TMI Blog2015 (8) TMI 222X X X X Extracts X X X X X X X X Extracts X X X X ..... e to section 36(2) and 36(1)(vii) of the Act. Accordingly, the addition made by the Assessing Officer was rightly deleted by the Ld. CIT(A) - Decided against revenue. Addition on account of sundry creditors - CIT(A) deleted addition - Held that:- A perusal of the letter of assessee shows that Amitabh Mendiratta was a retainer of the assessee who left the institution on 31.03.2008 and went abroad. The amount shown as sundry creditor by the assessee is the amount due to said Amitabh Mendiratta. Just because the assessee could not give the confirmation about the said amount which is due for Amitabh Mendiratta does not mean that it is a bogus entry made by the assessee.We find that the AO mis-directed himself by not going through the entire explanation given by the assessee in respect to his explanation in respect to the sundry creditor as observed by the ld. CIT (A). Therefore, considering the facts of the case, ld CIT(A) has concluded that that there is no justification for the Assessing Officer to make the impugned addition. Accordingly, he deleted the addition which does not need any interference on our part - Decided against revenue. Addition on account of proportionate disa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re taken through the month wise chart showing details of salary paid to employees of the assessee for the period from 1.04.2008 to 31.03.2009 along with confirmation and appointment letter of the employee are on record. In the light of the said evidences, merely because few employees have been paid salary as cash cannot justify disallowance unless the AO is able to bring any adverse material to suggest that the claim of salary incurred by the assessee is bogus - Decided in favour of assessee. Addition on account of negative cash balance - Held that:- Finding of CIT(A) cannot be countenanced. The undisputed position is that there was negative cash balance on 01 November 2009 of ₹ 51,707/-. The basis of CIT (A) that expenditure incurred as per cash book of ₹ 4,600/- was not actually expended on 28/Feb/2009 is unsupported by any material. It is an afterthought of the assessee, as cash book has been maintained and produced in the course of the proceedings. As regards the explanation of ₹ 10,000/- that the same was incurred out of own sources does not deserve any merit as it is a more self serving explanation without any basis. We therefore reverse the conclusion of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in terms of order u/s 143(3) of the Act 1961 (hereinafter the Act ) at an income of ₹ 2,02,33,088/- as against the returned income of ₹ 1,66,60,730/- and made various additions vide order dated 28.12.2011. 4. Against the aforesaid order of the Assessing Officer, assessee appealed before the Ld. CIT(A), who vide his impugned order dated 5.3.2013 has partly allowed the appeal of the assessee. 5. Now the Revenue is in appeal before us. 6. Ld. DR relied upon the order of the AO. 7. On the contrary, Ld. Counsel of the assessee has relied upon the order of the Ld. CIT(A) and defended the same and does not want us to interfere in the same. 8. We have heard both the parties and perused the records. With regard to ground no. 1 regarding deletion of addition of ₹ 6,04,805/- made by the AO on account of disallowances of bad debts is concerned, we find that in the course of assessment proceedings, the Assessing Officer noticed that the assessee had debited a sum of ₹ 9.23 lakhs as bad debts. The Assessing Officer asked the assessee to show whether all the conditions for allowability of bad debts as per the provisions of section 36(2) and 36(1)(vii) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actions and we have perused the same which is placed in pages 1 to 19 of the paper book and finds that the explanation of the assessee is corroborated by the documents placed on record. Having considered all the facts of the case, we find that the Assessing Officer was not justified in making the impugned disallowance as the amounts in question were written off by the assessee in accordance to section 36(2) and 36(1)(vii) of the Act. Accordingly, the addition of ₹ 6,04,805/- made by the Assessing Officer was rightly deleted by the Ld. CIT(A), which does not need any interference from our part, hence, we uphold the same by dismissing the Ground no.1 raised by the Revenue. 8.1 Apropos Ground 2 regarding the deletion of addition of ₹ 2,44,850/- made on account of sundry creditors. During the course of assessment proceedings, the Assessing Officer asked the assessee to file confirmation pertaining loan amount of ₹ 2,44,850/- appearing as sundry creditor in the name of Sh. Amitabh Mendiratta. The Assessing Officer observed that the assessee merely stated that the amount in question does not pertain to the year under consideration but did not furnish the confirmation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is the amount due to said Amitabh Mendiratta. Just because the assessee could not give the confirmation about the said amount which is due for Amitabh Mendiratta does not mean that it is a bogus entry made by the assessee. We find that the AO mis-directed himself by not going through the entire explanation given by the assessee in respect to his explanation in respect to the sundry creditor as observed by the ld. CIT (A). Therefore, considering the facts of the case, ld CIT(A) has concluded that that there is no justification for the Assessing Officer to make the impugned addition. Accordingly, he deleted the addition of ₹ 2,44,850/-, which does not need any interference on our part, hence, we uphold the same and dismiss the ground no. 2 raised by the Revenue. 