TMI Blog1991 (7) TMI 137X X X X Extracts X X X X X X X X Extracts X X X X ..... ns and it was found that no such concern existed at the given address. Enquiries were also made from the Union Bank ofIndia, Shahdara,Delhiwhere Shri Ashok Kumar, Proprietor of M/s Ashok Embroidery was stated to be maintaining an account on comparison of the signatures in the bank account opening form and the signatures on the confirmation letter it was found that the two did not tally at all. It was also found by the Assessing Officer that some of the cheques issued by the assessee in the name of M/s Ashok Embroidery had not been credited to the said bank account. It was also found that withdrawals had been made from the aforementioned bank account within a day or so from the date of the credit of cheques. Assessee accordingly was confronted with the information collected by the Assessing Officer and was asked to produce Shri Ashok Kumar for examination. Shri Ashok Kumar was, however, not produced before the Assessing Officer nor was any other address given at which he could be contacted. The Assessing Officer treated the expenditure relating to M/s Ashok Embroidery as bogus. 3. In respect of M/s Upkar Garments, the Assessing Officer observed that the bills issued did not seem t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onfirmed for the following reasons : (a) Confirmation from Upkar Garments had not been furnished ; (b) party had not been produced ; and (c) the assessee had failed to establish the genuineness of the expenditure. 6. The learned counsel for the assessee contended that there was no justification for the disallowance of the expenditure of Rs. 66,729 in the case of M/s Ashok Embroidery. According to the learned counsel assessee had done everything at its end to establish the genuineness of the expenditure. The expenditure was properly vouched and the payments had been made by cheques. Though the party could not be produced during the course of assessment proceedings for the asst. year 1983-84 yet his statement had been recorded during the asst. year 1984-85 and the copy of statement was made available to the first appellate authority. According to the learned counsel, there is nothing in the statement of Shri Ashok Kumar that repudiates the claim of the assessee. Shri Ashok Kumar has admitted to have received the payment in respect of the work done. According to the learned counsel, the revenue authorities have ignored the material fact that embroidery work had been done in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s) who has considered the same on merits. A perusal of the statement of Shri Ashok Kumar recorded by the Assessing Officer reveals that he is admitted to have done the embroidery work for the assessee for 1 1/2 years starting from 1981. The claim of work done by him for the assessee is Rs. 80,000. In response to a question as to the situation of the business premises Shri Ashok Kumar has replied that the shop was in the comer of Gali No.9, Old Seelampur and rent of Rs. 350 per month was stated to have been paid to Smt. Bijli Devi. It has also been stated by Shri Ashok Kumar that he had purchased two machines for Rs. 2,800 which were later on sold for Rs. 2,100. In response to a question as to whether any account books had been maintained, Shri Ashok Kumar replied that some account books had been maintained but he did not have any accounts at the time of recording the statement. He is also admitted to have maintained the bank account with the Union Bank ofIndia, Shahdara,Delhi. The statement of Shri Ashok Kumar read as a whole, in our view, supports the claim of the assessee. We may have to deal with the discrepancies pointed out by the CIT (Appeals) for confirming the disallowance. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for embroidery work. Secondly, the rent receipt had also not been produced. From the statement of Shri Ashok Kumar it transpires that he was asked as to whether any machinery was purchased or used for the purpose of doing the job. He has replied that he purchased two machines for Rs. 2,800 which were later on sold for Rs. 2,100. There is no evidence on record to suggest that Shri Ashok Kumar was asked to furnish evidence relating to purchase or sale of the machinery. With regard to the payment of rent, Shri Ashok Kumar has given the name of the landlord as Smt. Bijli Devi the Assessing Officer has not made any enquiries from Smt. Bijli Devi nor has, it seems, the complete address been asked from Shri Ashok Kumar. The mere fact that Shri Ashok Kumar did not have the receipts for the rent paid would not lead to the conclusion that he did not carry on the business at the premises stated by him. 9. The other ground for confirming the disallowance taken by the CIT (Appeals) is that Shri Ashok Kumar did not maintain any books of account for the business conducted by him. From the statement of Shri Ashok Kumar, it is evident that he has admitted of maintaining some of the accounts durin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aras are not reproduced here as they involve minor issues.] 19. In respect of quality control expenses, inspection charges of Rs. 32,600 and Rs. 79,285 assessee would be entitled to deduction only if it were established that assessee had maintained a laboratory or any facility for controlling the quality of the goods. The CIT (Appeals) has referred to the report of the Assessing Officer and held that assessee has not maintained any laboratory or any other facility for quality control and inspection of goods. 19.1 Our attention was drawn to the details of salary, certificate from Inter Conti. Trade and Travel and a certificate from M/s Meenakshi Devi with and it was contended that these documents established the fact that the assessee had maintained a facility for the quality control of goods. The revenue's case is that since the assessee had failed to establish that such a facility was maintained weighted deduction is not permissible. 19.2 In our view, the evidence on record is not sufficient to establish that assessee had maintained a facility for controlling the quality of the goods for export. However, in the interest of justice, we do not wish to close the doors of justic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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