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2013 (9) TMI 676 - AT - Income TaxDisallowance of shortage of stock - shortage is being claimed on year to year basis - Held that:- the assessee's claim of shortages of closing stock cannot be accepted as except for putting forth the same explanation to us as before the authorities below, we find that the assessee has failed to bring on record any evidence to establish that such shortages had in fact occurred at all - Decided against assessee. Disallowance of expenditure - sales promotion expenses - Held that:- no details and supporting evidences have been produced to establish the expenses claimed for which the assessee has failed to discharge the onus upon it. Even before us, no details or supporting evidences have been filed to establish that the expenses on sales promotion claimed have in fact been spent. Further, interestingly, we also find that while the turnover in the immediately succeeding year relevant to the assessment year 2006-07 has increased to ₹ 181 crores, the sales promotion expenses claimed have reduced by more than 50 per cent. to ₹ 19.70 lakhs. In this factual situation of the expenses claimed under this head in the preceding and succeeding years, we are of the considered view that the sales promotion expenses claimed in this year is excessive and in the absence of the assessee filing the details and supporting evidences of having incurred sales promotion expenses as claimed, the Assessing Officer was both reasonable and justified in disallowing only ₹ 10 lakhs out of sales promotion expenses in the relevant period and therefore sustain the same - Decided against assessee. Unexplained income - difference in sales - Held that:- AO has recorded that Karnataka Lokayukta in its report on the mining scam alleged malpractices on the part of the officials of the assessee-company. From the submissions made by the assessee, a Government of Karnataka Undertaking, it can be inferred that the sales of C-ore to Kalyani Steels Ltd. are supported by invoices raised, entries in the books of account audited by chartered accountants. The system of accounting followed by the assessee is the mercantile system as per the provision of section 145 of the Act and we find that no fault has been found therein nor has it been rejected. Nowhere in the order of assessment or the material on record do we find anything to establish that there were any realisation on account of sales beyond what is recorded in the books of account. As per the Income-tax Act, 1961 profits from business are to be computed under section 28 of the Act as per the accounting policies mandated by section 145 of the Act which in the assessee's case is the mercantile system. The scope of total income is also defined under section 5 of the Act. The Income-tax Act, 1961 is very clear that what is to be taxed is the real income of an assessee and not notional or hypothetical income and it does not permit an Assessing Officer to compute income without any evidence. There is no finding by the Assessing Officer that the assessee has sold its C-ore at a price less than that agreed to in the contract entered into with M/s. Kalyani Steels Ltd or that it has realised from M/s. Kalyani Steels Ltd. additional amounts on such sales which it had not recorded in its books. The assessee is legally bound to abide with the terms of the contractual obligations arising out of its agreement to sell C-ore to M/s. Kalyani Steels Ltd. and the contract entered into being legal and valid, it cannot be brushed aside. - no evidence of realization of unaccounted sale proceeds - no aditions - Decided in favour of assessee.
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