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2024 (1) TMI 23 - AT - Income TaxAddition on account of suppression of sales - DRP held that on the issue of credits notes it is seen that the credit note and debit note are been inserted by the assessee for account reconciliation which is not backed by actual transaction - allegation of the revenue that the credit note was afterthought is baseless as the credit note was duly accounted in the sales for the purpose of benchmarking, the corresponding adjustment was made by the AE, and furthermore benchmarking was duly accepted by the AO - HELD THAT:- Once the transaction has been benchmarked at the arm length and no adverse finding was there, then no further addition can be done, and no further attribution can be made. The AO and subsequently ld. DRP both erred in not appreciating the judgment of Morgan Stanley [2007 (7) TMI 201 - SUPREME COURT] - We find that the assessee has consistently benchmarked its international transaction with the cost plus @ 15% markup and it has been consistently accepted by the department during the assessment procedure and has passed the assessment order u/s 143(3). The AO erred in not appreciating that issuance of credit note / debit note was a regular year end feature of the assessee to achieve such benchmarking of mark -up. Once such transaction is held to be at ALP, no further addition /attribution can be made to the assessee income. Hence, we hold that the AO cannot treat the amount of Rs. 94,00,610/- as an unaccounted sales Disallowance of Expenses - The argument of the assessee that the Ld. DRP has erred in not appreciating that the all the inward and outward entry in the SEZ Area must passed through the checking of another wing of Ministry of Revenue i.e., custom department and the SEZ authority cannot be accepted. Invoices pertaining to Modi Graphic, Bharat Safety House, Om Jyoti Engineering Enterprises, Inox Air Products Ltd. and Vikram Paints & Sanitary Store have not been stamped proving their entry into the premises. Hence, the same cannot be considered as proven correctly. The disallowance on account of these expenses is hereby upheld. For other expenses, we find that they are very minor expenses, the AO erred in appreciating that nonreply of Section 133(6) notices cannot necessarily lead to disallowance of petty expenses ranging from Rs. 9,000/- to Rs. 1,00,000/- in the absence of any other proof of non-incurring of expenses. Assessee has provided primary and direct evidences along with the PAN & address and hence, no disallowance can be made merely on the reason of noncompliance of the parties to the notices issued u/s 133(6) of the Act.
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