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TMI Blog2018 (5) TMI 1824X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the loose papers is also a relevant factor to ascertain the said transaction belongs to the lot of the scrap sale and rate prevailing during the said period. Therefore, the rate of a particular item of scrap sale as found in the loose papers and the rate as recorded in the bills and books of accounts can be verified and then only to the extent of the same rate and same item of scrap sale will be considered for making the addition on account of under billing. Hence, in view of the facts and circumstances of the case, we set aside this issue to the record of the AO for proper verification of the facts and identify the particular item of scrap sale found recorded in the loose papers impounded during the course of survey and then apply the same rate in respect of the scrap sale of the same item which is shown by the assessee sold at the rate as mentioned in the corresponding bill. Trading addition - AO rejected the books of account u /s 145(3)- assessee surrendered an income which was included by the AO while computing the GP rate to be applied for the year under consideration - Held that:- There is no quarrel on the point that after rejection of books of account, the only cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our of the assessee by the ld. CIT (A) and thereafter by this Tribunal, then following the earlier order of the Tribunal, we do not find any error or illegality in the impugned order of the ld. CIT (A) qua this issue. Disallowance on account of travelling expenses - expenses incurred are personal in nature - Held that:- AO has not disputed that the expenditure was incurred on the travelling of the Director and, therefore, in the absence of any fact or material to show that the visits undertaken by the Director of the assessee was personal and not for the purpose of business of the assessee, such an adhoc disallowance of ₹ 50,000/- is not justified. - ITA No. 525/JP/2014, C.O. NO. 44/JP/2016 Assessment Years : 2005-06 - - - Dated:- 29-5-2018 - Shri Vijay Pal Rao And Shri Bhagchand, JJ. Revenue by: Shri J.C. Kulheri (JCIT) Assessee by: Ms Rano Jain (Advocate) ORDER Vijay Pal Rao, This appeal by the revenue and cross objection by the assessee are directed against the order dated 6th May, 2014 of ld. CIT (A), Alwar for the assessment year 2005-06. The revenue has raised the following grounds of appeal :- 1. That the Commissioner of Income T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment year 2005-06. The assessee disclosed ₹ 20,00,000/- in the Profit Loss account under the head Miscellaneous Income and as income from other sources in the return of income. The AO after analyzing the fund flow for the assessment years 2004-05 and 2005-06 came to the conclusion that though the assessee has surrendered an amount of ₹ 20,00,000/- for the year under consideration, however, it has reconciled the amount to the extent of ₹ 9,21,903/-. Thus the AO found that the assessee is having excess of cash amounting to ₹ 10,78,097/-. Accordingly, the AO made an addition of the said amount to the total income of the assessee. On appeal, the ld. CIT (A) has deleted the addition by holding that the addition made by the AO by considering the surrendered amount and comparing with the availability of cash would amount to double taxation of the same income. 3. Before us, the ld. D/R has submitted that the AO has analyzed all the details and referred to the statement of inflow and outflow of funds. Thus the AO worked out that the assessee has incurred the expenses out of books to the extent of ₹ 10,78,097/-. 3.1. On the other hand, the ld. A/R o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,13,089/-. Therefore, by considering the said differential amount of ₹ 10,89,560/-, the AO came to the conclusion that the assessee has charged 56.95% over the billed amount of scrap sale. Thus the AO held that the assessee has understated the scrap sale in the books as well as in the bills and accordingly the AO has applied 56.95% on the billed amount to compute the amount of understatement of scrap sale. The AO thus computed ₹ 59,07,216/- as understated amount of scrap sale and after giving the adjustment of ₹ 10,67,274/- as already covered in the surrendered peak, an addition of ₹ 48,39,942/- was proposed. Since the AO had already made an addition of ₹ 10,78,097/- on account of surplus cash, accordingly the AO granted the benefit of telescopic against the said addition of ₹ 48,39,942/- and the net addition was made of ₹ 37,61,845/-. The assessee challenged the action of the AO before ld. CIT (A). The ld.CIT (A) has deleted the addition by holding that the assessee has already declared income from sale of scrap appearing in the loose papers found during the course of survey. Therefore, there is no basis for extrapolating the figures of sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... different materials and at different rates. The scrap sale upto 5th May, 2004 is shown in the books @ ₹ 8500/- per MT and thereafter @ ₹ 11,500/- per MT. This sale was made only to the selected parties and, therefore, a particular scrap was sold by the assessee during the year to the selected parties. Apart from this particular metal sold as scrap @ ₹ 11,500/- per MT which