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TMI Blog2016 (6) TMI 686X X X X Extracts X X X X X X X X Extracts X X X X ..... said expenses. 3. On the facts and circumstances of the case, the Ld. CIT(A) has erred in accepting the additional evidence without giving opportunity to the AO to review the evidences and submit his report. 4. On the facts and circumstances of the case, the Id. CIT(A) has erred by ignoring the fact that in many of the replies submitted by the assessee regarding various payments which, though have been made in March, 2009 but the material unutilized was not be taken to closing stock. " 5. The appellant craves to be allowed to add any fresh grounds of appeal and/or delete or amend any of the grounds of appeal. " 2. All the grounds of appeal are against the deletion of adhoc disallowance made by the LD AO out of various expenses and therefore they are taken together. 3. The assessee is a limited company, who filed its return of income on 30th September, 2009. It is engaged in the business of manufacturing and export of iron and steel forging as per the specification given by the buyers. During the course of assessment proceedings Ld. AO disallowed 10% of freight and cartage expenses out of amounting to Rs. 21,30,000/-, tools and consumables of Rs. 6,28,939/-and Rs. 10,11,331/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the easy way out. For increase in expenses assessee has submitted the copies of the accounts, however Id AO has also not verified that whether increase in sales is on account of increase in exports sales. The statement is made by AO himself in assessment order that there is increase in soles of the company from 32.45 crore to 41 .83 crores showing a jump of almost 29 % compared to previous year. For freight assessee submitted before. AO detailed copy of account showing that assessee engaged M/ Swift freight movers as freight forwarders for export shipment and all payments were made. by cheques and further Tax deduction at source was also made by appellant. Therefore in our opinion the above facts read together gives complete picture of the freight expenses and to whom it is paid and whether he is assessed to tax and whether such expenses are in relation to export sales. This would have open floodgates of information for the AO to determine whether expenditure incurred by assessee are wholly and exclusively for the business or not. But no such efforts were made. Therefore statement of AO that there is no documentary evidence is produced by ossessee before him is a hollow stateme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted this disallowance as under :- "4.4.1 Tools and consumables : The assessee has shown expenses of Rs. 94,72,664/- under the head tools and consumables. AO observed that major purchases of tools and consumables have been made in the month of March 2009 only. The assessee has not been able to prove/justify that all the tools and consumables purchased in month of March 2009 have been utilized fully. The unutilized tools and consumables should have been reflected in the closing stock as on 31.03.2b09. The closing stock does not include the tools and consumable purchase in the month of March 2009. Therefore, it is certain that all the tools and consumable purchased in the month of March 2009 must not have been used in month itself. Taking conservative figure that the tools and consumables purchased in the month March 2009 have been used to the extent of Rs. 5 lacs in the March 2009 itself. The balance tools and consumables of an amount of Rs. 6,28,939/- which should have been shown in the closing stock is being added back by the AO to the total income of the assessee. 4.4.2 It is seen that the above adhoc and arbitrary addition is made by the AO on surmises and conjectures. Appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, Diesel for uninterrupted power supply to its machine shop and machine oil/lubricants for smoothening of machines parts. Appellant company is having a manufacturing facility in Ghaziabad and it is not feasible for appellant company to maintain separate store for Fuel. Therefore, it is procuring the material at the time of need. The Fuel is standard products and are easily available in the market. 4.5.3 It is seen that sales has increased by 100% over the last financial year. Therefore, the observation of the AO that the fuel expenses has increased by 70% is without considering the fact that the sales has increased by 100% from last financial year. AO also ignored the fact that by creating closing stock for one year by reducing expenses does affect interest of the revenue as the same is claimable as an expense for the next year. The appellant is procuring fuel at the time of requirement as and when necessary and issuing the same for production. Appellant is accounting for the same following the principle of consistency. Fuel is a standard product and readily available in the market. The fuel purchased on 25.03.2009 and 30.03.2009 are duly accounted for as per bills and vouchers ..... X X X X Extracts X X X X X X X X Extracts X X X X
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