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2016 (9) TMI 381 - ITAT INDORE

2016 (9) TMI 381 - ITAT INDORE - TMI - Addition on account of undervaluation of closing stock - CIT(A) deleted the addition - Held that:- It is seen from the bills dated 30.3.2005 and 31.3.2005 that these contain purchases of hatching egg for the period from Ist March to 31st March and the eggs hatched upto 10th March are converted into broiler chicks which were already sold. Therefore, there remains the closing stock of ₹ 35,98,223/- as shown by the assessee in its audited books of accoun .....

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be made the sound basis for such addition. Therefore, the findings of the learned CIT(A) are upheld - Decided against revenue - Disallowance u/s 40A(3) being 20% of total payment - Held that:- As noted that the payments were made in excess of ₹ 20,000/-. Therefore, we find no infirmity in the orders of the authorities below - Decided against assessee - Addition u/s 40(a)(ia) of legal and professional expenses - TDS was not deducted - Held that:- No force in the submission of the l .....

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e made without pointing out any specific defect or instance, hence such disallowance need to be deleted nned not to be accepted.- Decided against assessee - I.T.A. No. 374/Ind/2014, C.O. No. 40/Ind/2014 - Dated:- 27-7-2016 - SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER For The Revenue : Shri Mohd. Javed For The Assessee : Shri Manish Vaidya and Smt. Preeti Patwa ORDER PER O.P. MEENA ACCOUTANT MEMEBR This is an appeal filed by the department against the order of the l .....

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rred in - 1. Deleting the addition of ₹ 8,99,590/- on account of undervalued closing stock. That on the facts & circumstances of the case, the difference in the purchase ledger and the closing stock was not explained properly and needed to be added. 2. Deleting the addition of ₹ 4,64,436/- on account of unaccounted sale by simply accepting the plea of the assessee of typographical error. 3. Deleting the addition on account of undisclosed purchases of ₹ 25,68,986/- by simply .....

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at source u/s 194J 3. That the learned CIT(Appeals)-I, erred in disallowing ₹ 2,23,589/- on account of various expenses as mentioned hereunder and the disallowances are too excessive looking to the facts & circumstances of the case. (i) Disallowance of ₹ 50,000/- out of telephone expenses claimed at ₹ 3,60,333/- (ii) Disallowance of ₹ 75,000/- out of vehicles summary expenses ofRs.6,22,519/- (iii) Disallowance of ₹ 48,589/- out of total claim of depreciation of .....

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₹ 35,98,223/-. The Assessing Officer also observed that there was no sale of hatching egg as per the trading account. Therefore, the assessee was asked to explain the same but no satisfactory reply was furnished. According to the Assessing Officer, there is a normal process for hatching egg which requires 21 days to convert broiler to chicks. Therefore, the Assessing Officer made the addition of ₹ 8,99,590/- being the difference of purchases made on 30.3.2005 and 31.3.2005 (Rs.44,97, .....

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livered after 10.3.2005 are shown in the closing stock. However, the eggs purchased between 1.3.2005 to 10.3.2005 have already been hatched and they are no more part of the closing stock. The assessee submitted stock calculation chart also before the Assessing Officer and the learned CIT(A). In view of these facts, the addition of ₹ 8,99,590/- was deleted by the learned CIT(A) against which the revenue is in appeal before the Tribunal. 6. Before us, the learned DR relied upon the order of .....

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rate remains the same. The learned counsel for the assessee also placed reliance on the decision in the case of V.K.J Builders and Contractors P. Ltd. vs. CIT; 318 ITR 204 (SC) wherein the Hon'ble Supreme Court had clearly laid down that it is the fundamental principle of accountancy that the figure of the closing stock of the earlier year has to form the opening stock of the next accounting year. 8. We have considered the facts of the case in the light of the submissions of the parties. It .....

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no. 2 of the revenue s appeal relates to addition of ₹ 4,64,436/- and ground no. 3 relates to addition of ₹ 25,68,986/- being the undisclosed purchases. 10. The Assessing Officer noted that the assessee has purchased chicken from M/s Simran Hatcheries Ltd., Dhulia, of ₹ 55,30,554/- and from M/s Singh Hatcheries of ₹ 67,88,282/- aggregating to ₹ 1,23,18,636/- and as per the audited trading account, total purchases of ₹ 95,60,261/- are shown. Therefore, the Ass .....

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ken shown in the audited books of accounts at ₹ 95,60,261/-. 11. In appeal before the learned CIT(A) it was submitted by the assessee that a typographical error occurred in the tax audit report in the office of the auditor, details of which, as per the certificate given by the CA, are as under :- S.No. Name of party Purchases as per Tax audit report Purchases as per P&L a/c 1. Purchases from M/s Simran Hatcheries Ltd. 55,30,554 52,36,008 2 Purchasaes from M/s Singh Hatcheries 67,88,282 .....

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red the facts and the rival submissions of the parties. We find that the Assessing Officer was not able to bring out any evidence that the entries in audited books of accounts were not correct. Moreover, the assessee himself will not show higher figure in the audit report. Therefore, we find that there is a typographical mistake in the audit report alone which cannot be made the sound basis for such addition. Therefore, the findings of the learned CIT(A) are upheld in respect of both the aforesa .....

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egen Biotech Ltd., Indore and M/s Simran Feeds Pvt. Ltd., Indore, wherein payment in cash exceeded ₹ 20,000/- each. Therefore, 20% of ₹ 8,18,475/- was disallowed u/s 40A(3) of the Act. 16. In appeal before the learned CIT(A) the assessee did not contest the facts of the case but stated that the cash amount was paid to these sister concerns in excess of ₹ 20,000/- because they were in urgent need of funds. As the assessee has failed to explain what was such urgent need, whereas .....

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unt and the Assessing Officer has not doubted the genuineness of the transaction. 18. On the other hand, the learned DR relied upon the orders of the authorities below. 19. We have considered the rival submissions of the parties and noted that the payments were made in excess of ₹ 20,000/-. Therefore, we find no infirmity in the orders of the authorities below. Accordingly, this ground of cross objection is dismissed. 20. Ground no. 2 relates to addition of ₹ 18,700/- u/s 40(a)(ia) o .....

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habra, being the profession fee, on which TDS was not deducted, the learned CIT(A) confirmed the same u/s 40(a)(ia) of the Act. 22. Before us, the learned counsel for the assessee submitted that out of the total disallowance of ₹ 33,400/- paid on account of legal and profession charges, ₹ 18,700/- were paid to advocate Gourav Chabra for which the TDS provisions have no application and as such the same should have been allowed as deduction. 23. We have considered the facts of the case .....

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