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TMI Blog2022 (9) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee. Shri Rupesh Agrawal, Ld. Sr. DR appeared for the revenue. 4. The assessee in appeal before the Tribunal raising the following grounds of appeal: "1) For that the order passed u/s. 250(6) dated 30-05-2018 is bad both in law and in facts. 2) For that the CIT(A) erred in sustaining the addition made of Rs.5,00,000 by the A.O. on a/c. of unexplained capital. 3) For that the CIT(A) erred in sustaining an addition of Rs.1,50,000 on a/c of tanker. 4) For that the CIT(A) erred in sustaining an addition of Rs.52,685 on a/c VAT payable. 5) For that the CIT(A) erred in sustaining an addition of Rs.2,00,000 on a/c of security deposit. 6) For that the CIT(A) erred in sustaining an addition of Rs.2,50,343 on a/c unexplained purchases. 7) For that the CIT(A) erred in sustaining the addition of Rs.3,34,947 being 30% of expenses claimed of Rs.11,16,490 under the head fuel & repairs. 8. For that the CIT(A) erred in sustaining an addition of Rs.1,09,600 out of expenses claimed under the head bonus of Rs.4,02,600. 9) For that the CIT(A) erred in sustaining an addition of Rs.4,36,215 out of the expenses claimed of Rs. 8,72,430 under the head sales promotion. 10) For that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 45,085 1,09,017 12. Out of office expenses & stationery expenses 15% of expenses claimed of Rs. 6,96,283 1,04,442 13. Disallowance u/s. 80C 80,892 Total 26,45,647/- 7. Dissatisfied with the above order, the assessee preferred an appeal before the Ld. CIT(A). However, the appeal of the assessee was dismissed by the Ld. CIT(A). Dissatisfied with the above order passed by the Ld. CIT(A), the assessee preferred an appeal before this Tribunal. 8. While going through the grounds of appeal raised by the assessee before this Tribunal there are almost 14 grounds raised by the assessee. The ground no. 1 raised by the assessee is general in nature, therefore, need not to be adjudicated. 9. Ground no. 2 raised by the assessee stating that Ld. CIT(A) erred in sustaining the addition made Rs.5,00,000/- by the AO on account of unexplained cash introduced as capital. While deciding this issue, the Ld. AO while framing the assessment observed as under: "On going through the balance sheet of the assessee, it transpired that she has introduced capital of Rs.5.00 lakhs during the year in her business. She vide questionnaire dated 11.07.2014 was asked to file the evidences of genu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 5 lakhs along with net profit for the year. Since, the appellant has not produced any credible evidence whatsoever in this regard, therefore, I'am constrained to confirm the action of AO in invoking the provisions of section 69 of the Act and accordingly, the addition made on this account is being upheld." 9.2. We have heard at length the Ld. Sr. DR and note that the Ld. CIT(A) has passed a speaking order in respect of addition of Rs. 5 lakh as unexplained capital, in respect of this issue, the AO had put questionnaire dated 11.07.2014 and was asked to file the assessee regarding genuineness of capital introduced. But, the assessee had not complied in response to notice issued by the AO, no documentary evidences regarding genuineness of such introduction of capital before AO. Therefore, the AO had no other option but Rs. 5,00,000/- introduced capital was treated as unexplained capital investment u/s 69 of the Act and added back to her total income. Subsequently, at the time of hearing before the ld. CIT(A) also the assessee contended that a sum of Rs. 8,00,000/- was withdrawn from assessee's capital towards intended expenses on 15.04.2011 and part of such withdrawal amounting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment proceedings of the case, it has been found that the appellant had shown income from transportation but, on verification of the balance sheet of the appellant, no tanker/lorry was found to be disclosed. Further, no evidence has been brought on record as to whether this transportation business was carried by taking the tanker or lorry on hire. However, the AO was very considered to bring to tax and an amount of RS.1.50 lakhs towards unexplained investment into tanker/lorry used for the purposes of the transportation business of appellant for tax which being very reasonable, is, being upheld and this ground of appeal is, therefore, dismissed." 10.2. We have heard at length the Ld. Sr. DR and note that the Ld. CIT(A) has passed a speaking order in respect of addition of Rs. 1,50,000 on account of tanker, while ld. AO deciding the instant issue, the AO noticed that an income of transportation has been credited. However, the value of asset was found missing, subsequently the details in this regard was called for from the assessee. But the assessee never complied to such notices nor file any details during entire assessment proceeding and ultimately the AO had no other option ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment proceedings of the case or in the course of the appellate proceedings of the case had been produced that such outstanding VAT payment had been made on or before the date of the filing of the return of income. In absence of such details, I'm inclined to confirm the action of AO on this account, and therefore, this ground of appeal is dismissed." 