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2015 (10) TMI 2244 - ITAT AMRITSAR

2015 (10) TMI 2244 - ITAT AMRITSAR - TMI - Disallowance of consumable stores expenses and disallowance out of raw material expenses - CIT(A) deleted addition - Held that:- The assessee had produced a chart of prices of consumable stores for the year under consideration and of the preceding year, which was not considered by the A.O. The A.O just compared the percentage of the costs of consumable stores in the year under consideration and for the preceding year, making an addition of ₹ 1,59, .....

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e A.O. Therefore, finding no error therewith, uphold the action of the learned CIT(A) in deleting the addition on account of disallowance out of consumable stores expenses and that on account of disallowance out of raw material expenses. - Decided in favour of assessee.

Disallowance out of free sample expenses and on account of value of goods returned by customers to the assessee - CIT(A) deleted addition - Held that:- These additions were made by the A.O. on an estimated basis. In th .....

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as also without any basis and without any application of mind. Therefore, the learned CIT(A) was correct in deleting these additions. - Decided in favour of assessee.

Disallowance out of job work expenses - CIT(A) deleted addition - Held that:- The rates of the job work of the assessee were not compared with those of other similarly placed assessees which ought to have been done. Again, it is nowhere disputed that the payments made were all through account payee cheques and were verif .....

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mstances while dealing the addition and the action of the learned CIT(A) is, accordingly, uphold.- Decided in favour of assessee.

Disallowance out of wages expenses - CIT(A) deleted addition - Held that:- The A.O worked out the difference in money terms at ₹ 2,65,220/-, being 2.72% of ₹ 97,50,761/- and made addition of ₹ 92,827/-. The learned CIT deleted this addition. Here also, the addition was made by the A.O without any basis, without doubting either the factum o .....

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ape of the copies of bills, the learned CIT(A) observed that these bills had been raised in the name of the assessee company by M/s Flint Group India Pvt. Ltd. It was on considering these factors that the learned CIT(A) deleted the addition made. Do not find anything wrong with this action of the learned CIT(A) also and the deletion is upheld. - Decided in favour of assessee.

Difference in account with different parties - CIT(A) deleted addition - Held that:-Difference was on account .....

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ion. All these factors were duly taken into consideration by the learned CIT(A) while ordering the addition to be deleted. Finding no error here also, the action of the learned CIT(A) is confirmed. - Decided in favour of assessee.

Disallowance out of payment made to internal auditor - CIT(A) deleted addition - Held that:- No comments were offered by the A.O. The learned CIT(A) found the genuineness of the expenses to have not been doubted by the A.O. The payment was also not found to .....

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Sh. M.R. Bhagat, (AR) ORDER Per A. D. Jain (JM): This is Department s appeal for Asst. Year 2007-08, against the order dated 30.10.2013, passed by the learned CIT(A), Jalandhar, contending that the learned CIT(A) has erred in deleting the addition of ₹ 12,52,020/- made by the A.O. on account of certain disallowances/additions after rejecting the books of account of the assessee u/s 143(3) of the I.T. Act, 1961. 2. As per record, the facts are that the assessee company, which is engaged in .....

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ssessing Officer made the following additions/ disallowances to the returned income of the assessee: (i.) The addition on account of disallowance out of consumable store expenses Rs.1,59,912/- (ii.) The addition on account of disallowance out of raw material expenses Rs.2,62,430/- (iii) The addition on account of disallowance out of free sample expenses Rs.1,37,500/- (iv) The addition on account of value of goods returned by customers to assessee ₹ 29,000/- (v) The addition on account of d .....

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ns. Aggrieved, the Department in appeal before me. 4. I have heard the parties and have perused the material on record. Each of these additions are dealt with as follows. The books of account of the assessee were rejected without pointing out any defect therein. The unrebutted observation of the learned CIT(A) in this regard is that the observations made by the A.O. were of a general nature. This is found to be correct. No specific defects have been pointed out by the A.O. for rejecting the book .....

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was on these findings that the learned CIT(A) held the A.O to be not justified in rejecting the books of account of the assessee. Anyway, this action of the learned CIT(A) has nowhere being challenged before me. 5. Coming to the additions per se, the A.O. compared the expenses claimed with those incurred during the earlier year. So far as regards the raw materials expenses also, the A.O. made a similar comparison. It is seen that the stand of the assessee with regard to the sales was that durin .....

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e had produced it books of account before the A.O., including cash register, general ledger, purchase bills and vouchers, stock register and expenses vouchers. The A.O. did not find any defect in any all these books of account. The explanation of the assessee with regard to the decrease in the sales was that the purchase price of petroleum products had increased due to rise in the price of crude oil in the international market, which was beyond the assessee s control. All the purchases of consum .....

