. GROUND NO.23 52. CIT (A) has deleted the addition of Rs. 80,175/- made by the AO on account of packaging charges. AO made the addition only on the ground that the summons issued u/s 131 of the Act to some parties were received back unserved. However, CIT (A) after perusing the packing expenses account, copies of bills/vouchers and in view of the customary and factual evidence, came to the conclusion that expenses in question were incurred for business requirement as gold and diamond jewellery has to be sold in jewellery boxes, purses, pouches, etc. which are commensurate with the turnover of the assessee company to the tune of Rs. 2.64 crores. So again, we find no ground to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and stock inventory, which has been deleted by the CIT (A) by making following observations :- "A.O.'s observation and assessee's submission have been gone through. As regards the allegation of non-furnishing of the books of accounts, the assessee company has furnished the photocopy of the notings of order sheet in the assessment proceedings which clearly indicate that the books of accounts and documents as called for from time to time have been produced before the A.O. Photocopy of the documents including purchase and sale vouchers, cash book., ledger, Bank Book have been filed wherefrom the A.O have pointed out further enquiries. Thus, the allegation that books of accounts have not been produced is without any basis. As regard the furnishing of inventory the assessee company have given the basis of valuation consistently followed by it and others in the trade of gold/diamonds viz weight of gold/diamonds as per stock register kept on regular basis along with monthwise purchase and sale of gold / diamonds in weight in grams / carat. There is no change in the basis of valuation. The A.O. has not pointed out any discrepancy in this regard. It is also noted that G.P. Rate d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by AO has been rightly affirmed by ld. CIT (A). Even otherwise, Sonika Bhasin, director of a company having turnover of Rs. 2.64 crores is not proved to have assigned any substantial role to run the business of the assessee company as no such document has come on record nor such remuneration has earlier been claimed by the assessee company. So, in these circumstances, we find no ground to interfere into the findings returned by the ld. CIT (A), hence ground no.2 is determined against the assessee. GROUND NO.3 61. As regards addition of Rs. 66,000/-, it is noticed that the assessee company claimed that it has received amount of Rs. 66,000/- from Smt. Nidhi on 30.03.2004 for purchasing gold worth Rs. 1,06,278/- vide sale bill no.98 dated 18.04.2004 and the said advance was adjusted. AO merely made an addition on the basis of reply received from Smt. Nidhi u/s 133 (6) stating therein that she has given old gold and not cash of Rs. 66,000/-. When the assessee has categorically pleaded that on the sale bill, it is specifically written that Rs. 66,000/- vide receipt no.511 dated 30.03.2004 is on account of adjustment of cash payment, the addition cannot be made merely on the basis of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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