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TMI Blog2019 (5) TMI 1304X X X X Extracts X X X X X X X X Extracts X X X X ..... ce for the capital contribution of ₹ 90,000 only. Indeed there was a credit amount reflected in the bank statement of the assessee amounting to ₹ 90,000/- but the onus is on the assessee to substantiate the same as a gift received from his brother on the basis of documentary evidence. AR before us has also not provided any details to adjust the same with the telescoping benefit. Thus in the absence of any documentary evidence, we are not inclined to disturb the finding of the authorities below. Hence the ground of appeal of the assessee is dismissed. Disallowance of depreciation - asset put to use - assets which are ready to use but were not put to use because their use depends upon the operation of other machinery which were not actually ready to use before 30th September - HELD THAT:- In this regard, we note that the use of the plant and machinery depended upon the operation of the furnace which was not put to use before 30th September 2010. No ambiguity that the plant machinery were not put to use before 30th September. Accordingly, we hold that the assessee was entitled to depreciation at the rate of 50%. Thus we do not find any infirmity in the order o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d both in law and on the facts of the case in confirming the action of AO in disallowing ₹ 52,342/- u/s.37 of the Act being 20% of telephone and administrative expenditures on account of personal usage. 6. Both the lower authorities have passed the orders without properly appreciating the fact and that they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. This action of the lower authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. 7. The learned CIT(A) has erred in law and on facts of the case in confirming action of the Ld. AO in levying interest u/s.234A/B/C/D of the Act. 8. The learned CIT(A) has erred in law and on facts of the case in confirming action of the ld. AO in initiating penalty u/s.271(1)(c) of the Act. 3. The first issue raised by the assessee is that the Ld. CIT(A) erred in confirming the disallowance of commission expenses amounting to ₹ 10,10,000/-. 4. Briefly state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an adjustment. (5) In the original bills, the assessee had paid commission to all the agents against the sale of the quantity 12184.48 M.T., whereas the total sale is declared of 7615.82 MT only. 4.3. In view of the above, the AO was of the view that the adjustment in the commission paid to these parties has been made either to manipulate the weight or the amount of commission. Accordingly, the AO was of the opinion that the commission paid to these two parties is fabricated and non-genuine. Thus, he disallowed the commission expenses of ₹ 10,10,000/- and added to the total income of the assessee. 5. Aggrieved assessee preferred an appeal to the Ld. CIT(A). The assessee before the Ld. CIT(A) submitted that there was some typographical error in the details of commission submitted first time during the hearing before the AO which was rectified from revised bills filed by the commission agents. 5.1. The assessee has paid commission to these parties @ ₹ 200/- per M.T., whereas in the case of remaining parties he has paid commission @ ₹ 200/- per M.T. 5.2. However, the Ld. CIT(A) disregarded the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act. iii. The confirmation of accounts was filed by the assessee from both the parties. iv. There was no doubt about the identity of both the parties to whom the commission was paid. v. The addresses of both the commission agents were available before the AO during the assessment proceedings. 10.2. However, the AO without finding out any defect in the details as discussed above has treated the commission expenses as if it was not incurred in connection with the business. As per the AO, the commission expenses was not genuine and the same was fabricated. The basis adopted by the AO for treating the commission expenses as non-genuine has already been elaborated in the preceding paragraph. Therefore, we are not inclined to repeat the same for the sake of brevity and to avoid repetition. In our considered view, the AO before making the disallowance of the commission expenses should have taken the confirmation from the respective parties under section 133(6)/131 of the Act. But the AO failed to do so. 10.3. The AO was in possession of the details of the transactions and parties on behalf the comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds of the assessee. Thus if the details furnished by the 3rd parties are not believable, then the AO is under the obligation for taking the clarification from the concerned parties. 10.7. We also find force in the contention of the learned AR for the assessee that the turnover of the assessee was quite huge amounting to ₹ 24,31,54,719/- which is not possible without the involvement of the commission agents in this kind of trade. The learned DR has not brought anything on record against the contention of the learned AR for the assessee. 