TMI Blog2016 (1) TMI 1089X X X X Extracts X X X X X X X X Extracts X X X X ..... see has to lead evidences in his support-he has to produce documentary evidence to prove that expend was actually incurred and was incurred wholly and exclusively for the purpose of business in the case of Ramanand Sagar (2002 (2) TMI 52 - BOMBAY High Court )the Hon’ble Bombay High Court has held that the burden of proof is on the assessee to establish beyond doubt that the expenditure is solely incurred for the purpose of business. In the case before us, the incurring of expenditure disallowed by AO and upheld by the FAA itself is not proved. - Decided against assessee Addition on capital introduced - Held that:- We find that the assessee had filed the cash flow statement and the balance sheet in his support, that the FAA had not analysed the documents properly, that availability of cash was prima facie established. In our opinion, it requires further investigation. Therefore, in the interest of justice we are remitting back the issue to the file of the AO for fresh adjudication, who will decide the matter afresh after affording a reasonable opportunity of hearing to the assessee. Addition on account of bogus purchase - Held that:- AO had added ₹ 10.50 lakhs to the inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was argued that the AO had relied upon the information supplied by the investigation wing of the Sales Tax Department(STD), that the AO had not supplied the copy of the statement of Shiv Sagar recorded by the STD, that the assessee was not allowed to cross examine Shiv Sagar, that the assessee had discharged his obligation by submitting details of purchases, sales, bank transactions, that stock register was produced before the AO, that there was no evidence that payments for the so called bogus purchase had come back to the assessee, that all purchases and sales were recorded in the books of accounts, that quantitive details were maintained by the assessee with regard to purchase and sales, that the AO had accepted the sales. After considering the submissions of the assessee and the assessment order, the FAA held that STD had treated the suppliers of goods as suspicious dealers, that they had paid VAT, that during the investigation the suppliers had admitted that they had issued accommodation bills, that the assessee had not produced the party, that he might have purchased the goods from grey market, the he might have take accommodation bills, that addition could be made at certa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rajeev Kalathil(supra)the Tribunal has held as under: 2.4. We find that AO had made the addition as one of the supplier was declared a hawala dealer by the VAT Department. We agree that it was a good starting point for making further investigation and take it to logical end. But, he left the job at initial point itself. Suspicion of highest degree cannot take place of evidence. He could have called for the details of the bank accounts of the suppliers to find out as whether there was any immediate cash withdrawal from their account. We find that no such exercise was done. In the present case also the AO had made the addition on the basis of information received from the Sales tax department, but, he did not make any independent inquiry. He did not follow the principles of natural justice before making the addition. The FAA had reduced the addition to 20%, but he has not given any justification except stating that same was done to plug the probable leakage revenue. Considering the peculiar facts and circumstances of the case,we are reversing the order of the FAA. Effective ground of appeal is decided in favour of the assessee. First three grounds of appeal are about ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nses (Rs.96,582/-) had been incurred by the assessee as well as the employees and the persons connected with the business for travelling, the expenses were to be paid in cash, that the disallowance made by AO @ 50% was very high, that office expense of (Rs.49,486/-)included maintenance items, sweeping charges, the payments were made in cash, that the staff welfare expenses were incurred for tea, coffee cold drink etc., that sundry expenses of (Rs.52,465/-) included general repairs, repairs to furniture and similar expenses, travelling expenses of (Rs.56,480/-) were incurred for travelling outside Mumbai for business purposes, that the disallowance made by the AO was on higher side. With regard to telephone expenses the assessee argued that it included payment of tata indicom telephone and included payment of mobile bill of employees , that the expenses were incurred for business it was further submitted that warehouse expenses were paid in cash. Assessee furnished a copy of leave and license agreement. The FAA called for Remand Report (RR)from the AO. After considering the assessment order, remand report and the submissions of the assessee, the FAA held that the contention of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO had partially allowed the expenditure claimed by the assessee and had disallowed the remaining amount as the assessee had not produced supporting evidences. In these circumstances, we are of the opinion that order of the FAA does not need any interference from our side. We further find that the assessee had claimed that warehousing charges were paid in pursuance of an agreement, that the FAA had analysed the said agreement and had reached the conclusion that the assessee had no connection with that agreement. As the assessee had not proved that he had paid the warehousing charges therefore, the FAA rightly upheld the disallowance. For claiming deduction u/s.37(1) of the Act the assessee has to lead evidences in his support-he has to produce documentary evidence to prove that expend was actually incurred and was incurred wholly and exclusively for the purpose of business in the case of Ramanand Sagar (256 ITR 134)the Hon ble Bombay High Court has held that the burden of proof is on the assessee to establish beyond doubt that the expenditure is solely incurred for the purpose of business. In the case before us, the incurring of expenditure disallowed by AO and upheld by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith addition of ₹ 2.10 lakhs on account of bogus purchase. During the course of assessment proceedings, the AO found that the assessee had purchased goods worth ₹ 10.50 lakhs from Valiant Steel Engineering Co., that the name of that company was appearing in the list of the STD of Maharashtra Government. He made the addition of said amount on the same lines on which addition was made for earlier AY. In the appellate proceedings, the FAA reduced the addition to ₹ 2.10 lakhs. 13. Before us, the AR and the DR reiterated the argument that were made for AY.2009-10. Following our order for the earlier AY., we delete the partial addition retained by the FAA. Effective ground no.3 is decided in favour of the assessee. ITA/1275/Mum/2014 ,AY.-2010-11: 14. Only ground of appeal filed by the AO is about deletion of addition made by him under the head bogus purchases. As stated earlier, the AO had added ₹ 10.50 lakhs to the income of the assessee for the year under appeal and FAA had reduced it to ₹ 2.10 lakhs. We have deleted the addition made under the head bogus purchases while deciding the appeals filed by the assessee for both the AY.s. So, decidi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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