TMI Blog2017 (9) TMI 1028X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of section 40A (3) of the income tax act, then also only such expenditure are disallowable which are hit by that provision otherwise the case payments are not prohibited as per the income tax act if they are below the limit specified therein. Further, the assessee has provided the details addresses of those service providers as appearing on the printed copy of the bills received by the assessee from those embroiderers and fabricators. There confirmation was also submitted at the time of original assessment. It was also not informed to the assessee that such persons were issued any notices and they have not remained present. It is also required to look that the nature of the business of the assessee, which is in the nature of a ver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmation of Labour in Financial Year December 2007 for period of operation in Financial Year 1996-97. The AO has completely ignored the fact that Company production was already closed before the Financial Year 2007. The Ld. AO has disallowed 50% of Labour and Wages which is an assumed and hypothetical figure. In the Income Tax Act, no section supports such a wild decision of AO. However, the section 44AF if read carefully, reads out the percentage assumed for all expenses including depreciation to be 95% and 5% of the sale to be income of the assessee. The Ld. AO had no intention to bring the matter of assessment on a fair trial of the assessee and so he completely ignored and overlooked section 44AF which is the only guiding section in this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed 50% of Fabrication expense which is an assumed and hypothetical figure. In the Income Tax Act, no section supports such a wild decision of AO. However, the section 44AF if read carefully, reads out the percentage assumed for all expenses including depreciation to be 95% and 5% of the sale to be income of the assessee. The Ld. AO had no intention to bring the matter of assessment on a fair trial of the assessee and so he completely ignored and overlooked section 44AF which is the only guiding section in this case. 5. That under the given facts and circumstances and in Law, Ld. AO grossly erred in disallowing 50% of Fuel and Power expenses amounting to ₹ 51000.00 The Ld. AO has disallowed 50% of Fuel and Power expense ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explained credits with respect to two parties. 4. Assessee preferred an appeal before the Ld. CIT(A, who vide order dated 21/01/2011 confirmed the above addition. Against which assessee is in appeal before us. 5. Despite notice, none appeared on behalf of assessee and therefore the issue is decided on merit based on the facts available on record. 6. Ld. departmental representative relied upon the order of the Lord assessing officer. 7. We have carefully considered the contentions of the Ld. departmental representative as well as the order of the Ld. assessing officer. We also perused the reasons recorded by the Ld. CIT(A) while deleting the above addition/disallowances. 8. The Ld. assessing officer has disallowed this sum of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... December 2007 when the assessment was framed. Further, the Ld. assessing officer has made the disallowances at the rate of 50% of all the expenditure, which is not acceptable. In view of the fact that assessee is shown a receipt of ₹ 25 Lacs and out of which all these expenditures have been incurred by the assessee. Had the assessing officer has any doubt about the payment in cash, then such doubtful expenditure should have been disallowed and not ad hoc expenditure should be disallowed. It was also not pointed out by the Ld. assessing officer that whether there was any violation of the provisions of section 40A (3) of the income tax act, then also only such expenditure are disallowable which are hit by that provision otherwise the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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