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2014 (3) TMI 977 - AT - Income TaxAddition on purchase of H.R. Coils and profit earned thereon @ 10% - Held that:- Though the assessee has filed an appeal before the ld. CIT(A), but did not file any confirmation from JSJAI with regard to the debit balance shown in its books of account as on 31.3.2003. The ld. CIT(A) has taken note of the fact that according to the assessee a sum of `17,98,142.70 was the debit balance as on 31.3.2003 and it remained the same till disposal of the appeal before him and the assessee has not made any effort to recover the said amount. In this regard, the ld. counsel for the assessee could not furnish any valid explanation as to why the assessee has not made any effort to recover the aforesaid amount, if he has not purchased any goods through invoices as disclosed in the accounts of JSJAI during the period 2.5.2002 to 15.5.2002. The ld. CIT(A) has also observed that the assessee has raised technical objection to the evidences collected by the Assessing Officer during the course of assessment proceedings. From the orders of the lower authorities, we find that after collecting the evidence from JSJAI, the Assessing Officer has immediately confronted the same to the assessee. Thereafter the ld. counsel for the assessee asked the Assessing Officer to afford an opportunity to cross-examine the responsible Director of JSJAI but he has not made any effort to obtain the confirmations from JSJAI or to ask him as to why he has shown sales in its name in its books of account. We also find force in the observations of the ld. CIT(A) that if JSJAI has done mischief with the assessee or has committed any fraud by showing wrong sales in its name, there could have been some criminal complaint or FIR against JSJAI. But nothing has been done by the assessee against JSJAI. Even till final hearing of the appeal before the Tribunal, the ld. counsel for the assessee could not place any evidence on record as to how and when he has recovered the outstanding debit balance of `17,98,142.70 from JSJAI nor did he claim it to be as bad debt if he failed to recover it for any reason. All these facts support the case of the Revenue that the assessee has made purchases as declared in the books of JSJAI out of its books of account and made sale thereof and earned profit. Since the assessee has been showing debit balance in the name of JSJAI in its books of account and no purchase was shown in its account, the purchases made by it as per statement of JSJAI is outside the books of account, in which the investment made is to be considered as unexplained investment for which addition is called for. Similar is the position with regard to the profit earned thereon on its sales outside the books of account. - Decided against assessee. Disallowance of General expenses; Office expenses and Travelling and Conveyance expenses - Held that:- Assessing Officer has made the disallowances under different heads on ad hoc basis without pointing out any specific defect in the maintenance of the details of these expenses. Therefore, we find no merit in the ad hoc disallowances and we accordingly delete the disallowances made on this account. - Decided in favour of assessee.
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