9911796707
TMI Blog2022 (9) TMI 97X X X X Extracts X X X X X X X X Extracts X X X X ..... ial statements, there are separate proceedings provided under the provisions of the Act which has to be initiated against the assessee. There is no whisper in the assessment order whether such proceedings have been initiated against the assessee. So on this reasoning as well, there cannot be any disallowance of the expenses as made by the AO. Disallowance has been made by the AO on adhoc basis being 40% of the amount of salary though there is no provision under the Act for making the adhoc disallowance until and unless some evidences is available on record, suggesting that the employee salaries paid by the assessee is excessive and unreasonable in comparison to the prevailing market practice. In view of the above, we do not find any infirmity in the order of the learned CIT-A and therefore, we decline to interfere in his order. Thus, the ground of appeal of the revenue is hereby dismissed. Addition of unexplained loan and advances - claim that the advances were in nature of trade advance was not supported by the corroborative material - whether the loans and advances given in the course of the business can be treated as income under the provisions of law? - HELD THAT:- Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r considering the facts in totality, we are not inclined to uphold the addition made by the AO with respect to the opening value of stock. Difference found in the valuation of closing stock - On perusal of the sales register filed by the assessee we note that the assessee has sold different products are different rate. Most of the products were sold at a price less than 180 except on 3 of the occasions the price was charged by the assessee ₹ 412 of its product. Thus from these details, it is transpired that the assessee has not taken any price in the valuation of the closing stock based on artificial figure. Thus, details filed by the assessee for valuing the closing stock cannot be rejected in arbitrary manner. Thus in view of the above and after considering the facts in totality, we do not find any infirmity in the order of the learned CIT(A). Hence the ground of appeal of the revenue is hereby dismissed. Unexplained cash in hand shown as on 31-3-2016 in the audited financial statements - CIT-A deleted the addition - HELD THAT:- The cash in hand as on 31st of March 2016 is the net effect of cash receipts and payments made in the year under consideration. The recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unexplained cash of Rs. 18,81,497/- by ignoring that the assessee had not furnished the requisite details to the AO. 5. The Id C1T(A) has erred in law and in facts in ignoring that assessee was noncompliant before the AO during the assessment proceedings as is evident from the assessment order, and that assessee had not appeared before the CIT(A) and thus the benefit of doubt could not be granted not being borne out of evidences. 6. It is, therefore, prayed that the order of Id. CIT(A) may be set aside and that of the Assessing Officer be restored. 3. The first issue raised by the Revenue is that the learned CIT(A) erred in deleting the disallowances of excessive employee benefit expenses of Rs. 6,12,140/- only. 4. The facts in brief are that the assessee is a public limited company and engaged in the business of trading of aluminum foil, flexible lamination paper, coated material etc which are used in manufacturing of packing materials. The AO during the assessment proceedings found that the employees benefit expenses for the year under consideration increased form Rs. 5,29,824/- to Rs. 15,30,350/- as compared to immediate previous assessment year whereas, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompared to immediate previous assessment year. The AO also alleged that no return and audit report was filed for the last two immediate previous assessment year being A.Y. 2014-15 and 2015-16 and details such as list of employee, their monthly salary and details of hiring of new employee were not provided. However the learned CIT(A) while deleting the addition made by the AO found that the assessee has furnished details of salary, therefore he provided benefit of doubt to the assessee. 9.1 On perusal of the order of the AO, we note that it was alleged therein that the assessee has not furnished the details of the employees along with the salary. But we find that the assessee has furnished the necessary details about the name of the employees, addition of the employees and salary paid to them in the year under consideration viz a viz in the immediate preceding assessment year. No doubt, the salary paid to the employees by the assessee has increased manifolds in comparison to the earlier assessment year. But to our understanding, the revenue cannot enter in the shoes of the assessee to decide the quantum of salary to be paid by the assessee. It is the prerogative of the assessee t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia SME Assets 6,02,736 3. Anmol Developers 10,000 11.1 As per the assessee, these advances were given in the course of the business. However, the AO found that no contra confirmation and PAN were provided of the parties. The address in case of one party namely M/s BC India SME Assets was not complete. 