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2018 (10) TMI 1291 - AT - Income TaxAddition on account of sale of scrap out of books - unexplained sale - CIT(A) restricted the addition to ₹ 8,08,420/- out of total addition of ₹ 48,04,151/- made by the AO - Held that:- Once it is an undisputed fact that one of the Director has admitted in his statement that assessee company was indulged in unaccounted sale of scarp generated in the manufacturing process in cash in the assessment years 2010-11 to 2012-13; and manufacturing process of the Manesar unit continued to be the same for all the three years, then in our opinion CIT(A) has rightly held that if scrap has been generated and sold during the assessment year 2012-13 in the earlier years, then same should be there in the assessment year 2012-13 also. He has elaborately discussed and explained meticulously based on seized material how estimate of scrap sale can be made where no material is found. Such an action of CIT(A) is justified, because it is matter of record that in all the years assessee has been generated unaccounted cash from the scrap sales outside books, then based on same ratio such unaccounted cash has to be treated as unexplained. Thus, we do not find any infirmity in the order of the Ld. CIT (A) and the same is affirmed. Disallowance u/s 14A - sufficiency of own funds - Held that:- In wake of availability of such huge surplus fund, which is far more than the investment made by the assessee, we direct that no disallowance of interest can be made. With regard to indirect expenses, we find that assessee has not discharged its prima facie onus as to why no expenditure is attributable for earning of such a huge exempt income and it is only when assessee discharges his onus, then AO has to record his ‘satisfaction’ having regard to the accounts maintained by the assessee and on the claim made by the assessee. Thus, we hold that in so far as disallowance of indirect expenditure is concerned the same has rightly been confirmed by the CIT (A) and to this extent order of the Ld. CIT(A) is confirmed. - decided against revenue.
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