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2014 (6) TMI 287 - AT - Income TaxDeletion of unexplained expenses u/s 69C of the Act – Held that:- CIT(A) was rightly of the view that the assessee has been able to show on the basis of evidence that there was longevity yield on processing of Nylon cloth and that the analysis made by the AO on information obtained from M/s. Pioneer Syntex Private Limited was not correct as it did not consider opening and closing stock with the said concern - even otherwise the addition made by the AO on account of unaccounted purchases was not correct – assessee on its own has offered the full value of sales as income and not claimed purchases against them in the books - assessee is engaged in manufacturing and trading of synthetic cloth - no material could be brought on record by the Revenue to show that the assessee had actually made any investment in purchases which was not recorded in its books of account - In absence of any material, there was no reason to interfere with the order of the CIT(A) – Decided against Revenue. Deletion of unaccounted stock found in survey – Held that:- There was excess stock of Rs 2,02,129/- which was explained by the son of the assessee as return of goods at the time of the survey - The assessee was not in the station at the time of the survey - the statement of the assessee which was recorded u/s. 131 of the Act was rejected by the AO without making any attempt to verify the genuineness of the same - No material was brought on record by the AO to show that there was any error in the statement of the assessee recorded u/s 131 by making due inquiry - the AO was not justified in rejecting a plausible explanation without making necessary inquiry – Revenue could not point out any error in the finding of the CIT(A) which was to the effect that the trial balance prepared at the time of the survey itself shows that some job work charges which were also actually paid by the assessee before survey were not properly recorded in the books of account – thus, there was no reason to interfere with the order of the CIT(A) – Decided against Revenue. Deletion of interest expenses u/s 40A(2)(b) of the Act – Held that:- The assessee claimed deduction for interest payment to five parties on loans taken from them at the rate of 12% - the interest paid by the assessee at the rate of 12% was quite reasonable as the Income Tax Department itself pays interest at the rate of 15% per annum on the refund granted to the assessee after the completion of the assessment u/s 244 of the Act – thus, there was no infirmity in the order of the CIT(A) – Decided against Revenue. Restriction of disallowance of various expenses – Held that:- The AO made an estimated disallowance of 20% out of the various expenses claimed by the assessee which was restricted to 10% by the CIT(A) - No material was brought on record by the revenue to show that the estimation made by the CIT(A) for disallowance of expenditure at 10% was unreasonable and that actually an amount more than 10% of the expenditure disallowed by the CIT(A) was required to be disallowed – there was no reason to interfere with the order of the CIT(A) – Decided against Revenue.
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