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2012 (9) TMI 837 - AT - Income TaxRe-opening of assessment u/s 147/148 - Held that:- As during the course of assessment proceedings for A.Y 2004-05 AO noticed that there were certain discrepancies in the bank account leading to a belief that certain income had escaped assessment in the hands of the assessee which was not denied by the assessee - as all these assessments were framed under section 143(1) there is no infirmity in the order passed by CIT(A) vide which validity of reassessment proceedings has been upheld - against assessee. Estimation of 5% agency income in the hands of the assessee - Treating appellant as Permanent Establishment of a Foreign Company - Held that:- As the existence of the foreign party and its genuineness has not been doubted by the AO as the assessee apart from receiving separate funds has also imported goods from the said party for its own trade no material placed on record by the revenue to establish the same - As right from the beginning it is the case of the assessee that the said amount was placed with it in "Trust" and assessee has been submitting the accounts of the same to the said party which did not have any objection upon such spending. In the account also no commission has been charged by the assessee. Therefore, the addition is made simply on the basis of presumption, which is not sustainable. Therefore, the addition in respect of assessment years 2000-01 to 2002-03 is deleted - in favour of assessee. Disallowance of 20% of expenses - "telephone, postage, courier, sales promotions and conveyance" - Held that:- There is no dispute to the fact that the assessee has not been able to produce all documentary evidences to establish that the entire expenditure has been incurred by the assessee under the above heads for its business purposes. It is a fact that the assessee has also undertaken promotional activities to promote brand products of M/s. Miraj PTE Ltd in India and the receipt as well as expenditure have not been routed through P&L account of the assessee. Substance in the observations of CIT(A) that a part of expenditure claimed by the assessee under the above heads could be for the purpose of promotional activities for the purposes of promotional activities. As decided in CIT v. Calcutta Agency Ltd.(1950 (12) TMI 4 - SUPREME COURT) that if the assessee fails to establish the fact of necessary documents to claim for deduction under section 37(1), the claim is not admissible. Thus disallowance of 20% as confirmed by CIT(A) out of the expenses claimed by the assessee is reasonable - against assessee.
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