TMI Blog2016 (1) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... ce out of the sundry creditors. He made ad hoc disallowance at 20%. It is totally unheard. Whether sundry creditors are genuine or not genuine ? How they can be non-genuine to the extent of 20%. In other words, either total sundry creditors are genuine or all the sundry creditors genuine unless pointed out specifically. There cannot be any ad hoc disallowance out of these items. This appears to us that though the assessment was framed under section 144 of the Income Tax Act, according to the best judgment of the AO, but the AO failed to collect details by exercising his power in order to determine the fair income of the assessee. He ought to have looked into the earlier and subsequent years details available with the department before deter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on account of sundry creditors for want of any proof. [2] On the facts and circumstance of the case and in law, the Ld. CIT(A)-I, Surat has erred by estimating assessee income @ 50% of gross profit thereby deleting the various additions made by the A.O. on account of various expenses @ 20% as the assessee did not submit any proof. [3] On the facts and circumstance of the case and in law, the Ld. CIT(A)-I, Surat has erred by allowing depreciation of ₹ 1,49,07,251/- which the A.O. had added for want of any evidences [4] On the facts and in the circumstances of the case, the Ld. CIT(A) ought to have upheld the order of the Assessing Officer. [5] It is, therefore, prayed that the order of the CIT(A) may be setsi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out of sundry creditors of ₹ 92,09,983/- ii. 20% disallowance out of power and fuel expenses of ₹ 55,31,083 iii. Rent of ₹ 99,03,860 iv. 20% disallowance out of repairs to machinery of ₹ 1,88,595/- v. 20% disallowance out of other expenses of ₹ 28,54,867 vi. Depreciation of ₹ 1,49,07,251/- 6. Dissatisfied with the determination of the income at ₹ 1,95,08,550/-, the assessee went in appeal before the CIT(A). The ld.CIT(A) has decided the appeal of the assessee by observing as under: 8. The case records were also requisitioned from the Assessing Officer during appellant proceedings. From perusal of the same, it is noticed that there was no compliance by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und of appellant i.e. Assessing Officer should have started the computation from the loss ₹ 46,37,530/- arises from this fact. However, in the schedule of computation of total income the profit and gains from Business have been shown at ₹ 1, 49, 68, 305/- against which, brought forward loss of ₹ 1, 49. 68, 305/- has set off showing the returned income at NIL. This means that from the loss of ₹ 46,45,910/- a profit of ₹ 1,49,68,305/- has been arrived at after making some adjustments of admissible / non - admissible items, the details of which are not available. Therefore, the Assessing Officer should have started the computation from ₹ 1,49,68,305/- rather than NIL. Since the Assessing Officer has started ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en as 50% on this amount i.e. ₹ 1, 23,06,299/- The assessing officer himself allowed set off of loss / depreciation to the extent of ₹ 87,59, 467/- on the basis of assessment order for Asstt Year 2008-09. Therefore, the total income assessed by the Assessing Officer is reduced to ₹ 35,46,833/-. (Rs 1,23,06,299 - ₹ 87,59,467/-) This ground of appeal is therefore, partly allowed. 9. In ground no. 4 the appellant states that it made disallowance u/s 40a(ia) was made in n the return out of expenses. However, disallowance out of same expenses was made by the Assessing Officer again. Since the profit of the appellant has been estimated (supra), this ground does not survive and accordingly dismissed. Moreover, it is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is totally unheard. Whether sundry creditors are genuine or not genuine ? How they can be non-genuine to the extent of 20%. In other words, either total sundry creditors are genuine or all the sundry creditors genuine unless pointed out specifically. There cannot be any ad hoc disallowance out of these items. This appears to us that though the assessment was framed under section 144 of the Income Tax Act, according to the best judgment of the AO, but the AO failed to collect details by exercising his power in order to determine the fair income of the assessee. He ought to have looked into the earlier and subsequent years details available with the department before determining the income of the assessee. While he considering all these as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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