11.2 Likewise, there was no other transaction except for making the payment of Rs. 11 lacs during the year in case of M/s Narendra Gravure Pvt Ltd. despite there was already opening advance of Rs. 24 lakh. 11.3 Therefore, the claim that the advances were in nature of trade advance was not supported by the corroborative material. Accordingly the AO treated the advance of Rs. 17,02,736/- given to parties namely Narendra Gravure Pvt Ltd for Rs. 11 lakh and BC India SME Assets for Rs. 6,02,736/- as income of the assessee. 12. The aggrieved assessee carried the matter before learned CIT (A) and submitted that against the trade advance given to the party namely M/s Narendra Gravure Pvt Ltd, there was purchase in the FY 2016-17 and 2017-18 and the account got cleared. The AO without a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years. To this effect, we note that the assessee has filed the copies of the ledger of the parties along with the payment vouchers which are placed on pages 13 to 16 of the paper book. The genuineness of these documents were nowhere doubted by the authorities below. Even at the time of hearing, the learned DR appearing on behalf of the Revenue has not brought anything on record contrary to the finding of the learned CIT-A. Hence we do not find any infirmity in the order of the learned CIT-A and therefore we uphold the same. Thus the ground of appeal of the revenue is hereby dismissed. 17. The next issue raised by the Revenue is that learned CIT (A) erred in deleting the addition of Rs. 6,29,89,149/- and 2,23,50,00/- made on account of difference in the opening stock and closing stock. 18. The AO during the assessment proceedings observed that the assessee has shown opening stock of Rs. 6,29,89,149/- whereas as no return and tax audit report furnished for the last 2 immediate preceding assessment years i.e. A.Y. 2014-15 and 2015-16. In the last return for the A.Y. 2013-14 the closing stock was shown at Nil. The AO furthered found the turnover of the assessee decreased and sim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in support of valuation of closing stock detail such TIN no. of customer, LR detail, PO detail etc were blank. The AO further found that the assessee is dealing different type of aluminum paper foil/coated material but no detail of quantity wise purchase, sale and inventory was provided. The assessee itself submitted that different type of material and goods were sold and purchased at different price varying between Rs. 420 to Rs. 165. Therefore the valuation of the closing stock @ 180 per kg based on bill issued in 03-03-2016 on one item cannot be accepted. Thus AO valued the closing stock @ 285 per kg being average purchase price and made addition of differential amount of Rs. 2,23,50,000/- only. Thus, the AO in aggregate made an addition of Rs. 6,29,89,149.00 and 2,23,50,000.00 to the total income of the assessee. 19. The aggrieved assessee preferred an appeal before learned CIT(A). 20. The assessee before the learned CIT(A) submitted there was no specific query raised during assessment proceeding with respect to valuation and existence of the opening stock. Further detailed submission was made during the assessment proceeding along with tax audit report where the opening ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nting practice that the closing stock of one year becomes the opening stock of the subsequent year. In the present case, the opening stock was shown by the assessee at ₹ 6,29,89,149/- which was treated by the AO at Rupees nil. The view of the AO was based on the fact that the assessee has not filed any income tax return for the 2 assessment years immediately preceding the assessment year in dispute. Thus, the closing stock of the previous year was not available with the revenue authority. If the opening stock for the year under consideration is taken at NIL then the corresponding closing stock should also be taken at nil which would lead to no difference of the income declared by the assessee except shifting the profit from one year to another year. The opening stock of the current year cannot be disturbed without disturbing the closing stock of the immediate preceding assessment year. However, from the preceding discussion we do not find any whisper suggesting that closing stock of the immediate preceding assessment year was not proper. Admittedly, the assessee has not filed the return of income of the immediate preceding assessment years but non-filing of the income tax ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever, it is not incorrect to hold that the assessee has been dealing in different types of aluminum paper foil and coated materials which are sold and purchased at different prices. As such the assessee has not furnished the details of the quantity wise stock of different types of material which were lying as on 31 March 2016. According to the learned AO the particular rate applicable to a particular material cannot be applied to all the materials which are having different price range. The contention of the AO may be correct. But on perusal of the sales register filed by the assessee we note that the assessee has sold different products are different rate. Most of the products were sold at a price less than 180 except on 3 of the occasions the price was charged by the assessee ₹ 412 of its product. Thus from these details, it is transpired that the assessee has not taken any price in the valuation of the closing stock based on artificial figure. Thus, details filed by the assessee for valuing the closing stock cannot be rejected in arbitrary manner. Thus in view of the above and after considering the facts in totality, we do not find any infirmity in the order of the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
