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2016 (6) TMI 330 - ITAT DELHI

2016 (6) TMI 330 - ITAT DELHI - TMI - Ad-hoc disallowance of conveyance expenses - Held that:- The assessee has paid the entire amount of expenses related to conveyance and collection in cash. The assessee before the Assessing Officer made written submissions that the disallowance of this expenses were made on estimated basis but the same are incurred for business purpose by the assessee. The assessee submitted that the supporting evidence towards incurring expenditure was produced before the As .....

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essee's submission the loan was taken for business purpose and thus the interest was paid / incurred for business. The relevant documents before the authorities, but the same was not taken cognizance. The Assessing Officer and the CIT (A) proceeded on the premise that the assessee has failed to produce any evidence in support of his claim. This is not a correct position as the paper book submitted by the assessee along with the loans statement for the period 1/4/2008 to 31/3/2009 was produced be .....

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ly stated that there was no evidence produced by the assessee. We find that there is no merit in the disallowance. The said statement is incorrect. It is not for the Assessing Officer to decide how an assessee can use a cash credit limit with the Bank. - Decided in favour of assessee

Addition of house hold expenses - Held that:- We find that ₹ 90,000/- is not a reasonable amount for monthly expenses of any person and his family. The addition in our view is not warranted. - Decid .....

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Held that:- The Assessee has given the books at the relevant time to the Assessing Officer to verify the same and the books were also subjected to the audit under Section 44AB of the Act to support the value of closing stock. The finding of the CIT(A) that the assessee has not produced complete sale vouchers and also quantity wise details of opening and closing stock, is not factually correct. It was clear from the records that the same was produced before the Assessing Officer at the relevant t .....

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- 31-5-2016 - Shri J. Sudhakar Reddy, Accountant Member And Smt Suchitra Kamble, Judicial Member For the Appellant : Sh. Gurjeet Singh C.A & Sh. Rakesh Jain For the Respondent : Sh. Raman Kant Garg, SR. DR ORDER Per Suchitra Kamble, JM This appeal is filed against the order dated 15/5/2012 passed by CIT (A) Karnal. 2. The grounds of appeal are as follows:- 1. Because the findings of Ld. CIT(A) are being challenged on facts and Law, for adhoc disallowance of conveyance expenses amounting S .....

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#8377; 2,40,369/- on account of utilizing cash available in hand for non business purposes and hence payment made for Bank Limit whereas according to assessee the carrying & conduct of the business and business affairs as a prudent businessman cannot be objected by the respondent. 4. Because the findings of Ld. CIT(A) are being challenged on facts and Law, for making addition of ₹ 50,000/- on account of low House hold expenses. 5. Because the findings of Ld. CIT(A) are being challenged .....

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Ld. CIT (A) are being challenged on facts and Law, for making addition of ₹ 12,02,512/- on account of variation in the value of closing stock between the value declared in the accounts and the value declared to the bank whereas according to assessee books are subject to audit under S. 44AB of the Act to support the value of closing stock. b) Because the findings of Ld. CIT(A) are being challenged on facts and Law, for making addition of ₹ 12,02,512/- on account of rejecting the books .....

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8377; 1,74,652/-. The Assessing Officer observed that the expenses were entirely in cash and no supporting evidence or bills etc was produced to verify the authenticity of expenses claimed. The Assessing Officer further noticed that there was substantial increase in expenses as compared to preceding year where the expenses claimed were only at ₹ 24,160/-. The Assessing Officer further mentioned that the assessee could not explain satisfactorily the manifold increase in expenses except stat .....

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s per schedule 8 forming part of balance sheet. As per assessee, ₹ 2 lacs were advanced to Deepak Mehla which was shown as opening balance as on 01.04.2008. The Assessee was called upon to explain the nature of advance and also to state whether any interest was charged on the above advance. The assessee submitted that the advance was given to Deepak Mehla in the year 2007-08 for the purchase of Makki which remains outstanding till date and he was facing difficulty to recover the same. The .....

