TMI Blog2010 (3) TMI 1170X X X X Extracts X X X X X X X X Extracts X X X X ..... . Similarly for this AY too, the assessee has raised five grounds, out of which, ground Nos:1 and 5 being general and no specific issues involved as in last year, they have become non-consequential. In the remaining grounds, the substances of the issues are as under: The CIT(A) erred in confirming: (i) the addition of ₹ 31372/- towards suppression of sales; (ii) the disallowance of ₹ 15000/- made out of general expenses, traveling, conveyance etc. (iii) the addition made u/s 40A(3) without appreciating the facts. Common order: 4. Since the issues raised in these appeals are almost similar to each other, for the sake of convenience and clarity, these appeals were heard, considered together and disposed off in this common order. 5. The assessee firm ( the assessee in short) was dealing in purchase and sale of plywood on retail basis. The assessee firm is not in existence now on account of losses. Additions on account of suppression of sales: 6. For the AYs under dispute, the assessee on turnovers of ₹ 23.72 lakhs and ₹ 25.34 lakhs, admitted GPs of ₹ 4.18 lakhs and ₹ 5.08 lakhs which were accounted for 17.6% and 20% respec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly to those delivery challans which are treated as sales, which is a bear minimum in this case and it is proving sales only with available records like delivery challans, even they are not fully accounted. AO has not considered unaccounted delivery challans by which large number of sales left out, therefore, additions are confirmed .. 7. Before us, the Ld. A R reiterated more or less what has been contended before the CIT (A). In furtherance, it was submitted that the CIT (A) confirmed the addition with an observation that the assessee had not maintained sale bills, stock inventory etc., without appreciating the nature of business and the modus operandi adopted by the assessee in the dayto- day business. The authorities below have not considered the very fact that whatever was given on the basis of delivery challans did not represent the direct sales but goods given which were subject to approval. During the course of hearing, the Ld. A R furnished a paper book containing 1 -34 pages which mainly consists of (i) written submissions before the lower authorities; (ii) copies of returns of income for 04-05 05-06 etc., 7.1. After hearing the submission made by the Ld. D.R. pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AYs 04-05 and 05-06 respectively. It is ordered accordingly. Disallowance of ₹ 20000/- under business promotion for the AY 2004-05: 8. The assessee debited in the cash book on 31.3.04 and claimed as business promotion. On a query, it was explained that these payments were made to carpenters who have helped the assessee in increasing the sales. In the absence of any evidence to support its claim, the AO had disallowed ₹ 20000/- as excessive and not relating to business. 8.1. On appeal, the CIT(A) confirmed the addition on the ground that the business expenditure could be allowed based on bills/vouchers which were not forth-coming in the case on hand. 8.1.1. It was contended before us that the CIT(A) had confirmed the disallowance as there were no bills etc. without appreciating the fact that the details were produced before the AO and that these payments were incidental to the business. 8.2. After hearing the version of the Ld. D R who was present, we have duly perused the records and also the rival submissions. 8.2.1. It was not uncommon in this line of business that the very survival of such business depends upon the middle men, say, the small time co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee had claimed expenses of ₹ 60095/- whereas the AO had limited the disallowance only to 1/4th of the claims which, in our view, is quite reasonable in the given circumstances. It is ordered accordingly. Addition u/s 40A(3) of the Act: 10. For the AYs under dispute, the assessee had made cash payments in excess of ₹ 20000/- being freight charges to the extent of ₹ 51720/- and ₹ 101500/- respectively. The AO in a cryptic way disallowed 20% of the expenses claimed u/s 40A(3) of the Act on the ground that the said payments were made otherwise than by crossed cheques/DDs etc. for both the years under appeal. 10.1 The CIT(A) too in a characteristic manner observed that 5 .However, it is stated by the AR that such purchases (sic) payments are made in exceptional circumstances but neither before AO nor before me any such circumstances is explained for considering such disallowances, therefore as per the provisions of the Act, 20% disallowance of such cash payment made is hereby confirmed for both years. 10.2. Before us, the typical contention of the assessee was that the CIT(A) erred in confirming the additions made u/s 40A(3) of ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
