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2010 (1) TMI 881 - AT - Income TaxDisallowance of labour charges - genuineness of the transactions were not proved - assessee during the course of assessment proceedings has filed the confirmations of all the 5 recipients to whom labour charges were paid - merely because PA Nos. were not mentioned, the Assessing Officer disallowed the labour charges doubting the creditworthiness of the karigars and the genuineness of the transactions – bills relate to premises not occupied by the assessee and there is no such agreement between the assessee company and the brother of one of the directors for use of the laser machine - certificate filed before the CIT(A) was neither filed before the Assessing Officer nor confronted by the CIT(A) to the Assessing Officer – Held that:- matter remanded back to the Assessing Officer with a direction to give another opportunity to the assessee to substantiate with evidence to the satisfaction regarding the genuineness of such electricity expenses,ground by the Revenue is accordingly allowed for statistical purposes Undervaluation of closing stock - value determined by adopting the average manufactured cost method - assessee has not reasonably maintained the stock to arrive at a fair valuation of the closing stock - if the average cost method is adopted then in the A.Y. 2006-07 the income of the assessee will diminish by an amount of Rs.20,00,00,255. Thus according to the Assessing Officer himself this method is not to be adopted for the A.Y. 2006-07. - ground raised by the Revenue dismissed. Disallowance of electricity charges - held that:- CIT(A) deleted the addition on the ground that because of the use of the laser machine, the labour charges in respect of laser treatment have gone down by Rs.26 lakhs and therefore, it is a sufficient evidence to establish that the laser treatment has been done in-house. This theory of learned CIT(A), in our opinion, is merely on presumption basis. It is the settled proposition of law that for any claim of expenditure, the onus is always on the assessee to substantiate with documentary evidence to the satisfaction of the Assessing Officer that the expenditure so claimed is wholly and exclusively for the purpose of business. - Matter remanded back to AO.
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