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2016 (6) TMI 488 - ITAT KOLKATAAddition on account of carriage inward expenses - Held that:- AO before disallowing the expenses has failed to consider the claim of the assessee of such expenses in the earlier years to arrive at the view whether the expenses claimed are more or less. The AO has not pointed out any flaw in the books of accounts. The AO should have verified these expenses with regard to the purchase claimed by the assessee. We also find that the vouchers in support of the expenses are also placed. In our view, Revenue cannot resort to ad hoc and arbitrary disallowance of expenses for the purpose of arriving at the alleged undisclosed income especially when there is no incriminating evidence found against the assessee to establish that the assessee had in any manner, inflated the expenses and not accounted for the correct income. Therefore, an assessment cannot be made to disallow or add back expenses on ad hoc basis and that too, to make arbitrary additions to the alleged income as the onus is on the Revenue to prove the actual expenditure and then establish that the source of money spent for such expenditure had not been satisfactorily explained by the assessee. Therefore considering the totality of the case, we are of the considered view not to interfere in the order of ld. CIT(A) - Decided against revenue Addition on account of bogus purchase - Held that:- From the facts of the case, we find that the AO has disallowed the purchases merely on the ground of non service of notice u/s. 133(6) of the Act. In our view, the AO has failed to appreciate other circumstances of the case such as there was no flaw in the books of accounts, there was no adverse comments in the audit report duly certified by the Chartered Accountant, the confirmation received from the bank regarding the payment made to the aforesaid parties in response to the notice u/s. 133(6) of the Act. In the instant case, all the details relevant to the transaction for the purchase of the materials are very much placed on record. Therefore, in our considered view, merely notice issued u/s. 133(6) of the Act cannot be the sole ground for making the disallowance - Decided against revenue Addition on account of bogus sundry creditors - Held that:- AO in the instant case has failed to verify the payment made to the parties through banking channel from the party. In support of payment, the assessee has submitted the bank statement which is placed on pages 143 to 172 of the paper book. Ld. DR has also failed to bring anything contrary to the finding of Ld. CIT(A), the PAN of the assessee was very much available to the AO and the AO failed to reconcile the amount of creditor’s by way of issuing notice u/s. 133(6) of the Act to the AO having jurisdiction over the party. The AO in the instant case has treated the balance of the party as cash credit merely on the ground that the notice issued u/s. 133(6) of the Act was returned as unserved. The AO has not rejected the purchase bill as submitted by assessee at the time of framing of assessment under consideration. The order of AO is silent about the copy of the ledger and confirmation of account by the party submitted by the assessee. Therefore, in our considered view, the amount of credit balance as appearing in the ledger of the party cannot be regarded as unexplained cash credit. - Decided against revenue
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