9911796707
TMI Blog2022 (1) TMI 1441X X X X Extracts X X X X X X X X Extracts X X X X ..... e us: "1. The Ld. CIT(A) erred confirming the disallowance of Rs.19,08,688/- made by the ld. A.O under Section 69C of the Act on account of alleged bogus purchases without appreciating that the same are duly supported with documentary evidence. Thus, the disallowance made of Rs.19,08,688/- is not justified and the same may be deleted. 2. The ld.CIT(A) erred in confirming the addition made by the A.O under Section 40A(2(b) amounting to Rs.6,00,000/- being salary paid to one of the employees of the Appellant company treating the same as excessive in nature without appreciating the facts and circumstances of the case. Thus, the addition of Rs.6,00,000/- under section 40A(2)(b) is not justified and the same may be deleted." 2. Briefly st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urse of the assessment proceedings had in order to verify the genuineness and veracity of the purchase transactions called upon the assessee to furnish the details of the parties from whom purchases in excess of Rs.1 lac were made by it during the year under consideration. After perusing the requisite details filed by the assessee, the A.O issued notices u/s 133(6) to two parties, viz. (i) M/s Nidhi Printer; and (ii) M/s Cupid Ltd. Insofar the first party was concerned, viz. M/s Nidhi Printer, the notice was returned unserved by the postal authorities with the remarks 'left', while for the other party i.e M/s Cupid Ltd. filed its confirmation. On a perusal of the confirmation filed by M/s Cupid Ltd. (supra), it was observed by the A.O that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was placed on record by the assessee. However, the A.O observed that though the turnover of the assessee company had substantially reduced as in comparison to that of the immediately preceding year, however, the salary expenditure had escalated. Backed by his aforesaid conviction the A.O triggering the provisions of Sec.40A(2)(b) disallowed 50% of the salary that was paid to Ms. Anita Poddar and made a consequential addition/disallowance of Rs.6 lac to the returned income of the assessee. 7. We have heard the ld. Authorized Representatives for both the parties, perused the orders of the lower authorities and the material available on record. As regards the disallowance of Rs.1,32,962/- (supra) made by the A.O on account of the discrepancy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchases from the aforesaid party, the assessee had placed on record the copy of the invoices pertaining to the purchases claimed to have been made from the aforementioned party (Page 41 to 51). After perusing the aforesaid details so filed by the assessee, we find that the confirmation that has been placed on record does not inspire much of confidence. On a perusal of the invoices a peculiar fact which emerges therefrom is that nowhere the details of the L.R. Number and date, vehicle number etc is therein mentioned. In the backdrop of the aforesaid facts, we are afraid that the assessee's claim of having made genuine purchases from the aforementioned party is not proved to the hilt. Backed by the aforesaid facts, we are of the considered v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers of the lower authorities, we find that the allowability of the aforesaid salary expenditure had been scaled down by the A.O by 50%, for the reason, that while for the sales of the assessee company had reduced to one half, however, the salary and bonus expenses had almost doubled during the year. In our considered view the very basis for disallowing the salary paid by the assessee company to Ms. Anita Poddar (supra) under Sec. 40A(2)(b) is absolutely misconceived or in fact misplaced. As per Sec. 40A(2)(a), it is only where the assessee incurs any expenditure in respect of which a payment had been made to a related party as contemplated in clause (b) to Sec. 40A(2), then, if the A.O is of the opinion that such expenditure is excessive or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In our considered view, the very basis for taking recourse to the provisions of Sec. 40A(2)(a) and disallowing the assessee's claim for deduction of the salary paid to Ms. Anita Printer (supra) is absolutely misconceived, and thus, cannot be sustained in the eyes of law. We, thus, not being able to persuade ourselves to subscribe to the disallowance u/s 40A(2)(b) of Rs. 6 lac made by the A.O, therein, vacate the same. Accordingly, the order passed by the CIT(A) sustaining the said disallowance is set-aside. The Ground of appeal No. 2 is allowed in terms of our aforesaid observations. 9. Resultantly, the appeal filed by the assessee is partly allowed in terms of our aforesaid observations. Order pronounced under rule 34(4) of the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
