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2015 (12) TMI 1542 - ITAT DELHI

2015 (12) TMI 1542 - ITAT DELHI - TMI - Addition on account of Freight Expenses, Packing Expenses, Power & consumption Expenses, Machinery Expenses and Tools & Consumable Expenses - Held that:- 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 r .....

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the assessment proceedings started with the first notice u/s 143(2) on 18.09.2008 and assessment continued and concluded on 18.12.2009 i.e. almost 14 months , this time period shows that AO has ample time to exercise all the power vested up on him by the Act and gather adequate evidence to make concrete disallowance, if at all any. - The powers bestowed up on assessing officer are very wide and most effective which were used very sparsely in this case. Therefore there is no basis, except st .....

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.P Dam Kanunjna, Sr. DR O R D E R PER PRASHANT MAHARISHI, A. M. 1. The present appeal filed by the revenue is directed against the order of learned CIT (A)-XVI, New Delhi dated 20.07.2010 passed for the assessment year 2007-08. The revenue raised the following grounds of appeal: 1 That on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the additions made by the AO on account of Freight Expenses, Packing Expenses, Power & consumption Expenses, Machinery Ex .....

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the accounts were unaudited reliance could not be placed on book entries alone without examining supporting bills/voucher. 3. That on the facts and circumstances of the case and in law the Ld. CIT(A) erred in ignoring the fact that the assessee had not justified the genuineness of expenses incurred on the above mentioned heads during the course of assessment proceedings. 4. That on the facts and circumstances of the case and in law the Ld. CTI(A) erred in ignoring the fact that the AO had made .....

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y assessment and notice u/s 143(2) and 142(1) was issued. During the assessment proceeding AO enquired about the increase in freight expense, packing expenses, Power consumption expenses, Machinery expense and tools and consumable expenses. According to AO there is disproportionate increase in those expense compared with the increase in sales of the assessee. In response, for increase in freight expenses assessee submitted that there is 30 % increase in export and export freight increased on tha .....

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nation of assessee made disallowance of expenses on adhoc basis as under :- a. Freight expenses 20 % ₹ 45,86,126/- b. Packing expenses 13 % ₹ 20,36,214/- c. Power and consumption expenses ₹ 81,13,559/- d. Machinery expenses 20% ₹ 14,57,839/- e. Tools and Consumables 20 % ₹ 23,83,663/- 3. On Appeal, CIT (A) deleted the disallowance holding that disproportionate increase in expenses compared with sales is no ground for disallowance of expenses when complete details ar .....

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but only made ad hoc disallowances then CIT (A) is not correct in deleting the addition. Therefore deletion of disallowance is not correct. He relied on the order of AO submitting that there is disproportionate increase in expenses compared with sales. 6. Ld AR of the assessee submitted that complete details were produced before AO for all the expenses and submission with respect to query of AO regarding increase in expenses was also provided. However without rejecting the explanation of the ass .....

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e expense are wholly and exclusively incurred for the purposes of the business no disallowance should have been made. He relied on several judgments of various courts supporting that ad hoc disallowance cannot be made. 7. We have carefully considered the rival contention as well as the orders of lower authorities. It is a fact that there is increase in various expenses of compared to previous year. Further there is also higher percentile increase than the increase in sales of the company. Ld AO .....

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