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part of it was diverted for making interest free advances. Therefore, the Assessing Officer held that interest attributable to the advance of ₹ 2 lacs for the period 01.04.2008 to 31.03.2009 @ 12% per annum works out to ₹ 24,000/- and is disallowed out of interest claimed in view of Section 36(1)(ii) and also the ratio of judgment of Hon ble Punjab & Haryana High Court in the case of Abhishek Industries and accordingly disallowed ₹ 24,000/-. 5. The assessee claimed expendi .....

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the business of the assessee is such that they recover cash which is usually in small denomination and bank does not accept cash in small denomination. Thus, some part of cash goes on accumulating. Another reason given by the assessee was that collections from small farmers was in cash and cash-in-hand was accumulation of receipt from the small farmers on daily basis and no cash is withdrawn from the bank during the year. The assessee submitted break up wise minimum balance of cash in respect o .....

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0/- on the education of son. Thus making total withdrawal of ₹ 94,860/-. The Assessing Officer held that the expenses shown were inadequate and made addition of ₹ 50,000/- for low household withdrawals. 7. The assessee claimed freight expenses of ₹ 8,87,130/- as against NIL of the immediate preceding year and ₹ 38,300/- only of the Assessment Year 2007-08. Necessary details was furnished by the Assessee before the Assessing Officer. The assessee was called upon to confirm .....

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ndividual truck freight was below ₹ 20,000/-, no TDS was deducted. The Assessing Officer observed that aggregate of payments exceeds ₹ 50,000/- and by not deducting tax at source, there is clear violation of Section 194C(5) of the Act and thus, total expenditure of ₹ 2,35,804 was disallowed. 8. The Assessing Officer further observed that the assessee incurred expenditure in cash exceeding ₹ 20,000/- in violation of provisions of Section 40A(3) of the Act in respect of fre .....

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the assessee furnished quantity- wise details of closing stock along with valuation. During the year, the assessee was having cash credit limit from Canara Bank against hypothecation of stock where the amount payable to bank as on 31.03.2009 was shown at ₹ 51,94,891/-. As the amount payable to the bank by the assessee was more than 50 lacs enquiries were made from the Canara Bank, Karnal u/s. 133(6) of the Act and Banking authorities were requested to provide the copy of stock statements f .....

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y the Assessing Officer. 10. Aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT (A) while confirming the Assessment Order held that for each expenses which was claimed by the assessee there was no evidence given by the assessee. 11. We have perused all the records and heard both the parties. The assessee has given all the relevant material before the Assessing Officer as well as before the CIT (A). There are five grounds contested by the assessee in the prese .....

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fficer. It is seen from the paper book that the evidence to the extent of expenses incurred on conveyance and collection was before the adjudicating and appellate authorities but the same was not taken into account by both the authorities. The disallowance was on ad-hoc basis. This is in our view arbitrary. Hence we delete the disallowance. Ground No. 1 is allowed. 12. Ground No. 2 relates to the disallowance of interest for utilizing bank loan for making interest free advance. The assessee subm .....

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was produced before the Assessing Officer as well as CIT (A). Both the authorities failed to take cognizance of the said loan statement. It is not in dispute that the loan was taken for business purpose. The money was also advanced for business purpose. Hence the disallowance is bad in law. Ground No. 2 is allowed. 13. Ground No.3 relates to disallowance of interest on account of not utilizing cash available in hand for business purposes and resorting to payment from bank cash credit limit. The .....

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xpenses of any person and his family. The addition in our view is not warranted. Ground No. 4 is allowed. 15. Ground No. 5 relates to disallowance in respect of freight expenses of ₹ 2,35,804/- u/s 40AI (a) of the Act on account of non-deduction of TDS u/s 194C (5) on payment made to transporters. The assessee submitted all the details related to the payment made to the transport and the authorities fail to look into the same. As each payment is less than ₹ 20,000/-, TDS Provisions a .....

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