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2023 (8) TMI 22 - ITAT AHMEDABADAdmission of additional evidence by CIT(A) - HELD THAT:- CIT(A) before admitting the additional evidences awarded an opportunity to the revenue by calling remand report on such additional evidences. Therefore, in such circumstances it cannot be said that the learned CIT(A) committed any error. CIT[A] committed no error nor the admission of additional evidence can be stated to be in breach of the requirement of Rule 46A of the Rules - See KAMLABEN SURESHCHANDRA BHATTI [2014 (3) TMI 151 - GUJARAT HIGH COURT] Coming to the case on hand, the assessee before the CIT(A) submitted that at the time of the assessment proceeding, its business was closed and the person who was looking after the accounting and taxation related work also had left. Therefore, the assessee was facing difficulties in locating the necessary details required by the AO. Accordingly, the same were not produced before the AO during the assessment proceedings. The CIT(A) in view of the above explanation furnished by the assessee accepted the additional evidences and before acting on such documents provided the AO an opportunity to verify the same. Thus, the learned CIT(A) safeguarded the interest of revenue while admitting the additional evidences furnished by the assessee. Addition u/s 68 - AO has treated the current liabilities shown by the assessee as unexplained cash credit - CIT(A) deleted the addition - HELD THAT:- CIT-A has given very reasoned findings which were not controverted by the learned DR at the time of hearing. It was pointed out by the learned CIT-A that there were various expenses incurred by the assessee during the year under consideration which were subject to disallowance on adhoc basis. AO has also disallowed the liabilities appearing as on the balance sheet date which was arising out of the expenses incurred by the assessee in the year under consideration which were also subject to disallowance on adhoc basis. Thus, if any other disallowance is made on account of the liabilities arising out of such expenses, would lead to the double addition which is not desirable under the provisions of law. Likewise, CIT-A found that the assessee has already made the suo-moto disallowance of the sales tax liability and likewise some of the sales tax liability was pertaining to the earlier year which can’t be subject matter of disallowance in the under consideration. Also there was interest liability pertaining to the year under consideration which was disallowed in the year under consideration under the provisions of section 43B and some of the liability representing the outstanding interest was pertaining to the earlier year which cannot be made subject to disallowance in the year under consideration under the provisions of section 43B - CIT[A] has given very detailed finding which was not controverted by the learned DR at the time of hearing. Therefore no reason to interfere in the finding of the learned CIT-A. Ground of the Revenue are hereby dismissed. Nature of receipt - Receipt on account of termination of bottling license - capital receipt not taxable u/s 28 or u/s 45 of the Act - HELD THAT:- What is the substance in the present case is this that there was loss of source of income to the assessee on account of the main settlement agreement - the word ‘cease to subsist’ has been used in the main settlement agreement. Perhaps, these words have been used in the main settlement agreement for the reason that the original contract entered between the assessee and the company was ended by efflux of time but still the same was continued. Thus, it appears that though the agreement has come to an end but it was subsisting as on the date of main settlement agreement on account of the conduct of the assessee and the company. Once the agreement has already been terminated but subsisting because of the conduct of the parties, maybe for this reason the word cease to subsist was used in the agreement. But we have to see the substance of the main settlement agreement instead of making reference to the relevant clause. It is beyond doubt that the source of income of the assessee as a result of main settlement agreement has come to end which can be verified from the financial statements filed by the assessee for the year ending 31st March 2009 and 2010, placed on record. Thus, direct the AO to delete the addition made by him. Hence, the ground of appeal of the Revenue is hereby dismissed. Disallowances of total expenses to the extent of 15% and purchases to the extent 10% as against the disallowances made by the AO for 30% and 20% respectively - HELD THAT:- In the event the assessee fails to justify, the AO has to see the claim of the assessee based on the circumstantial evidence, history of the case, comparable cases so as to find out whether the claim of the assessee is genuine or excessive before making any disallowance. But we find that the AO has not done such exercise but made the ad-hoc disallowance in the absence of supporting documents. In our considered view, such ad-hoc disallowance is not permitted under the provisions of law unless it is based on scientific basis. Yet, the claim of the assessee cannot be allowed in to-to in the absence of documentary evidence. We find that the ld. CIT- A has upheld the order of the AO in part after giving partial relief to the assessee based on reasoning as discussed above which has not been controverted by the ld. DR of the Revenue. Hence, the ground of appeal of the Revenue is hereby dismissed. Late deposits of employee’s contribution towards PF fund - HELD THAT:- As assessee before us conceded that the issue on hand has been covered against the assessee by the order of GSRTC [2014 (1) TMI 502 - GUJARAT HIGH COURT] - Therefore, respectfully following the order of Hon’ble Gujarat (supra), the ground of appeal of the Revenue is hereby allowed.
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