TMI Blog2012 (11) TMI 219X X X X Extracts X X X X X X X X Extracts X X X X ..... ds to be reconciled, at his level. Therefore, the issue is restored back to AO to adjudicate the issue properly, in accordance with provisions of law and in terms of established accounting norms - grounds of appeal of the revenue are allowed for statistical purposes. Assessee's appeal for assessment year 2006-07 Disallowance of Interest – Held that:- Since these advances are for non-business activity and no supporting evidence has been furnished - interest @ 12% on these advances making addition of Rs.1,26,000 is disallowed - AO should afford reasonable and proper opportunity to the assessee, while adjudicating the issue afresh and the assessee is also directed to render necessary cooperation in the matter - ground of appeal of the assessee is allowed for statistical purposes. - ITA No. 93 & 94/CHD/2010 & - - - Dated:- 8-6-2012 - Ms.SUSHMA CHOWLA, AND SHRI MEHAR SINGH, JJ. Assessee by : Shri Sudhir Sehgal Respondent : Shri Akhilesh Gupta ORDER PER MEHAR SINGH, AM The present two appeal fi led by the assessee and the Revenue are directed against the order dated 09.11.2009, passed by the ld. CIT(A) u/s 250(6) of the Income-tax Act, 1961 ( in short 'the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be furnished u/s 44AB of the Act, page No. 23 is Balance-sheet and page No. 22 is statement of computation, page No.24 represents audited Profit Loss Account in the year ending 31.3.2006. Page 29 of the Paper Book represents details of discounts. The AO, disallowed the impugned amount, representing payment of discount by the assessee, on the ground that assessee has not furnished any details. It is, further, observed by the AO, that discount, if any, is allowed to the purchaser on sales. Often it is reduced from the sales. This expenditure, could easily be debited to trading account, could not be reduced from the turnover. Ld. CIT(A), allowed the claim of the assessee, as is evident from para 5 of the order, which is reproduced hereunder : 5. I have carefully considered arguments of the counsel for the appellant and have perused the assessment order. Ground no. 2(a) of the appeal is regarding addition of Rs. 1,22,600/- under the head discount. The AO has made this addition on the ground that details have not been furnished by the appellant and moreover the discount should have been reduced from the sales. The counsel for the appellant on the other hand has argued that during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refully perused the rival submissions, facts of the case and the relevant record. The assessee is a wholesale cloth merchant. The assessee did not produce books of account and other documents, as observed by the AO. The AO, consequently, rejected the book version u/s 145(3) of the Act. The AO, on rejection of books of account, applied 11% GP and made the impugned addition. It is observed by the AO that GP declared by the assessee for the assessment year 2006-07 comes to 8.24%, whereas during the previous year, relevant to the assessment year 2005-06, GP was at 10.47% and for the year, relevant to assessment year 2004-05, it was 11.2%. Ld. CIT(A) recorded his findings on the issue in question, in para 8.1 and the same are reproduced hereunder : 8.1 On careful consideration, I find force1 in the arguments of the counsel for the appellant that after the rejecting of books of accounts, the AO is duty bound to make a fair and reasonable estimate of the income of the appellant which has to be based on material available. The AO has riot taken into consideration comparable cases. The AO has not appreciated the arguments of the appellant that its turnover increased more than 2.5 times ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of law and in terms of established accounting norms. Accordingly, these grounds of appeal of the revenue are allowed for statistical purposes. 6. Ground Nos. 6 7 are general in nature, therefore, need no separate adjudication and the same are dismissed. 7. In the result, appeal of the revenue is allowed for statistical purpose. ITA No. 93/Chd/2010 (A.Y. 2006-07 (Assessee's appeal) 8. In assessee's appeal, the following grounds of appeal have been raised: 1.That the order of the learned C.I.T (A) in upholding disallowance of interest of Rs. 126000/- for assessment year 2006-07 is unjustified, against law and is erroneous. 2. That the order of the learned C.I.T (A) in upholding disallowance of interest of 161267/- u/s 40(a)(ia) for A.Y. 2006-07 is unjustified, against law and is erroneous. 3. That the appellant craves for permission to add, delete or amend the grounds of appeal before or at the time of hearing of appeal. 9. In Ground No.1, the assessee contended that CIT(A) erred in upholding the disallowance on interest of Rs.1,26,000/- for the assessment year 2006-07. I t is contended by the ld. 'AR' that a reference be made to para 7 of the CIT(A) ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... advanced out of the appellant's own capital also does not have any merit in view of the jurisdictional high court decision in Abhishek Inds. Case 286 ITR 1 (P H). The addition of Rs. 1,26,000- made by the AO is upheld and this ground of appeal is rejected. 9 (ii) Having regard to the rival submissions and facts of the case, the disallowance is upheld in principal. The AO, for the purpose of fresh adjudication in accordance with law. The AO, is further directed to consider the content ion of the ld. 'AR' that interest for the full year cannot be charged, having regard to the fact situation of the present case. Needless to say that AO should afford reasonable and proper opportunity to the assessee, while adjudicating the issue afresh and the assessee is also directed to render necessary cooperation in the matter. This ground of appeal of the assessee is allowed for statistical purposes. 10. In the present appellate proceedings, ld. 'AR' stated that Ground No.2 is not pressed. Hence, the same is dismissed as not pressed. 11. Ground No. 3 is general in nature and, hence, needs no separate adjudication. 12. In the result, appeal of the revenue (ITA No. 94/Chd/2010) as well as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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