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2017 (3) TMI 819 - AT - Income TaxDisallowance of 5% of the expenses disclosed under the head ‘Financial and Administrative expenses’ - Held that:- The total expenses incurred by the assessee towards ‘Financial and Administrative Expenses’ were ₹ 56,42,384/-. The A.O. has made disallowance of 5% of the total expenses towards ‘Financial and Administrative Expenses’ which led to the disallowance of ₹ 2,82,119/-, which was later upheld by the ld. CIT(A) by dismissing the appeal of the assessee on not being pressed. In our considered view, this matter need to go back to the file of learned CIT(A) who shall adjudicate the same based on merits after hearing the assessee. Needless to say that proper and adequate opportunity of being heard shall be provided by learned CIT(A) to the assessee in accordance with law and the assessee shall be allowed by learned CIT(A) to produce cogent material/ evidences in its defense which shall be admitted by learned CIT(A) in the interest of justice. Bogus purchases - Revenue has received information from Maharashtra Sales Tax Department as well Information was received by the AO from DGIT (Inv.), from where it was unraveled that these three parties were accommodation entry providers issuing bogus bills - Held that:- No attempt has been even made before us to prove genuineness of purchases to prove genuineness of the material purchased and that the said material been used wholly and exclusively for the purpose of the manufacturing/business activities of the assessee nor any effort has been made even before us to co-relate quantitative reconciliation of quantities of sale with purchases so made nor the assessee could prove , correlate and reconcile the consumption of material so purchased with the manufacturing/ business activity of the assessee. We do not find any merit in the contentions of the assessee. In the absence of quantitative reconciliation of material so allegedly purchased with sale, consumption or stock in hand held by the assessee, the plea of the assessee to adopt gross profit ratio is devoid of any merits and is hereby repelled. - Decided against assessee
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