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2016 (7) TMI 1131 - ITAT DELHI

2016 (7) TMI 1131 - ITAT DELHI - TMI - Disallowance of the credit cart expenses of two directors of the company - Held that:- The expenses having been incurred through credit card and assessee having failed to establish that these expenses were incurred wholly and exclusively for the purposes of business, we are of the view that the AO was justified in disallowing the same. - Decided against assessee. - Un-reconciled purchases - Held that:- It is not the case of the AO and the learned CIT(A) .....

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/-. Thus the assessee has claimed expenditure less by ₹ 1,22,985/- on account of the purchases. Having claimed less expenditure the addition cannot be made in the hands of the assessee and accordingly we hold that the learned CIT(A) was not justified in confirming the addition on account of these differences in the reconciliation. Accordingly, AO is directed to delete the entire addition. - Decided in favour of assessee. - ITA No. 3430/Del/2013, Cross Objection No. 239/Del/2013 - Dated:- 1 .....

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ssing Officer on account of unexplained credits wherein the assessee company had taken accommodation entries by paying cash to M/s. Kalra Paper Pvt. Ltd., 3. On the facts and in the circumstances of the case, the Learned CIT(Appeals) has erred in deleting the addition of ₹ 2,65,577 made by the Assessing Officer on account of disallowance of the credit cart expenses of two directors of the company in absence of any business expediency of such expenses. 4. The appellant craves to amend modif .....

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cheques/ demand drafts from various parties. 3. In order to verify this, a survey was conducted at the premises of M/s Kalra Papers Pvt. Ltd. During the course of the survey some loose papers were found whereby it was noticed that cash amounting to R.56,33,966/- has been received and cheques of ₹ 57,72,733/- were issued in favour of M/s Super Plastic Coats Pvt. Ltd. Not being satisfied with the reply of the assessee the AO treated the cheque amount of ₹ 57,72,733/- as income of the a .....

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ed the order passed by the learned CIT(A). It was submitted that the amount of ₹ 57,72,733/- has been duly accounted for in the books of accounts of the assessee as sale consideration. This amount has been included in the income and accordingly the same amount cannot be added again. It was also submitted that the findings given by the learned CIT(A) has not been controverted and no error or defect has been pointed out in these findings. There is no allegation even from Kalra Papers Pvt. Lt .....

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its in the bank accounts of the appellant is cheques given by M/s Kalra Papers (P) Ltd. While the revenue claims, on the basis of documents impounded during survey u/s 133A from the premises of M/s Kalra Papers (P) Ltd. that these cheques were given against cash received from the appellant, the appellant claims that it did not have any cash transactions with M/s Kalra Papers (P) Ltd. The version of M/s Kalra Papers (P) Ltd. is not on record. It is not known whether any statement of the director .....

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to be explained by M/s Kalra Papers (P) Ltd. If they claim that the cash was received from the appellant, the appellant will be confronted with this fact and allowed an opportunity to crossexamine M/s Kalra Papers (P) Ltd. unless these actions are taken, entries in documents found in possession of M/s Kalra Papers (P) Ltd. cannot be held adversely against the appellant. It is also noted that in the similar matter of entries taken by the appellant from one Sh Ravinder Yadav in lieu of cash sales .....

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urvey have been recorded in the books of account of M/s Kalra Papers (P) Ltd. It is also to be examined as to how and to whom M/s Kalra Papers (P) Ltd. has sold the goods purchased from the appellant and whether the sales are duly recorded in the books of account and credited to the P & L Account duly audited and filed with the I.T. Returns in the case of M/s Kalra Papers (P) Ltd. I hold accordingly and direct the AO to make a reference in the matter to the AO of M/s Kalra Papers (P) Ltd. Th .....

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the paper found at the premises of Kalra Papers Pvt. Ltd. cannot be the basis for making addition in the hands of the assessee. It is also an admitted fact that cheques of ₹ 57,72,733/- are duly accounted for in the books of the assessee company. These cheques have been accounted for against sales made by the assessee company. The sales having been included in the income, the same addition cannot be made again in the hands of the assessee company. 8. It may also be relevant to refer to th .....

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n view of the above facts this ground of the Revenue is rejected. 9. The next ground in appeal is deletion of addition of ₹ 2,65,577/- made by the AO on account of the credit card expenses. The AO has made this addition on the ground that the director of the company has incurred this expenditure through credit card. Since these expenses incurred by the director were through credit card, the same cannot be considered as business expenditure and accordingly he made the disallowance. The lear .....

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that the fringe benefit tax stands abolished for the year under consideration and the learned CIT(A) was not justified in giving benefit to the assessee on account of fringe benefit tax. 11. In reply, it was submitted by the learned AR that these expenses have been incurred for the purposes of business as is evident from the explanation. It was further submitted that the credit card is only a facility like bank. The assessee instead of making payment in cash can make the payment in respect of th .....

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icable. The learned CIT(DR) is correct in its submission that the fringe benefit tax provisions were not applicable for the year under consideration. Accordingly, the order of the learned CIT(A) on this issue cannot be sustained. The expenses having been incurred through credit card and assessee having failed to establish that these expenses were incurred wholly and exclusively for the purposes of business, we are of the view that the AO was justified in disallowing the same. Accordingly, this g .....

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h year were worked out. As per this table there were some short purchases booked by the assessee company whereby in some of the years there were excess purchases. The learned CIT(A) on the basis of this reconciliation sustained the addition to the extent of the differences in each of the year. In this year there was a short purchase of ₹ 122,985/- and accordingly the learned CIT(A) sustained addition to the extent of ₹ 1,22,985/- as against addition of ₹ 10,35,790/- made by the .....

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as arisen because of the claims and counter-claims between the parties. The difference has arisen because of accounting of such claims in a period subsequent to the end of the year as is evident from the table made by the learned CIT(A). It was further submitted that in any case when the assessee has booked less expenditure by making some claims against the supplier, the addition cannot be made of the difference of amount short booked as assessee itself has claimed lesser expenditure. It was fur .....

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he learned CIT(A). It is an admitted fact that assessee has been making purchases from M/s Jindal Poly Films Ltd. Further there is no allegation that the purchases made by the assessee are excessively booked. The learned CIT(A) has made a table for the 7 years which reads as under:- (Amounts in Rupees) Financial Year Purchases of Super Plastic (Appellant) Discount (as per appellant) N. Purchases of appellant Gross Sales of Jindal Difference in Purchases Addition By AO Short Excess 2002-03 344,37 .....

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