Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2017 (12) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (12) TMI 1329 - ITAT AMRITSARDisallowance u/s 40A(3) - assessee made payments exceeding ₹ 20,000/- on three occasions - Held that:- We find that these payments had been made to the truck drivers who generally insist on cash payments. The Assessing Officer has not doubted the genuineness of these payments and has disallowed the amount holding that assessee was bound to make the payments through Banking Channels. However, we find that where the genuineness of payments is not doubted the disallowance u/s 40A(3) should not be made. The Central Board of Direct Taxes vide Circular No. 220 dated 31.05.1977 has clarified that no disallowance u/s 40A(3) of the I. T. Act shall be made where the assessee satisfies the ITO that the payment could not be made by way of a crossed cheques drawn on a bank or by a crossed bank draft due to certain exceptional circumstances. Keeping in view the exceptional circumstances and in view of the amount involved, we delete the disallowances u/s 40A(3) sustained by Ld. CIT(A). Valuation of the stock at the time of survey - Held that:- We find that the break up of stock found included an amount of ₹ 12750/- which is on account of empty drums and which the assessee had claimed at the time of survey itself that these do not belong to it and these are to be returned. This fact is verifiable from P.B. page 34 where the details of drums mentioned as returnable is placed, therefore the addition of ₹ 12750/- is not justified as this item of stock did not belong to the assessee. As regards the addition on account of consumable stock amount to ₹ 111740/- as per the details as P.B. 35, we find that the amount of consumable stores were actually lying at the premises and which the assessee had not declared in the stock statement. Therefore the addition is justified as the assessee was bound to pass entry in the profit and loss account relating to expenses of consumable stores after reducing the closing stock left over on account of consumable stores and therefore this grievance is not justified and we uphold the action of Ld. CIT(A) as regards addition on account of valuation of consumable stores. As regards the difference in valuation of finished goods The assessee vide this letter had explained the total difference in respect of various sizes and the authorities below should have considered the same. We further find that the closing stock found at the time of survey included damaged/cut pieces and obsolete stock. This fact is verifiable from the inventory of stock itself placed at P.B. page 25 where the obsolete stocks/damaged stocks falling in the category of 4mm/3mm, 12mm/9mm and 18mm has been mentioned by adding separately on lump sum basis the quantity of 2000 sq. ft., 500 sq. ft., 1000 sq. ft. and 500 sq. ft. under various categories. The assessee had explained these facts vide letter addressed to Assessing Officer placed at P.B. page 1 to 3. The Assessing Officer in his order has noted down these contentions. The Assessing Officer has also noted down the contentions of assessee that there was difference in valuation of stock as the same has to be valued on cost price basis but still he did not verify the claim of assessee and made the additions. - Decided in favour of assessee.
|