consist of the major amount of scrap sale during the year, the assessee has also shown the scrap sale of other items @ ₹ 25/- per KG. Thus it appears that only 3 rates are recorded in the books. First rate is ₹ 8,500/- per MT i.e. only after 8th May, 2004 and thereafter the said particular item of scrap was sold @ ₹ 11,500/- per MT. Some other items like empty containers, V.P. rings, zinc dust etc. were sold by the assessee @ ₹ 25/- per KG. Thus the details of the various items of scrap is very well clear from the record and books of account and, therefore, the scrap sale of a particular item which is found in the loose papers showing the actual receipt is more than the billed amount can be extrapolated in respect of the scrap sale of the same item and not to the other i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P rate. The AO has considered the GP of the earlier year and also allowed relief of 1.46% and then applied only 6% as GP for the year under consideration for estimation of income of the assessee. The AO has also given the credit and benefit of other additions made by the AO and only the balance amount of ₹ 5,67,936/- was added by the AO on this account. The ld. D/R has relied upon the order of the A.O. 9.1. On the other hand, the ld. A/R of the assessee has submitted that the assessee has declared GP at 1.12% for the year under consideration as against the GP @ 0.5% in the preceding year. The AO has considered the GP of the earlier year at 7.46% after including an amount of ₹ 57,00,000/- as surrendered by the assessee. Therefore, the addition made by the AO is not based on reasonable and proper basis. The AO can estimate the income of the assessee only on the basis of the undisputed GP rate of the earlier year. Therefore, the action of the AO including income surrendered in the business income while computing the GP rate is bad in law. 10. We have considered the rival submissions as well as the relevant material on record. There is no dispute that the AO has appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loose papers found during the course of survey which contains only ₹ 1,37,902/- and, therefore, over and above the said amount the AO cannot make an addition. She has supported the order of the ld. CIT (A). 13. We have considered the rival submissions as well as the relevant material on record. The AO has noted from Annexure-A-22 of the loose papers that the bills of Haryana Rajasthan Roadlines were impounded during survey. The details of the ledger account and the bill amount as per the loose paper is given by the AO as under :- Month Expenses claimed by company Bill amount as per loose paper Difference April, 04 78338 55000 23338 May, 04 243901 165900 7800 June, 04 127463 96800 30663 July, 04 48104 19400 28704 Aug, 04 122097 74700 47397 Total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the disallowance made by the AO on account of interest expenses due to loan given to M/s. International Engineering Manufacturing Services Pvt. Ltd., a sister concern of the assessee, without charging interest was considered by this Tribunal in assessee s own case for the assessment year 2003-04 vide order dated 4th March, 2015 in ITA No. 1038/JP/2011. The revenue has not disputed the fact that there is no fresh loan given by the assessee during the year under consideration to the sister concern. Therefore, when the disallowance made by the AO on this account was already decided in favour of the assessee by the ld. CIT (A) and thereafter by this Tribunal, then following the earlier order of the Tribunal, we do not find any error or illegality in the impugned order of the ld. CIT (A) qua this issue. Ground No. 6 is regarding disallowance of ₹ 50,000/- on account of travelling expenses which was restricted by the ld. CIT (A) to ₹ 15,000/-. 16. The AO noted that the assessee has incurred ₹ 3,44,125/- on account of travelling expenses of the Directors of the assessee company. The AO made a disallowance of ₹ 50,000/- by holding that the expenses incur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the assessment order or on the grounds raised by the revenue, then the objections so raised cannot be taken under rule 27 of the ITAT Rules. In any case, the order of ld. CIT (A) would stand and will have full effect in so far as it is against the assessee and only in case the assessee succeeds in the plea raised, then the appeal of the revenue would fail. The Hon ble Bombay High Court in the case of B.R. Bamasi vs. CIT, 83 ITR 223 (Bom.) while discussing the scope of rule 27 has held as under :- But even if the assessee had not made such a statement, the above judgment shows that the assessee would be entitled to raise a new ground, provided it is a ground of law and does not necessitate any other evidence to be recorded, the nature of which would not only be a defence to the appeal itself, but may also affect the validity of the entire assessment proceedings. If the ground succeeds, the only result would be that the appeal would fail. The acceptance of the ground would show that the entire assessment proceedings were invalid, but yet the Tribunal which hears that appeal would have no power to disturb or to set aside the order in favour of the appellant against which the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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