8.2 Apropos Ground 3 is regarding the deletion of addition of ₹ 18,36,524/- made by the AO on account of proportionate disallowance of commission expenses is concerned, we find that in the course of assessment proceedings, on perusal of the audit report the Assessing Officer noticed that though the assessee maintained his accounts on mercantile basis, income from commission was partly accounted for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT (A) has observed in respect to commission expenses were concerned, they had been paid to the assessee's agents in India who had rendered services to the assessee. The ld. CIT (A) has made a finding that the payments of commissions were made after deducting corresponding TDS as per law. In the said facts and circumstances, ld. CIT (A) held that there was no justification for making any proportionate disallowance out of commission expenses. We have gone through the bank statement of the assessee i.e. of M/s. Overseas Associates with Corporation Bank for the period from 01.04.2008 to 26.08.2008 and 24.01.2008 to 03.02.2009 which is placed at page 25 26 PB, and copy of commission earned account in the books of the assessee (M/s. Overseas Associates) for the period 01.04.2008 to 31.03.2009 PB page 27 28 and copy of the letter dated 05.12.2011 from Soring, Germany for payment of commission at page 29 PB and copy of commission paid account for the period 01.04.2008 to 31.03.2009 at page 30 -31 PB and finds no infirmity in the findings of the ld. CIT (A). Therefore, she has rightly deleted the addition of ₹ 18,36,524/- made by the Assessing Officer out of commission exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that these payments did not fall within any of the exceptions of Rule 6DD, there was a contravention to the provisions laid down in section 40A(3) as stated before. Therefore, in our opinion, the addition made by the AO amounting to ₹ 41,600/- needs to be upheld, accordingly, we uphold the action of the AO on this account and allow the Ground No. 4 raised by the Revenue. 8.4 Apropos ground 5 relating to deletion of addition of ₹ 11,10,028/- made by the AO out of salary expenses is concerned, we find that in the course of assessment proceedings, vide order sheet entry dated 29.11.2011, the Assessing Officer asked the assessee to file the details in respect of salary expenses amounting to ₹ 18,88,656/- with necessary evidence. Since, the appellant did furnish evidence in respect of salary expenses, vide order sheet entry dated 12.12.2011, the Assessing Officer issued a show cause to the appellant as to why the salary expenses be not disallowed in the absence of evidence. The appellant in his reply dated 15.12.2011 filed before the Assessing Officer had submitted as under: It is submitted that the salary register which was being maintained on monthly basis fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer to make such an impugned addition. In the instant case, we find that the AO has reproduced a chart presented by the assessee in page 5 6 of his order. From a perusal of the said chart, we find that out of 14 employees to whom the assessee claims to have paid the salary, only 3 were not given salary by cheque. Other 11 employees were paid by account pay cheque and cash. The assessee had produced the appointment letters of the said employees and confirmation from them that they have received the said salary as claimed by the assessee. We were taken through page 37-94 (PB) were the month wise chart showing details of salary paid to employees of the assessee for the period from 1.04.2008 to 31.03.2009 along with confirmation and appointment letter of the employee are on record. In the light of the said evidences, merely because few employees have been paid salary as cash cannot justify disallowance unless the AO is able to bring any adverse material to suggest that the claim of salary incurred by the assessee is bogus. So the Ld CIT(A) righty deleted the addition of Rs. ₹ 11,10,028/-, which does not need any interference on our part, hence, we uphold the same by dismi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al bank withdrawal ₹ 25,000 ₹ 20/- Debit Balance ₹ 92,200/- Hence, the Assessing Officer worked out the negative balance as aggregating to (Rs.41,707 + ₹ 10,000) ₹ 51,707/- and added to the income of the assessee. Ld. CIT(A) deleted the addition of ₹ 51,707/- by relying on a letter of assessee dated 8.12.2011 wherein she observed that AO did not appreciate the contents of letter properly and failed to comprehend that what was done was only a book entry for both credits and debits. According to Ld CIT(A) the disbursement of ₹ 46,600/- was only made on 2.3.2009 when the cheque was encashed. Regarding the amount of ₹ 10,000/- the Ld CIT(A) was of the opinion that it was explained by the assessee that since 1.3.2009, being Sunday and since the cash was urgently required for expense, the same was provided by the assessee from his own pocket, therefore, ld. CIT(A) has deleted the addition of ₹ 51,707/- on this account. Having considered the above factual matrix we are of the opinion that the finding of CIT(A) cannot be countenanced. The undisputed position is that there was negative ..... X X X X Extracts X X X X X X X X Extracts X X X X
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