9911796707
TMI Blog2024 (6) TMI 1130X X X X Extracts X X X X X X X X Extracts X X X X ..... thereafter. Even there is no proper scientific basis for estimate for such an expense. Here, the provision made was not based on any scientific basis but on likely future event that also was not demonstrated that it was accounted for on some reasonable estimate, therefore even according to accounting standard AS-29 same cannot be allowed. Thus, the ld. CIT (A) was correct while upholding the disallowance on account of the provision made by the A.O. We find that the amount has been credited back in the subsequent assessment year for which copy of profit and loss account and other details have been filed which show that this amount has been credited back as income. Thus, even if the provision is to be disallowed in A.Y. 2010-11, then in the subsequent year once assessee has credited back and offered as income then same cannot be taxed again in A.Y.2011-12. Accordingly, the Assessing Officer is directed to verify the said account and if assessee has written back and credited to income then he should give consequential relief in the A.Y. 2011-12 and not to tax the same amount in next year. With these directions, ground no. 1 raised by the assessee is partly allowed for statistical purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee had given entire details of the parties and their ledger account and that payment has been made through cheques. Further, it is seen from these invoices that the goods purchased have been delivered to various depots of the assessee across the country along with the delivery details. Once, assessee has submitted all these details, simply based on that notice u/s. 133(6) only on ITBA portal has not been responded cannot be the basis for disallowing the entire purchases when book results and trading account/ sales has not been disturbed. The assessee had submitted that that these notices were sent in December, 2019 and at that time there was no internet and communication was break down following revocation of Article 370 on 4th August, 2019. Thus, these parties were not aware of any such notices nor through ITBA portal. Till January, 2020 2G services were also not working, thus it was impossible for these parties to respond. Further, the assessee has purchase transaction from these parties in the past and subsequent years and all the assessment were completed u/s. 143(3) and no adverse inference has been drawn. Thus no reason to treat entire purchases as non-genuine simply because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofit for the year, having regard to principles of prudence. 5. The appellant pray that disallowance made be deleted. 6. The appellant craves your honour's leave to add, alter or amend any grounds of appeal at the time of hearing or before. 3. The brief facts are that the assessee is engaged in the business of manufacturing and trading of petro-chemicals. The Assessing Officer noted that the assessee has debited following amounts as provisions:- i. Effluent/waste disposal expenses Rs. 1,43,98,421/- ii Processing charges Rs. 1,82,61,022/- In response to show cause notice, the assessee submitted the details of the above expenses. From the perusal of the details, he noted that the payments have been made along with tax deducted at source to the extent of Rs. 59,01,821/- however there is a credit for provision of expenses of Rs. 84,96,000/- on account of effluent/waste disposal. Similarly, in respect of processing charges, the assessee has furnished the details of the parties to whom the payments were made alongwith the details of tax deducted at source to the extent of Rs. 1,39,65,513/-, but again there was a credit for provision of expenses of Rs. 42,95,509/- under this head. Aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that assessee could not provide the details of expenses for which provision was made nor furnished such bills of expenses incurred. Thus, provision cannot be allowed. Regarding the amount which has been credited/written back in the next assessment year, he submitted that matter should be restored back to the file of A.O. to verify the same. 7. We have heard the rival contentions and also perused relevant finding given in the impugned order and the materials referred to before us. It is seen that assessee has created a provision for likely incurring of expenses for treatment of disposal of effluent waste generated out of manufacturing carried out during the year. The assessee might have incurred expenditure in the earlier years under this head but those were actual expenses and paid to the third parties. From this year, assessee has installed its own plant. However, neither any details of expenses incurred prior 31st March, 2010 were filed nor any expenses which have been actually booked and have been shown to be paid immediately thereafter. Even there is no proper scientific basis for estimate for such an expense. Here, the provision made was not based on any scientific basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount in dispute is a provision made for likely loss on sales return. Therefore, it is quite clear that the expenditure has not crystallized during the year and is an anticipated loss. That being the case, it cannot be allowed. However, if such loss has actually arisen in the subsequent assessment year due to sales return, the Assessing Officer is directed to verify and grant consequential relief. This ground is allowed for statistical purposes. 2.2 Han ITAT held that loss arising in subsequent year, on sales return be allowable. It is prayed that a similar direction may be given for Current Year also. In this judgment Hon'ble ITAT also has said that amount in dispute is provision made for likely loss of sales return means that expenditure is not crystallized and has directed that it should be allowed only if it has actual arisen in the event of sale return in next year. So loss on likely sales return cannot be allowed. So in the light of above discussion contention of assessee is rejected and order of Assessing Officer regarding addition of Rs 5,40,000/- as provisions of sale return is upheld. Thus, this ground raised by the assessee is dismissed. 12. In the result, the appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the following payments: Accordingly, he has made the disallowance u/s. 40(a)(ia) of Rs. 1,27,89,234/-. The ld. CIT (A) has confirmed the said addition on all the three expenses claimed by the assessee. 15. Before us, the ld. counsel submitted that one of the parties i.e. MEISTR Media Worldwide is on account of development in chemical magazine of foreign country and this entity is non-resident. This entity does not have any business connection in India or PE and since it is a business income, therefore same could not have been subjected to TDS. There were certain other parties to whom payments were less than the prescribed limit and therefore TDS was not required to be deducted. He has also submitted details of expenses made debited during the financial year on various dates for TDS was not required to be deducted. Similarly expenses for clinical trial, he submitted that some of them were government institution and therefore exempted income tax. Lastly, he submitted that all these parties have shown these incomes in their income tax return and offered it for tax; therefore in view of the proviso to section 201(1), no disallowance can be made. 16. On perusal of the various details ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs. 10,32,38,955/-. The ld. CIT(A) has also confirmed the said addition after observing as under:- The said Notices were issued to these purchase parties to verify the genuineness of the purchases, but these parties failed to reply or file any response to the said notices, so issued u/s 133(6) of the Act. till the date of passing of the Assessment Order or even later. Further the Assessee also failed to discharge the onus cast upon it by the AO to prove the identity creditworthiness and genuineness of such transactions as the appellant assessee had neither provided any supporting documents to the AD or reasons for the said default i.e. in producing the parties for verification, when countered with the above facts nor did the appellant seek such further time to do so. Further, the assessee did not care to inform the AO (in writing) of any such problem it had in producing the said purchase parties for verification or such documents or of any other such technical problems/reasons plaguing it at the time of the assessment proceedings. The appellant assessee even did not care to seek such further time from the AD for producing the said purchase parties in order to prove its bona-fide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion and the fact that, the assessee has not discharged the onus cast upon it to prove the genuineness of transactions etc. by submitting true and proper facts timely either before the AO or the Appellate authority (before whom it had all the time to do so), this Appellate Authority is hence of the view that Appeal of the Appellate Assessee on these facts is not acceptable and hence rejected and order of the Assessing Officer making the said addition of Rs. 10,32,38,955/- is upheld. 22. Before us, the ld. Counsel submitted that, before the A.O. assessee has filed entire details of purchases and the trading goods and the suppliers and the addresses along with the bills. Apart from that, assessee has also given the GST No. and also invoice/delivery challan and further on these items not only excise duty was payable but also details of the trucks and the vehicles though which goods have been transported were also given. He referred to the copy of ledger accounts, copy of sample bills of the parties and the details of excise duty payable and delivery details. Accordingly, he submitted that no addition should be made. 23. On the other hand, ld. D.R. strongly relied upon the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