10.8. We also disagree with the contention of the learned DR to refer the matter to the AO for conducting the necessary inquiries from the commission agents. It is because the AO had sufficient details in its possession during the assessment proceedings. Therefore, we are reluctant to provide further opportunity to the Revenue for making the fresh inquiries on the same set of documents. In this regard we find support and guidance from the judgment of ITAT Jaipur in case of Abdul Latif (130 ITD 255) wherein it was held as under: We do not feel to provide second inning to the revenue because the enti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d there was a credit amount reflected in the bank statement of the assessee amounting to ₹ 90,000/- but the onus is on the assessee to substantiate the same as a gift received from his brother on the basis of documentary evidence. 18.1. The learned AR before us has also not provided any details to adjust the same with the telescoping benefit. Thus in the absence of any documentary evidence, we are not inclined to disturb the finding of the authorities below. Hence the ground of appeal of the assessee is dismissed. 19. The third issue raised in the fourth ground of assessee s appeal is that the Ld. CIT(A) erred in confirming the disallowance of ₹ 2,05,290/- on account of excess depreciation. 20. The assessee in the year under consideration has shown addition in respect of factory sheds, building, furnace, and plant machinery. The addition shown by the assessee in respect of these items was allocated before 30th September-2010 and after 30th September-2010. The assessee in respect of addition made before 30th September-2010 claimed depreciation at the full rate prescribed under the provisions of section 32 of the Act. The ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee by observing that the activity of production was suspended from 30/09/2010 to 21/11/2010. The labor charges amounting to ₹ 1,01,000/- were paid to M/s Bapa Sitaram welding works vide bill dated 12/03/2011 which was classified under the head factory shed. Accordingly, the Ld. CIT(A) confirmed the order of the AO. 22. Aggrieved by the Ld. CIT(A), the assessee is in appeal before us. 23. The Ld. AR before us submitted that the factory shed was ready to put to use. There is no nexus between the factory shed/building and the plant machinery with the construction of furnace activities. Accordingly, the ld. AR prayed to allow the depreciation at the full rate on the addition of fixed assets before 30/03/2011. 24. On the other hand, the Ld. DR vehemently supported the order of the lower authorities. 25. We have heard the rival contentions and perused the materials available on record. In the instant case, we note that the assessee has shown additions in the fixed assets as detailed under: Details of fixed assets depreciation allowable Name of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew of the AO. 25.2. The controversy before us arises whether the assets were actually ready to use in respect of the additions made by the assessee before 30th September 2010 were eligible for the depreciation at full rate. 25.3 Regarding factory shed and building, we note certain facts as admitted by the assessee during the assessment proceedings as detailed under: i. He has incurred labor expenses amounting to ₹ 1,01,000/- dated 12th March 2011. The assessee in support of his claim has also filed the copy of the bill of M/s Bapa Sitaram Welding Works. ii. The production activity was suspended from 30th September 2010 to 21st November 2011. Almost all the expenses on the furnace were incurred during the period when the work was suspended. As such the major expenses amounting to ₹ 24,17,826/- were incurred after 30th September 2010. On perusal of the ledger, the assessee has incurred part of the expenses amounting to ₹ 7,95,080/- before 30th September 2010. 25.4. From the above details, it is transpired that the factory shed and building were not put to use before 30th September 2010. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities below. Hence the ground of appeal of the assessee is dismissed. 26. The next issue raised in the assessee s appeal is that the Ld. CIT(A) erred in deleting the disallowance of ₹ 52,342/- being 20% of telephone and administrative expenses on an ad-hoc basis. The AO observed that the assessee had claimed telephone expenses and administrative expenses amounting to ₹ 41,982/- and 2,19,730/- which is not verifiable. As per the AO, the element of personal use out of such expenses cannot be ruled out. Therefore, the AO made the disallowance @ 20% of such expenses amounting to ₹ 52,342/- and added to the total income of the assessee. The assessee also claimed that the AO had made the disallowance without issuing any show-cause notice. 27. The aggrieved assessee, preferred an appeal to the Ld. CIT(A). The assessee before the Ld. CIT(A) submitted that ad-hoc disallowance is not permitted under the provisions of law. There was no specific defect pointed out by the AO in the claim of the assessee. 27.1. The assessee without prejudice to the above, also submitted that the ad-hoc disallowance @ 20% is quite unreasonable. Howeve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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