11.2. We have heard at length the Ld. Sr. DR and note that the Ld. CIT(A) has passed a speaking order in respect of addition of Rs. 52,685 on account of VAT liability while we are going through the findings and material available on record in respect of sustaining the addition of Rs. 52,685/- on account of VAT liability, the AO on perusal of audited account, it was noticed by the AO that VAT amounting to Rs. 52,685/- was shown as payable. However, the AO was asked the assessee to submit the copy of challan to support the actual payment of VAT was discharged and accordingly the AO had added back the amount of Rs. 52,685/- to the total income of the assessee and the assessee while raising this issue before the ld. CIT(A) and the assessee completely failed to show that payment of VAT was discharged and the ld. CIT(A) accordingly conf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing observations: "At the time of assessment proceeding of the case, it has been found out by the AO that there was a security deposit of Rs.2 lakhs made by DD No.808775 dated 17/02/2004 made in favour of IOC. But, said security deposit was not found to be disclosed in the balance sheet of the appellant and no explanation for not disclosing the said security deposit in its account was offered leading AO to invoke the provisions of section 69 of the Act and bringing the amount to tax in the hands of the appellant. In the course of the appellate proceedings of the case, once again, no explanation whatsoever was offered in this regard, accordingly, I have no option but to agree with the action of the AO in invoking the provisions of section 69 of the Act which is being upheld." 12.2. We have heard at length the Ld. Sr. DR and note that the Ld. CIT(A) has passed a speaking order in respect of addition of Rs. 2,00,000/-on account of security deposit. While we considering the instant issue raised by the assessee, the AO sustaining the addition of Rs. 2,00,000/- on account of security deposit. However, the AO found that the investment made made as security with LOC never appeared in ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the above unaccounted purchase of Rs. 2,45,290/- and accordingly an amount of Rs. 5,053/- is added as extra profit earned by the assessee on sale of the petroleum products purchased out of books (as discussed above)." 13.1 Aggrieved against the action of the Ld. AO, the assessee preferred an appeal before the Ld. CIT(A), who while deciding the issue made the following observations: "In the course of the assessment proceedings of the case, it has been found out by the AO that on comparison of purchases and sales of the appellant, there was difference of Rs.2,45,290/-. No explanation whatsoever in respect of the same was offered at the time of assessment proceeding the case, neither any explanation was put forth at the time of the appellate proceeding of the case. Since, the said difference was found to be not more than purchases made by the appellant on a daily basis, it was concluded by the AO that not only the appellant had made unexplained investment in the purchases to this amount but has also concealed profit on the sale of the same which was computed at the rate of 2.06%, as declared in the returns of income for the A. Y 2012-13. At the time of the appellate proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rusal of the profit & loss a/c it was found that the assessee against all these income of Rs.98,95,579/- has claimed expenses under twenty two different heads of Rs.95,57,699/- and showing net profit of Rs.7,89,980/- only from all ventures which includes the compensation claim. Therefore factually the assessee has shown net profit of Rs.3,37,880/- only against the total sale of Rs.40.10 crores i.e. 0.08% . Hence the expenses claimed by the assessee appears very excessive, unreasonable and on a very higher side which is also strengthened from the enquiry report of the ITI who on physical verification did not get any supportive bills and vouchers of claimed expenses. The assessee has claimed expenses under the head fuel of Rs.6,18,240/- repair & maintenance of Rs.4,98,250/- against the transportation come of Rs.11,44,847/- which has been credited to the profit & loss a/c. The expenditure under the head of insurance might have also been claimed against transport vehicle. Thus the assessee has claimed the entire amount of income as expenses under these heads. It is important to mention here that when compared to other petrol pump of this area namely M/s