TMI Blog2017 (3) TMI 689X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 21,548/-. Accordingly, AO is directed. Hence, this ground of appeal of the assessee is partly allowed. Disallowance of expenses on estimated basis - Held that:- AO should have verified the expenses at the time assessment rather disallowing the same on the basis of estimation. The AO should have pointed out defects in respect to the specific vouchers before making the disallowance. In our considered view the AO should not disallow the expenses based on some suspicion, doubt and should not draw unreasonable inferences based on some unreasonable apprehensions. The AO has not brought on record any cogent reasons as to why this expenditure was to be disallowed. It is not the case that the expense was considered to be bogus or short comings in the vouchers in this regard as observed by the Revenue. No material has been placed before us by the Revenue to controvert the arguments of the ld. AR. In that view of the matter we find ourselves in no agreement with the reasoning and conclusion contained in the order of ld. CIT(A). With the result we reverse the finding of ld. CIT(A) with regard to delivery expenses. Disallowance for Installation and teas & tiffin charges we find th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee further submitted that no payment was made to the party against such purchases. However, the AO during the assessment proceedings verified the necessary details provided by MUS, such as sales bills, vouchers, stock registers and output VAT and accordingly opined that the sale made by MUS is genuine. Finally, the AO treated the undisclosed purchases as undisclosed income of the assessee along with the profit element which was worked out to ₹ 21,548/- only. The AO disallowed a sum of ₹ 15,07,636/- and added to the total income of the assessee. 5. Aggrieved, assessee preferred an appeal before the Ld. CIT(A). The assessee before the Ld. CIT(A) submitted that MUS has shown two sales bills in its books of accounts in the name of the assessee dt. 30.03.2007 for ₹ 9,72,000/- and dated 30.03.2007 for ₹ 5,17,000/- which was not purchased by the assessee. The supporting documents submitted by MUS such as sales bills and copy of challans are false documents. The assessee, however, requested to the Ld. CIT(A) to set aside the matter to the ITO for further verification. However, the Ld. CIT(A) has disregarded the contention of the assessee and confirmed the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e instant case relates to the addition made by the lower authorities on account of undisclosed purchases and the profit attributable to such purchases. Admittedly, MUS has shown its sales to the assessee and which was duly verified by the AO on the basis of supporting evidence. However, on examination of the details submitted by the assessee, we find that the goods were purchased on credit basis. As there is outstanding credit balance in the books of the assessee, in the name of MUS. Thus, it can be presumed that the goods were purchased on the basis of credit. However, the lower authorities have not brought anything on record about the sales made by the assessee of such undisclosed purchases. If it is presumed that the sales of the goods have been duly recorded in the books of the assessee, then undisclosed purchases will become the income of the assessee in its entirety. Therefore, the lower authorities presumed that the undisclosed purchases have been sold without recording the same in the books of accounts. In such a situation, the entire amount of undisclosed purchases cannot be added to the total income of the assessee. 7.1 Moreover, we find that the lower authorities have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s disallowed a part of expenses, as the evidences produced in support of expenses claimed were incapable on cross verification regarding the genuineness of expense claimed. Therefore a part of expense was disallowed. During the appellate proceeding other than challenging the addition in a general manner, no evidence was produced to substantiate the appellant s claim that the entire expense needs to be allowed. Therefore, it is concluded that the A.O. had correctly disallowed a part of expense claimed and the appeal on this ground is dismissed. Being aggrieved by the order of the Ld. CIT(A), the assessee is in second appeal before us on the following ground of appeal: 2. Adhoc Disallowance of ₹ 32,570/- being 10% of Delivery Charges, ₹ 43,875/- being 5% of Installation Charges, ₹ 16,525/- being 10% of Tea and tiffin expenses. 12. The Ld. AR before us submitted that all the books of accounts, documents, appeals and vouchers were produced at the time of assessment. The lower authorities have made the disallowances on surmises and conjunctures without pointing out any defect in the details submitted at the time of assessment. The Ld. AR prayed to the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that view of the matter we find ourselves in no agreement with the reasoning and conclusion contained in the order of ld. CIT(A). With the result we reverse the finding of ld. CIT(A) with regard to delivery expenses. Now coming to the disallowance for Installation and teas tiffin charges we find that the assessee has failed to provide the supporting evidence in respect to the aforesaid expenses. Therefore the AO had to resort for the purpose of disallowance on the basis of estimation. In our considered view it was the duty of the assessee to provide the necessary details as desired by the AO as the onus lies on the assessee. Even before us the learned AR has not produced any supporting evidence in support of his claim therefore the inclined not to interfere in the order of lower authorities. Hence this ground of appeal of the assessee is partly allowed. 14. The next issue raised by assessee in this appeal is that ld CIT(A) erred in confirming the order of AO by sustaining the disallowance of ₹ 34,000/- under the provisions of section 40A(3) of the Act. 15. At the outset, it was found that the ld AR has not advanced any argument on this issue therefore we are incl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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