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2017 (1) TMI 1530 - ITAT LUCKNOWRejection of books of account - Estimation of gross profit rate @ 12.50% as against 11.59% declared by the assessee - Held that:- Neither the Assessing Officer nor the ld. CIT(A) has conducted any independent enquiry regarding the same and just on the basis of guess work has observed that assessee is not bringing out full particulars. Even the judicial pronouncements are clear on the facts that in the nature of trade as like assessee, cash memos for day-to-day sales are not required and that a consolidated entry in the cash book along with relevant documents of purchase of liquor are sufficient to prove the genuineness. In this view of the matter, we hold that the ld. CIT(A) was not justified in confirming the rejection of the books of account and adopting the G.P. rate on the higher side and, therefore, we set aside the order of the ld. CIT(A) on this issue and allow grounds No.1 & 2 of the appeal of the assessee. Ad-hoc disallowance on account of shop rent paid - Held that:- Only affidavits and confirmation of receipts of shop rent are enclosed and the Department did not conduct any independent enquiry and physical verification regarding rent paid and both the Assessing Officer and the ld. CIT(A), on ad-hoc and summary basis, have stated that the rent should be @ ₹ 3,000/- per month per shop, however, neither the order of the Assessing Officer nor of the ld. CIT(A) was a speaking order on this issue and the reasons for arriving at the conclusion was not spelt out specifically. We are of the considered view that any ad-hoc disallowance made summarily by a quasi-judicial authority, without any factual basis, cannot be held justified and accordingly we set aside the order of the ld. CIT(A) - Decided in favour of assessee. Ad-hoc disallowance on account of salary paid - Held that:- As held in various judicial pronouncements discussed hereinabove, how the business has to be conducted, it is the prerogative of the assessee and not of the Department. The Department is, however, free to conduct enquiry and have a physical verification to put forth the allegation on the assessee, but on guess work and summary basis any addition made is unwarranted. In view of commercial expediency of the expenditure incurred and the evidences placed before us in the paper book and the judicial pronouncements discussed hereinabove, we set aside the order of the ld. CIT(A) on this issue and allow ground of the appeal. Disallowance of processing fee, assessment fee and renewal fee - Held that:- The additional evidences go to the root of the matter wherein all these details of renewal, processing and assessment fees paid to the Government are there and such evidences filed by the assessee are accepted. We also find that these payments were paid to the Government agencies and that is certified from the receipt letter of the District Excise Officer. We are of the considered view that under these facts and circumstances of the case, these expenses cannot be held as unjustified expenses and it has direct nexus with the nature of business of the assessee and the payment is also duly debited in the cash book and it has been paid to the Government. - Decided in favour of assessee.
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