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TMI Blog2020 (12) TMI 1036X X X X Extracts X X X X X X X X Extracts X X X X ..... xed assets - we feel it appropriate to restore this issue to the file of the Assessing Officer for examining and verifying in view of our observation above. Disallowance of operating expenses @ 10% - HELD THAT:- Without pointing out any such defect in the books of account or vouchers relating to operating expenses, the action of the Assessing Officer in disallowing 10% of the expenses on ad-hoc basis by way of following earlier years and simply mentioning that expenses being of unverified, unreasonable and excessive, is not justified. The action of the Ld. CIT(A) in simply upholding the finding of the Assessing Officer following the finding of his predecessor in earlier years, without noticing the change in facts and circumstances in the year under consideration, is also not justified. In view of the above discussion, we are of the opinion that without pointing out any defects in the bills and vouchers of operating expenses, the ad-hoc disallowance at the rate of the 10% out of the operating expenses cannot be sustained. We also note that in assessment year 2007-08, the Assessing Officer while verifying the operating expenses in compliance to the direction of the Tribunal, has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t books of accounts were not produced before him. The Assessing Officer in assessment order passed on 30/12/2009 made following disallowances to the returned loss: Sl. No. Nature of disallowance Amount in Rs. 1. Unverified purchases from related parties 10,61,30,515/- 2. Operating expenses 8,72,60,100/- 3. Purchase of Unverified fixed assets 2,45,00,000/- 4. Depreciation claimed on unverified fixed assets 36,75,000/- 3.1 The Ld. CIT(A) deleted the disallowance of unverified purchases from related parties (₹ 10,61,30,515), disallowance of purchase of unverified fixed assets (₹ 2,45,00,000/-) and disallowance of the depreciation on unverified fixed assets ( ₹ 36,75,000/-). In relation to disallowance of operating expenses, he reduced the rate of disallowance from 30%, which was made by the Assessing Officer to 10% of the total expenses. Aggrieved, bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udes that they cannot decide the question and issue in absence of details and particulars, an order of remand may be passed. Our aforesaid decision would equally apply to the question of claim of depreciation on bottles and tetra packs, which were disallowed by the Assessing Officer. 16. In view of the aforesaid discussion, the question of law is partly answered in favour of the appellant-assessee and partly answered in favour of the respondent-Revenue. We uphold the order of remand passed by the Tribunal in respect of disallowance of unverified purchases from related parties. We, however, set aside the order of the Tribunal remanding the matter to the Assessing Officer on the question of unverified fixed assets and depreciation. The said issue/question would be examined afresh and in case and only if the Tribunal finds that the said question cannot be answered on the basis of papers and documents filed before the Assessing Officer, an order of remand may be passed. 4. We find that the Hon ble High Court has directed the Tribunal to examine the contention of the assessee regarding disallowance on purchase of unverified fixed assets and depreciation thereon. It is undisp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 17/06/2019, available on page 38 and 39 of the paper-book, which is passed by the Assessing Officer under section 254/143(3) of the Act in compliance to the direction of the Tribunal in order dated 05/06/2017. He submitted that the Assessing Officer in the said order has referred to the order of the Hon ble High Court (supra) and also considered the issue of unverified fixed assets and depreciation thereon in favour of the assessee and therefore now, there is no need to adjudicate this issue by the Tribunal. 7. Alternatively, the learned counsel of the assessee referred to paper-book and submitted that on page 185, list of Visicoollers added during the year is available and on page 192 list of bottles and shells added during the year is available. He referred to one sample bill of visicooler available on page 50 of the paper-book. He submitted that entire details of list of the fixed assets available in report of Tax Auditor (in form No.3CD) was made available to the Assessing Officer and, therefore, the Ld. CIT(A) is justified in deleting the addition in dispute. 8. The learned DR, on the other hand, submitted that no bills and vouchers were produced before the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to verify purchase of the fixed assets as directed by the Hon ble High Court. In the circumstances, we feel it appropriate to restore this issue to the file of the Assessing Officer for examining and verifying in view of our observation above. 10. Accordingly, the ground No. 1 of the appeal to the extent of disallowance of unverified fixed assets and disallowance of the depreciation thereon is allowed for statistical purposes. ITA No. 6807/Del./2015 11. Now, we take up the appeal of the assessee for assessment year 2011-12. The grounds of the appeal are reproduced as under: 1. That the CIT(A) has erred on facts and in law in upholding the order dated February 28, 2014 of the assessing officer assessing loss at ₹ 504,100,040/- as against loss of ₹ 634,86,288/- returned by the Appellant. 2. That on the facts and circumstances of the case, the CIT(A) merely relying on the order of his predessor, has erred in upholding the ad-hoc disallowance of ₹ 12,121,000/- being ten percent of the total operating expenditure of ₹ 1,201,2410,000/- made by the Assessing Officer alleging that the same to be unreasonable and excessive without bringing a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r verification. Assessee was further required to produce complete books of account, bills and vouchers for verification vide order sheet entry dated 21.02.2014. Books of account in respect of operating expenses were produced on 26.02.2014 and were examined. 15. After verification of the books of accounts in respect of the operating expenses, the Assessing Officer made a observation that during the entire year only 22999024 cases have been sold and expenses of ₹ 120,12,10,000/- had been debited in the books of accounts and therefore operating expenses came to ₹ 52.23/- per case. In view of this observation, he asked the assessee as why the 10% of the operating expenses should not be disallowed. While making the disallowance, the Assessing Officer has followed the finding of the Assessing Officer in assessment year 2009-10. He has not pointed out any other discrepancy in the books of accounts or the vouchers . Before the Assessing Officer the assessee provided detailed explanation in respect of the expenses covered under the operating expenses , however , the Ld. CIT(A) following the finding of his predecessors upheld the disallowance observing as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer has duly examined the books of accounts produced and particularly examined the operating expenses (which is the issuein- dispute before us). After verification of operating expenses, he has not pointed out any discrepancy in the expenses claimed or in the vouchers in support of bills of expenses. Without pointing out any such defect in the books of account or vouchers relating to operating expenses, the action of the Assessing Officer in disallowing 10% of the expenses on ad-hoc basis by way of following earlier years and simply mentioning that expenses being of unverified, unreasonable and excessive, is not justified. The action of the Ld. CIT(A) in simply upholding the finding of the Assessing Officer following the finding of his predecessor in earlier years, without noticing the change in facts and circumstances in the year under consideration, is also not justified. In view of the above discussion, we are of the opinion that without pointing out any defects in the bills and vouchers of operating expenses, the ad-hoc disallowance at the rate of the 10% out of the operating expenses cannot be sustained. We also note that in assessment year 2007-08, the Assessing Officer wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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