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nder consideration and for the preceding year, making an addition of ₹ 1,59,912/-. The sales made by the assessee were accepted. All these facts were duly taking into consideration by the learned CIT(A) and it was rightly observed by him that it was not necessary that the expenses regarding consumable stores should also come down proportionately with the decrease in sales, since the assessee could not pre-suppose or envisage that its sales were going to the fall. The learned CIT(A) has als .....

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on account of value of goods returned by customers to the assessee. These additions were made by the A.O. on an estimated basis. In this regard, it is seen that the A.O had himself accepted giving of free samples to be a part of the assessee s business. So much so, the A.O had himself allowed 50% of the expenses concerning free sample given. In fact, the disallowance for the other 50% was not based on any clear justification or reasoning. Thus, this disallowance was clearly without application o .....

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sis, without doubting either the actual incurrence of the expenditure, or the genuineness thereof. The A.O merely compared the job work expenses incurred during the year with similar expenditure in the preceding year. It remains undisputed that the assessee was getting the job work done from others. So much so, TDS was also made from the persons doing the job work. It is also not under challenge that the job work charges are directly proportional to the work done by those persons. The A.O inordi .....

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job work, including their names and addresses, the A.O did not deem it fit to make any enquiry whatsoever from them. The A.O made a selfanalysis of the matter, but even this analysis was not put to the assessee. The learned CIT(A), however, duly took into consideration these facts and circumstances while dealing the addition and the action of the learned CIT(A) is, accordingly, uphold. 8. The next addition made by the A.O was of ₹ 92,827/-, on account of disallowance out of wages expenses .....

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is addition. Here also, the addition was made by the A.O without any basis, without doubting either the factum of incurrence, or the genuineness of the expenditure claimed. Therefore, the learned CIT(A) is perfectly justified in deleting this addition also. This deletion is also confirmed. 9. The A.O also made disallowance of ₹ 2,02,267/- out of purchase expenses. The assessee had shown purchases of ₹ 2,02,267/- from M/s Flint Group India Pvt. Ltd. between 2.7.2006 to 4.9.2006/- thro .....

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claim made in assessee s written submissions and the application filed for admission of additional evidence, whereby, it was submitted that the assessee had produced the original bills before the A.O, but the A.O had objected that copies of the bills had not been provided for the A.O s record. The assessee had sought to place photocopies of these eight bills before the learned CIT(A). The learned CIT(A) asked for a remand report from the A.O., in which, the A.O submitted that assessee had been s .....

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₹ 2,02,267/- and had shown it as income for Asst. Year 2008-09. It was this very amount which has been shown as payable to M/s Flint Group India Pvt. Ltd. during the under consideration. In these facts, the learned CIT(A) found and correctly so, that the addition made would have a revenue neutral effect in the succeeding year, Asst. Year 2008-09, as the income of the succeeding years would have to be reduced to that extent, if the addition made during the year were to be confirmed. The le .....

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ot find anything wrong with this action of the learned CIT(A) also and the deletion is upheld. 10. The A.O made additions of ₹ 13,258/-, ₹ 58,834/- and ₹ 13,030/ , on account of difference in accounts of three parties, i.e., M/s. Exact Leather and Accessories, M/s Gee Kay Internation and M/s Kunwar Overseas, respectively, by observing as follows: (c) Difference in account with different parties: The copies of account of certain parties with whom assessee had made purchase and s .....

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he said party so the difference of ₹ 13258.41 is added to assessee s income. Penalty proceedings u/s 27(1) (c) for inaccurate of income are being initiated separately. Addition: ₹ 13258.41 (ii) M/s Gee Kay internation: The said party has shown credit balance of ₹ 3,58,205.33 in the name of the assessee whereas the assessee has shown debit balance of ₹ 5,17,037.33. Out of this assessee attributed difference of ₹ 58,834/- towards opening balance and ₹ 100000/- o .....

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In the absence of confirmation of the reason for difference, the same is added to assessee s income. Penalty proceedings u/s 271(1) (c) for furnishing particulars of income are being initiated separately. Addition: ₹ 13,030/- 11. The assessee maintained as follows before the CIT(A): The learned Assessing Officer made addition of ₹ 13,258/-, 58,834/- and 13,030/- by noting that the amount receivable by the appellant was at variance with the amount shown as payable by three parties. I .....

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he accounts of the party. This difference stood duly reconciled by the A.O. This was precisely the reason why no comment was offered in the remand report. Besides, part of the explanation had also been accepted by the A.O., concerning the difference in the accounts. However, no further enquiry had been made. Still, the amounts were added without considering that since the difference was on account of opening balances, no addition could be made in the year under consideration. All these factors w .....

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