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2006 (6) TMI 146 - AT - Income TaxMarginal Fall In GP Rate - trading addition - unexplained public deposit accepted u/s 68 - failed to file corroborative evidence - non-business related expenditure - disallowance of foreign travelling expenses - Entertainment expenditure - Order of the CIT(A) is non-speaking - HELD THAT:- In the instant case, the assessee is a company under the Companies Act, 1956 whose accounts are statutorily audited and there are no adverse observations in this regard. In fact, the reasons explained for the marginal decline are also reasonable and can be accepted. The AO has reproduced the reply of the assessee made before him wherein the reasons for the decline have been explained. Ostensibly, the assessee explained that the average selling price of one of its products, namely, connecting rods declined in this year. Further, the purchase price of raw material remained the same. None of these explanations has been commented adversely by the AO and yet the addition has been made. Thus, we are inclined to affirm the conclusions drawn by the CIT(A) that the impugned addition was unwarranted. Accordingly, on the first ground, the Revenue fails. We notice that in a large number of cases the repayment cheques issued by the assessee have been furnished before the IT authorities. These cheques which are placed at the paper book contain an endorsement of the bankers of the depositors, which clearly evidence the repayment. The aforesaid piece of evidence clearly demonstrates the identity of the deposit holders. Now, insofar as the quantum of individual deposit is concerned, we find that the same ranges from Rs. 5,000 to Rs. 15,000 in an overwhelming majority of cases. Considered in the face of the fact that the deposits have been received in response to the public advertisement, through normal banking channels, repayments are evidenced by bank and most importantly, the absence of any adverse material with the Revenue, we see no reason to treat the deposits as unexplained. Therefore, considering the overall gamut of facts and circumstances of the issue, we are inclined to affirm the conclusion of the CIT(A) in deleting the addition made by the AO. Merely because the order of the CIT(A) is brief, cannot be a reason to interpret it as a non-speaking order. In contrast, a non-speaking order is to be understood as one, which shows a lack of application of mind on the part of the authority writing the order. Having noted the manner in which the CIT(A) has proceeded to examine the rival claims, it cannot be said that there is an absence of application of mind on his part. Therefore, the grievance of the Revenue on this count is misplaced. Accordingly, the Revenue fails on this ground. Foreign travelling - We find that no specific instance of any non-business related expenditure has been pointed out by the AO on this count. The order of the CIT(A), even if we agree with the learned Departmental Representative that the same is brief, yet it brings out the reasons adopted by him for deleting the addition. In any case, having regard to our observations above, we are inclined to affirm the conclusion drawn by the CIT(A), albeit on a different ground. Thus, the Revenue fails in this ground. Entertainment expenditure - There is no instance noticed by the AO, which showed that the expenditure was incurred for personal purpose. Moreover, the accounts of the assessee, as noted by us earlier, are statutorily required to be audited and have been so done. There is also no adverse observation by the auditors in this regard. The disallowance, therefore, was made by the AO on mere surmises and conjectures. Therefore, the CIT(A) appropriately deleted the addition. We hereby affirm the order of the CIT(A) and, therefore, the Revenue fails on this ground. In the result, the appeal of the Revenue is dismissed.
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