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2017 (1) TMI 1735 - AT - Income TaxViolation of prescribed method u/s. 145A in respect of the valuation of stock - upward adjustment made by the CIT-A invoking the provisions of section 43B - A.O. noticed that the assessee has included Excise Duty of ₹ 15,97,851/- to the value of closing stock in view of the provisions of section 145A of the act instead of balance of Excise Duty of ₹ 21,76,920/- available as on 31.03.2009 - HELD THAT:- CIT(A) has travelled beyond the grievance before him and invoked the provisions of section 43B of the Act and directed the A.O. to consider the disallowance . In our considered opinion, this amounts to enhancement. We also find that this act of the First Appellate Authority is without notice and in contravention to the provisions of section 251(2) of the Act. In our considered view, any enhancement without notice and made in contravention to the provisions of section 251(2) of the Act violates the mandatory provisions of the act and cannot be upheld. We, therefore, set aside the findings of the ld. CIT(A) to this extent, the addition stands deleted and the observations of the ld. CIT(A) qua the enhancement is struck down. Disallowance of insurance expenses on account of short adjustment of prepaid insurance expenses - HELD THAT:- It is true that the assessee has incurred insurance premium of ₹ 39,416/- during the year under consideration. It is also true that the entire insurance premium does not pertain to the year under consideration but amount of ₹ 13,533/- is attributable to the next financial year. It would not be out of place to refer to the observations made by the Hon’ble High Court of Bombay in the case of Nagri Mills Co Ltd. [1957 (9) TMI 30 - BOMBAY HIGH COURT ] - Since the tax effect would be neutral, we do not find any merit in the impugned disallowance in the light of the afore-stated observations of the Hon’ble High Court of Bombay. We set aside the findings of the ld. CIT(A) and direct the A.O. to delete the addition. Addition u/s 69C - Estimating expenditure on installation of certain assets @ 7% of the value of asset - AO noticed that the assessee has not debited any expense relating to the installation and/or labour charges and that such plant and machineries cannot be installed without incurring any expenditure, hence estimated 10% of the total additions and made an addition u/s. 69C - HELD THAT:- The burden is on the revenue to prove that the assessee has actually incurred some expenditure which is not explained. We find that the revenue authorities have not brought any evidence on record to show that the assessee actually incurred some expenditure in the installation of the Plant and Machineries. We also find that the revenue authorities did not make any enquiry from the suppliers of the plant and machineries when complete bills /invoices were before them. In our considered opinion, the entire addition has been made on presumption and, therefore such addition cannot be sustained.
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