TMI Blog2013 (9) TMI 477X X X X Extracts X X X X X X X X Extracts X X X X ..... e on record, such addition is not sustainable in law - Decided in favour of assessee. Addition on account of DVO’s report - CIT confirmed disallowance - Held that:- there were no reasons to discard the books of account merely because the same were not found during the course of survey. The AO should have verified each and every entry from the books of account of the assessee on this issue before making reference to the DVO. However, no such findings have been given and the AO merely because the assessee did not produce bills and vouchers referred the matter to the DVO for estimating cost of construction. The findings of the AO are, therefore, not justified - It, therefore, appears that the matter requires reconsideration at the level of the AO - Decided in favour of assessee. Addition of Rs.10,000/- on account of investment from undisclosed sources. - The assessee was asked to correlate the payments from books of accounts but the assessee failed to do so. When the register is found at the time of search and the assessee has failed to reconcile this entry in the register and books of account, the addition is warranted. The assessee has failed to reconcile this entry before us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure @ 20% hence the disallowance is unwarranted. 5. That in any view of the matter the observation of the learned Commissioner of Income Tax (Appeals) in Para-5.2 of his order for confirming the disallowance are general in nature and not from the angle of trader who actively engaged in such business and who spent the amount in regular course of business since the expenditure recorded in books and the books entries are not in doubt hence the disallowance of Rs.84,277.00 is highly unjustified. 6. That in any view of the matter disallowance of Rs.47,268.00 @ 10% out of diesel expenses as claimed by the appellant and the action of two lower authorities is highly unjustified and incorrect when the expenditure are supported by vouchers and most of the payment made by cheques to the dealers hence the disallowance maintained by the Commissioner of Income Tax (Appeals) is unwarranted. The decisions cited by the Commissioner of Income Tax (Appeals) are on different fact and not applicable in the present case. 7. That in any view of the matter in the original assessment order dated 20.12.2006 passed under section 143(3) of the Income Tax Act no disallowance was made under the h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amed is abilities void and unlawful and bad in law without appreciation of facts and utter disregard of the submissions made by the assessee which action of the two lower authorities are not correct. 15. That in any view of the matter no reasonable opportunity was provided to the assessee as such the addition made by the Assessing Officer under different head and partly confirmed by the Commissioner of Income Tax (Appeals) are unwarranted. 16. That in any view of the matter the penal interest charged under section 234A, 234B and 234C of the Income Tax Act is incorrect and before charging interest no opportunity of being heard was allowed to the appellant nor any working of charging of interest was provided to the appellant. The penalty notice under section 271(1)(c) has also been wrongly issued as the assessee did not conceal any income. 17. That in any view of the matter the appellant reserves his right to take any fresh ground of appeal or modify/amend or withdraw the same before or at the time of hearing of appeal. It is, therefore most respectfully prayed that relief may please be allowed accordingly. 3. The ld. Authorised Representative did not press gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . If the general conditions of maintenance of bills vouchers have been mentioned by the A.O., there was no need to single out a particular item of payment. I do not agree with the appellant that once the matter was examined by the A.O. in the regular assessment proceedings u/s 143(3), there was no need to further examine the matter. In fact, the evidence that has been fund on conducting the search that the assessee did not have bills and vouchers for loading and unloading expenses was not available with the A.O. who passed the original assessment order. There is no denial of the facts that for carrying out loading and unloading work there is need of labour. Bu at the same time, the assessee has to establish as to what extent the payments to the labours were made in this respect. It is not open to anybody to record any expenditure behind the claim of its exigency. I also do not agree with the claim of the appellant that books of account were not rejected by the A.O. The books of a/c may be rejected by explicit remarks or by implicit remarks. When the A.O. states that the expenses are not verifiable in the absence of bills vouchers, she directly says that the books of a/c are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hers have not been produced before him at assessment stage. The diesel is used in generator, which is necessary for running of cold storage due to frequent failure of electricity in the State of U.P. Therefore, it was necessary component/expense for running the cold storage. Considering the above, it would be reasonable and appropriate to restrict the addition by disallowing 5% of the expenses instead of 10% confirmed by the authorities below. We, accordingly, modify the orders of the authorities below and restrict the addition of disallowance to 5%. In the result, these grounds of appeal of the assessee are partly allowed." 8. We have heard the ld. Departmental Representative and found that on identical set of facts, the I.T.A.T., Allahabad Bench has decided the issue sustaining the disallowance to the extent of 5% of the expenses instead of 10% confirmed by the CIT(A). Since the facts are identical, to maintain consistency, we follow the order of I.T.A.T. (supra) and in the light of the fact, addition by disallowance of 5% of the expenses instead of 10% confirmed by the authorities is sustained. The A.O. is directed accordingly. 9. The third effective ground is in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20. We have considered the rival submissions and the material on record. Hon ble Supreme Court in the case of Sargam Cinena vs. CIT, 328 ITR 513 held that when books of account of the assessee are not rejected, the Assessing Officer cannot refer the matter to the Departmental Valuation Officer. Hon ble Rajasthan High court in the case of CIT vs. Pratapsingh Amrosingh Rajendra Singh Deepak Kumar, 200 ITR 788 held that there was no dispute that the assessee maintained proper books of account and same had been accepted in past and no defects were pointed out in the books. The expenses were fully supported by vouchers. Full details were also mentioned in respect of each items in the books. Simply because valuation report was of a higher amount, books could not be said to be unreliable. The Tribunal was, therefore, justified in deleting the addition of Rs.55,780/-. The assessee filed details of investment made in earlier years in the property at pages 116 of the paper book, which support the submissions of the assessee that investment has been made from the assessment year 2004-05 to 2010-11. The assessee maintained proper books of account in past and it was only when no regul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the A.O. vide Order Sheet entry in assessment record for A.Y. 2008-09 for which he agreed. Therefore, the A.O. treated this amount of Rs.40,500/- out of income from undisclosed sources and added to the total income of the assessee. The CIT(A) confirmed the addition. 14. We have heard the learned Representatives of the parties and records perused. We noticed that the assessee has agreed for this addition as noted by the A.O. in his order that the assessee was confronted vide order sheet entry for assessment record for the A.Y. 2008-09. When there is an agreed addition and the assessee has no grievance, the assessee should not have raised the ground. In the light of the fact, we sustain the adition of Rs.40,500/- and confirm the order of CIT(A) on the issue. 15. The fifth effective ground i.e. ground no.13 is in respect of addition of Rs.10,000/- on account of investment from undisclosed sources. The A.O. noticed that the Annexure-A11 found and seized from the business premises of the assessee is a register in which substantial payments were made. The assessee was required to substantiate these payments with its regular books of account. The assessee could not correlate the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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