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M/s. Samwon Precision Mould Mfg. (India) Pvt. Ltd. Versus ITO, New Delhi

2016 (4) TMI 1094 - ITAT DELHI

Cash payment not supported by voucher - Held that:- The books of accounts were incorrectly rejected as it is not a case where it can be held that the books of account was incorrect or incomplete or correct profits could not be deduced. On the contrary, we find that completed audited books of accounts were produced before the AO, which were duly examined and such book of accounts have not been shown to have been maintained from where correct profits could not be deduced, thus vitiating the entire .....

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rance and regular inspections/scrutiny’s by these Government departments is carried out. Accordingly, the results declared by the assessee are accepted and addition made including addition on account of exchange fluctuation in excess of the declared profit are deleted.

Addition u/s 41(1) - Held that:- We notice that there is a fundamental misconception on the facts as appreciated by the AO and CIT(A). It is noticed that during the instant year, the assessee had shown in the beginning .....

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nothing to do with the unsecured loan of ₹ 7,35,30,351/-. There is neither a payment towards the loan, nor there was cessation or remission of the liability of the loan. Even the AO has proceeded merely on conjecture to hold that such liability is the income of the assessee. There is no evidence to suggest that liability was squared up or paid. In the absence of any evidence to come to such impugned conclusion, the addition is arbitrary and has to go. Therefore, we order deletion of the ad .....

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turing of plastic moulded components of plastic good. It declared Nil income in its return, which was not accepted by the AO, by rejecting the books of account, which was upheld by the CIT(A) and as such this appeal before us. 3. Ground Nos.1 and 7 to 10 are general so not adjudicated 4. The grounds no.2 to 4 relate to estimation of net profit by rejecting the books of account of the assessee company. 5. It is noticed that during the assessment proceeding, the books of account was produced befor .....

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in the cash book was made on 14.09.2007. (b) Similarly, the AO pointed out that the assessee made a payment of ₹ 5,49,237/- in cash to M/s Superwell Services on 07.04.2007 for providing labour. In other instances, cash payment to Shri Lee Geua yeop on 07.04.2007 were also made on dates which did not tally with the books of accounts and no vouchers in support of these cash payments were available. (c) The AO has pointed out that the assessee company submitted that it does not maintain any p .....

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IT Act, as well above ₹ 20,000/- for which the assessee could not produce any bills or vouchers. Having regard to the above, the AO applied the net profit at the rate of 3% and computed the income at ₹ 1,35,47,020/-. The CIT(A) has upheld the said action of the AO, by holding as under :- After considering carefully the facts of the case, and the reply of the AR of the appellant, it is observed that the AR has no case for justifying the discrepancies and establishing that the books of .....

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oks of accounts u/s 145 of the income Tax Act. With regard to the application of net profit rate @ 3% of the turnover, the assessing officer has made this estimation by considering the market rates and results of similar companies in this line of business. Even though the AR of the appellant has submitted that there is no basis for applying this net profit rate, the AR has not brought on record any comparable results of other companies to argue or justify that the rate applied was on higher side .....

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AR highlighted the replies and submissions before the CIT(A), to contend that the action on the facts of the case was highly arbitrary and unjustified and, therefore, the addition made may be deleted. 7. The ld. DR supported the orders of the authorities below. 8. We have considered the rival submission and perusal the records. The first and foremost specific objection is regarding a cash payment of ₹ 1,74,500/- on the ground that such payment was not supported by voucher. Whereas before .....

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ficant mistakes or issues which are not relevant and the nature of mistakes and discrepancy are of serious nature and, therefore, cannot be ignored. We, however, neither support the conclusion, on the contrary castigate such an arbitrary approach of the authorities below in the facts of the case. The assessee is a company having declared a turnover of ₹ 44.45 crores and profit thereon of ₹ 1.65 crores. The books of accounts are duly audited and no defect has been pointed out vis-a-vi .....

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s rejecting of books of accounts, at best disallowance could have been made u/s 40A (3) of the Act. We, therefore, hold that the books of accounts were incorrectly rejected as it is not a case where it can be held that the books of account was incorrect or incomplete or correct profits could not be deduced. On the contrary, we find that completed audited books of accounts were produced before the AO, which were duly examined and such book of accounts have not been shown to have been maintained f .....

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country such as Excise, Sales Tax, Provident Fund and Employee State Insurance and regular inspections/scrutiny s by these Government departments is carried out. Accordingly, the results declared by the assessee are accepted and addition made including addition of ₹ 1,16,68,281/- on account of exchange fluctuation in excess of the declared profit are deleted. 5. Ground No.5 and 6 relates to addition of ₹ 7,35,30,351/- u/s 41(1) of the Act. 6. The AO has noted that the assessee has sh .....

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ome from undisclosed sources . He has therefore concluded as under :- The assessee would be claiming depreciation of the machinery and interest of loan as well and in either way this amount is liable to be added to the income of the assessee in the shape of cessation of liability u/s 144 (1) of Income Tax Act or income from undisclosed sources used to pay of the liability. Whether the liability of the assessee has been fully discharged is within the special knowledge of the assessee. He has to p .....

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#8377; 7,35,30,351/- + ₹ 50,09,447/-, while M/s SPM has confirmed only USD 1251736 x 40.02= INR 50,09,447/-. Therefore the balance amount of ₹ 7,35,30,351/- is liable to be added back to the case of the assessee. 7. The CIT(A) has affirmed the aforesaid approach of the AO by holding that once the confirmation letter did not tally with the accounts of the assessee, and the assessee has not provided any reason for not furnishing the documentary evidence before the AO, and held that add .....

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