TMI Blog2006 (9) TMI 454X X X X Extracts X X X X X X X X Extracts X X X X ..... f the amounts due to the sister concern. Therefore, the assessee paid interest at the rate of 12 per cent per annum amounting to Rs. 85,764 on amount due to the sister concern at Rs. 7,14,708. The Assessing Officer observed that these purchases were made at the fag end of the year and firm had sufficient liquidity of funds. The assessee did not make payment to its sister concern when the payments to other parties stood paid within reasonable time. The Assessing Officer, therefore, disallowed the interest under section 37(1) read with section 40A(2)( b ) of the Act. 3. Being aggrieved, the assessee filed an appeal before the CIT(A). It was submitted before the CIT(A) that the goods were not purchased in the accounting year relevant to assessment year under consideration. The goods were purchased in the accounting years relevant to the assessment years 1999-2000 and 2001-02 and form part of the closing stock. The observations made by the Assessing Officer that assessee had sufficient liquidity of funds were factually incorrect because a copy of the balance sheet indicated cash in hand at Rs. 55,954 and bank balance of Rs. 1,000. It was submitted that payments to other creditors h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld to be reasonable and the disallowance of interest under section 40A(2)( b ) was deleted. Thus, he submitted that the disallowance of interest sustained by the CIT(A) was uncalled for and deserves to be deleted. 5. The learned Departmental Representative, on the other hand, heavily relied on the orders of the authorities below. 6. I have heard both the parties and carefully considered the rival submissions, gone through the evidence and material placed on record. I find that the Assessing Officer has made this addition by presuming wrong facts. The purchases were not made towards the end of the accounting year under reference. These were made in the earlier assessment years and the payments for the same remained outstanding for more than one year. Copies of accounts of other parties show that payments were made within a period of 4 to 6 months. Further, balance sheet of the assessee indicated that the assessee did not have sufficient cash balance as assumed by the Assessing Officer. Since the assessee had utilized funds due to its sister concern for more than one year and rate of interest paid to its sister concern was only 12 per cent which could neither be considered ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such income. Therefore, this claim was rightly rejected. As regards the claim of the assessee that expenses of electricity and telephone were met by assessee s brother Shri Ashok, the Assessing Officer observed that total withdrawals in his case to the tune of Rs. 48,350 were enough to meet his own household. Thus, I am of the opinion that the authorities below were justified in rejecting such claims of the assessee. No worthwhile arguments have been advanced about the expenses estimated by the Assessing Officer. The learned CIT(A) has been fair enough to give credit for other two additions which were surrendered during the course of assessment proceedings. Thus, I do not find any justification to interfere with the order of the CIT(A). The same is upheld and this ground of appeal is dismissed. 11. The last two grounds of appeal relate to sustaining trading addition of Rs. 36,294 and disallowance of advertisement expenses of Rs. 18,500. The facts of the case are that the assessee had shown gross profit of Rs. 6,49,706 on the total turnover of Rs. 48,89,519 which worked out to 13.28 per cent. The Assessing Officer observed that the assessee had not maintained any stock register ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... since the grievance of the assessee was already redressed by him, there was no merit in such grounds of appeal. The relevant findings recorded by the CIT(A) on page 19 of the order are as under : "I have considered the submissions from both the sides in the light of the relevant order sheet entry as in the case records. The addition having been agreed the Assessing Officer was prevented from making further inquiries in this regard. In the light of the decision of Hon ble jurisdictional High Court in the cases reported at Banta Singh Kartar Singh v. CIT [1980] 125 ITR 239 (P H) and Kanshi Ram Wadhwa v. CIT [1982] 27 CTR (P H) 4 : [1982] 138 ITR 830 (P H), wherein it was held that in a case where the assessment has been made on agreed basis, the same could not be challenged in appeal, the appellant is in appeal because additions so agreed were not held available for set-off against household expenses as per submissions of appellant but the same having been considered, the additions on agreed basis will remain. The agreed additions were not made under any mistaken belief of fact and law. Therefore, in view of the decisions above, I do not find any merits in the submissions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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