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2020 (7) TMI 48 - AT - Income TaxAddition u/s 68 - Addition on account of confirmations not received from creditors - HELD THAT:- It is an undisputed fact that the AO has simply added the balance as on 31.3.2004 without realizing that the entire credit balance were the outcome of the purchases made during the year. It is also undisputed that in the immediately succeeding years the outstanding have been paid by the assesee. Addition on account of failure on the part of assessee in submitting confirmations regarding the reimbursement of Duty Draw Back - HELD THAT:- Assessee has furnished the complete details supported by vouchers. We find that the Duty Draw Back has been reimbursed by the assessee to supporting manufacturers through account payee cheques. We also find that during the assessment proceedings, the AO had issued the notices u/s 133(6) of the I.T. Act to the persons whose names were not therein in the list of Duty Draw Back. Therefore, there was no question of them confirming the transactions. The notices to 02 parties were sent correctly. The confirmations and the transaction considering the facts in hand in totality and in light of voluminous documentary evidences, we do not find any error or infirmity in the finding of the Ld. CIT(A), hence, we decline to interfere with the finding of the Ld. CIT(A). Accordingly, the ground no. 1 raised by the Revenue is dismissed. Excessive payment of salary to Director covered under section 40(A)(2)(b) - HELD THAT:- The undisputed fact is that the AO has not brought any comparable case to demonstrate that the payments made by the assessee were excessive/ unreasonable. A plain reading of Section 40A(2)(b) show that onus has been cast upon the AO to bring on record comparable cases to demonstrate that the transactions made by the assessee with the related parties are unreasonable and excessive. The AO has failed to bring such comparable case on record. Payees are also assessed to tax at the same rate of tax. The CBDT Circular No. 6-P dated 06.07.1968 states that no disallowance is to be made u/s. 40A(2) in respect of the payments made to the relatives and sister concerns where there is no attempt to evade tax. This Circular has been considered by the Hon’ble Bombay High Court in the case of CIT vs. Indo Saudi Services (Travel) P. Ltd. [2008 (8) TMI 208 - BOMBAY HIGH COURT]. - Considering the totality of the facts in light of the CBDT Circular (Supra), we do not find any reason to interfere with the findings of the Ld. CIT(A). Accordingly, the Ground No. 3 raised by the Revenue is dismissed. Additional ground - Revenue has challenged the admission of additional evidences by the Ld. CIT(A) which is in violation of Rule 46A of the IT Rules - HELD THAT:- We do not find any merit in this challenge of the Revenue. Since the additional evidences were transmitted to the AO and the AO responded the same by submitting 02 Remand Reports, therefore, it cannot be said that AO was not given any opportunity of being heard.
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