Ram Niwas Ram Ballabh, Hajipur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... genuineness of expense has submitted in his enquiry report that "it was told that to increase the sale such expenses are made. The customers are given different items like Lungi, Baniyan, Tooth Paste, Glass Spoon etc. A palm plate showing schemes of gifts on purchase of certain item of petrol and diesel has been obtained. But there was no stock of any items which are given as gifts nor get any bills and vouchers of such expense. The staff goes to different cities and states to moblise the truck owners to get the fuel from her pump. But did not submit any evidences of the same." The claim as made by the assessee do not have any evidences like bills vouchers and copy of agreement if any made between the assessee or the truck owners. One important thing is to be mention here that the sale of the assessee has decreased in the year under consideration when compared to previous A.Y. i.e. 2011-12 by about Rs.4 crores. Further on perusal of the profit and loss a/c, it is gathered that the assessee has not shown a single Rs. as closing stock of items which she claimed of giving as gifts to increase her sale. Hence such claim is factually incorrect. Further the palm plate obtained by the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ences, there is no doubt that the assessee has deliberately and without any basis has claimed excessive exp. to lower down her income. Therefore, the nature of expenditure and the lack of proper supporting evidences, payments made against the expenses are not fully verifiable in the manner of quantum, authenticity and the purpose. Further it also cannot be ascertained that entire expenditure is attributable to his business activities. Hence considering the above facts 30% of Rs.4,96,280/- i.e. Rs.1,48,884/- is disallowed and added back to the total income of the assessee treating it as excessive and unreasonable." "The profit and loss a/c of the assessee further transpired that the assessee in addition of claiming exp. under all relevant heads, has claimed exp. under the heads like misc. exp & gen exp. of Rs.2,88,615/- & 2,56,470/- respectively. No bifurcated details of expo with any evidences could be filed by the assessee. No books ever produced by her. Hence the genuineness of expo remained unverified. Therefore, the nature of expenditure and the lack of proper supporting evidences, payments made against the expenses are not fully verifiable in the manner of quantum, authentic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant had incurred expenditure against discount received, transportation income, credit note, sales promotion, travelling and conveyance, miscellaneous in general expenses, festival expenses, head office expenses etc. the appellant was especially requested to justify these expenses being wholly and exclusively laid out for the purposes of the business as mandated under section 37(1) of the Act. But, the appellant could not offer any verifiable explanation in this regard, rather, it was found by the AO that there was no proper bills and vouchers for having incurred these expenditure. In this regard, it would be relevant to look into the provisions of section 37 (1 ) the act which is extracted as under:- General. 37. (1) Any expenditure (not being expenditure of the nature described in sections 30 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee), laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head "Profits and gains of business or profession". Explanation 1.-For the removal of doubts, it is hereby declared that any expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourts supra, action of the AO in this regard is being upheld. 10. I have gone through the assessment order and submissions made by the appellant in the course of the appellate proceeding as evident from the Statement of Facts enclosed with the Form 35 forming part of the Appeal Memo. It is found that appellant had claimed expenses under the head bonus amounting to Rs. 4,02,600/- . It has been contended by the appellant that staff at the petrol pumps had been paid bonus on 2 occasions during the year i.e. on Holi and Diwali. The payment of bonus had been claimed to be one month salary of the staff. However, on verification of the salary payment, it was found that the staff of the appellant was being paid salary of RS.2.93 lakhs per month whereas bonus of Rs.4,02,600/- had been made which was not commensurate with the one-month salary of the staff. Therefore, the excess payment made on the account of bonus of Rs.1,09,600/- was disallowed. No explanation whatsoever was offered in the course of the appellate proceedings of the case, accordingly, action of the AO in this regard is being exclusively based on the facts is, therefore, upheld." 14.2. While we are going to decide ground n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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