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TMI Blog2018 (5) TMI 1598X X X X Extracts X X X X X X X X Extracts X X X X ..... d in law in deleting the addition of Rs. 52,82,611/- made by the Assessing Officer on account of bogus purchase. (4) On the facts and circumstances of case, Ld. CIT(A) Jamshedpur, grossly erred in not following the tenets of the provisions of section 234B as amended in the year 2006. 2. Brief facts of the case are that the assessee is a company engaged in provision of security services and filed the return of income for the assessment year 2011-2012 electronically on 30.09.2011 showing a total income of Rs. 1,10,11,140/-. The return of income was duly processed u/s.143(1) of the Act and the case was selected for scrutiny consequent to the survey operation conducted on its business premises on 07.02.2012. statutory notice u/s.148 of the Act was issued. Subsequently, notice u/s.143(2) & 142(1) of the Act were issued to the assessee. In compliance the AR of the assessee appeared from time to time and filed the relevant documents. Thereafter the AO completed the assessment and assessed total income at Rs. 1,58,56,650/-. 3. Aggrieved by the assessment order, the assessee has filed an appeal with the CIT(A). In the appellate proceedings ld. AR of the assessee argued the grounds and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no mess was found to exist. At places, where it was found, it was a small self operated kitchen. Besides, the training centers were also non-existent. In cases where mess-owners were summoned u/s 131 of the I.T. Act, they did not appear and hence, the expenses could not be verified at all. The A.R. was asked to produce bills & vouchers for verification. He produced them. But they appeared to be self-made bills & vouchers. This was cross verified from Statement taken on Oath u/s 131 from a dog-supplier and escort services provider. They stated that they had received bills for A.Y. 2011-12 in January 2014 only. This proves that all the bills & vouchers were self-made. Besides as found in Survey operation, no bills or vouchers were present at the office of the Company. Hence, the expenses could not be verified and justified beyond doubt either from bills & vouchers as produced by A.R. or from enquiries u/s 133(6) and summons u/s 131. In sum, most expenses as claimed by the assessee could be verified beyond doubt. As the expenses are not established beyond doubt, the net profit of the assessee is found to be under-stated. It is, however not possible to verify the expense ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n an estimated basis keeping in view the result of the above discussed enquiries, in respect of expenses. 2% of the expenses at Rs. 43,43,804/- are disallowed and added to the income of the assessee." The AO has not pointed any defects in the books of account nor brought any material evidence on record to justify the said addition. The AO failed to onus cast upon him to conclusively arrive at the facts as to which expenses are not attributable to business expenses or which vouchers are not amenable to verification. Before passing the order, the AO also failed to shift the onus on assessee to substantiate any claim for which AO opined that the expenses are doubtful or not attributable to business expenditure. Moreover the account has been audited by a qualified CA and no specific fault in audit account has been found by AO. The addition made by the AO is based on conjecture and surmises which is bad in law. Based on above, the addition made by the AO amounting to Rs. 43,43,805/- is hereby deleted. 6. Ground no. 7 pertains to addition of Rs. 3,01,703/- on account of difference in FDR as per bank and as per balance sheet of the appellant. 6.1 During the course of assessment p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n order. Based on the above facts and circumstances the addition made by the AO is hereby deleted. 7. Ground no. 8 pertains to addition of Rs. 2,00,000/- on the ground that the shares were held by a non-existent company. 7.1 During the course of assessment proceedings the AO has dealt this fact which is being reproduced as below: From the annual return which the assessee files with the MCA, it is seen that the shareholders of the company include Anjani Putra Sales Pvt. Ltd. This company holds 2000 equity shares of Rs. 100/- each in the assessee- company. However, from enquiry on MCA and other sites, it was found that the company, "Anjani Putra Sales Pvt. Ltd.", is non-existent. There is no such company. A Company which is non-existent on MCA does not exist as per the Companies Act. IT Act recognizes only those companies which are existent under the Companies Act, 1956. Shares cannot be held by a company which does not exist. Hence, the 2000 shares are treated as bogus and the share money at Rs. 2,00,000/- is treated as income of the assessee and added to total income. 4. During the course of appellate proceeding, the appellant contention is reproduced as under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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