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TMI Blog2021 (2) TMI 533X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure in cash. It is the duty of the AO to verify the vouchers and check that whether this expenditure was actually incurred for the purpose of business or not. If it is not, he cannot proceed to disallow on adhoc basis without there being any reason. Therefore, we are inclined to treat the whole expenditure as incurred for the purpose of business. Accordingly, ground no. 2 raised by the assessee is allowed. Addition of 10% of the motor car expenses since there is no record on utilization of the vehicle - HELD THAT:- Ld. CIT(A) has already given substantial relief and reasonable. Therefore, we see no reason to grant any further relief to the assessee. Accordingly, ground no. 3 raised by assessee is dismissed. - I.T.A. No. 2364 & 2365/Mum/2019 - - - Dated:- 18-1-2021 - Shri Vikas Awasthy, JM And Shri S. Rifaur Rahman, AM For the Appellant : Shri Rahul Hakani, AR For the Respondent : Shri Sanjay J. Sethi, DR ORDER PER S. RIFAUR RAHMAN, ACCOUNTANT MEMBER: The present two appeals have been filed by the assessee against the order of Ld. Commissioner of Income Tax (Appeals)- 40 in short referred as Ld. CIT(A) , Mumbai, dated 23.01.2019 for Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27710642619V 2009-10 176790/- 6. BHARAT P MAKHWANA HUF PAYAL ENTERPRISE 27870658730V 2009-10 140216/- 7. RAMESH JOTIRAM PANCHAL ADINATH TRADING COMPANY 27930682074V 2009-10 205452/- 5. In order to verify the genuineness of the transactions, AO issued notice u/s 133(6) to all the parties and most of the show cause notices were returned unserved except M/s Bhumi Sales Corporation and M/s G. R. Trade Link who had filed a letter before AO that they have not made any sales to the assessee. Accordingly, AO treated the whole purchases as bogus and made 100% disallowance on the alleged bogus purchases. 6. Aggrieved by the above order of AO, assessee preferred appeal before Ld. CIT(A) and Ld. CIT(A) after considering the submission of assessee, sustained the addition @ 100% to M/s Bhumi Sales Corporation and M/s G. R. Trade Link by considering that they have not made any sales to the assessee and restricted the addition @ 6% to the other 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of alleged purchases by the AO relying on the statement of M/s Bhumi Sales Corporation and M/s G. R. Trade Link without giving them opportunity to cross examine to the above said parties. He submitted that Ld. CIT(A) has not adjudicated the above plea raised by the assessee raised before him. On the alternative plea, he submitted that the purchases made from these parties may be treated similar to the other parties on which Ld. CIT(A) made addition @ 6% and prayed that either delete the addition sustained by Ld. CIT(A) on relying on various judicial pronouncements in case of violation of natural justice i.e. sustaining the addition without giving opportunity for cross examination to the other parties or to restrict the disallowance @ 6%. 9. On the other hand, Ld. DR objected to the submission of the Ld. AR and submitted that assessee has claimed the above said purchases in their P L account and it is the duty of assessee to bring the parties before the AO to prove the genuineness of the transaction. Since, assessee has failed to comply the same, AO has issued show cause notice u/s 133(6) to all the parties and those parties have confirmed that they have not made sales with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has claimed depreciation on motor car expenses to the extent of ₹ 2,89,594/- and assessee was asked to prove the log book for running the motor car. Since assessee could not submit any log book for use of motor car for personal or official use, AO made disallowance @ 20% of the said expenses. 16. Aggrieved by the above order of AO, assessee preferred appeal before Ld. CIT(A) and Ld. CIT(A) after considering the submission of assessee, Ld. CIT(A) sustained the additions made on bogus purchase and labour charges. With regard to disallowance of motor car, he reduced the disallowance from 20% to 10%. 17. Aggrieved with the above, assessee is in appeal before us raising the following grounds of appeal:- 1. The learned CIT(A) erred in confirming addition u/s. 69C of alleged bogus purchases of ₹ 3,17,872/- from M/s. Payal Enterprises without appreciating that section 69C is not applicable as payment is made through banking channels and further assessee had produced purchase bills, bank statements, delivery challans, weigh bridge bills to prove the genuineness of the purchases and hence the addition of ₹ 3,17,872/- maybe deleted. 1.1 Without preju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue authorities. 20. Considered the rival submission and material placed on record. With regard to bogus purchase, we notice that M/s Payal Enterprises no doubt alleged as bogus purchase in the earlier year also and the disallowances were restricted to 6% of the alleged purchases by the then Ld. CIT(A). This year also, the assessee has purchased from the same party and this year, Ld. CIT(A) disallowed 100% of alleged purchases. In our view, there cannot be different treatment for the similar transaction. Therefore, we direct the AO to restrict the disallowance @ 6% of the purchases similar to the earlier assessment year. Accordingly, ground no. 1 raised by the assessee is allowed. 21. With regard to labour charges disallowed by the AO on adhoc basis, we notice that AO has made a general comment on this expenditure that these were not verifiable independently and made disallowance on adhoc basic with observation that assessee has self made vouchers and incurred expenditure in cash. It is the duty of the AO to verify the vouchers and check that whether this expenditure was actually incurred for the purpose of business or not. If it is not, he cannot proceed to disallow on adho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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