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DCIT Circle Haridwar, Haridwar Versus United Concept And Solution Pvt. Ltd.

2017 (12) TMI 615 - ITAT DELHI

Addition of “Project Monitoring Expenses” and “Erection and Commissioning Charges” - whether the assessee has failed before the A.O to specify the reason of less profit this year although turnover went up substantially as compare to last year - Held that:- As perused all the records and gone through the order of the CIT(A) wherein the CIT(A) has rightly deleted the addition as the Assessing Officer made the estimated addition or ad-hoc addition without assigning any reason to that effect. Merely .....

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flated or being of a bogus nature, the CIT(A) further held that there was no allegation that the expenditure occurred out of any other activity and Assessing Officer did not bring on record any instance of the expenditure being used for purposes of the other business. The addition made by the AO was rightly deleted by the CIT(A) - Decided against revenue - I.T.A .No. 1768/DEL/2016 - Dated:- 8-12-2017 - SHRI N. K. SAINI, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER For The Appellant .....

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before the A.O to specify the reason of less profit this year although turnover went up substantially as compare to last year. 2. That the order of the Ld.CIT(A) be set aside and that of the Assessing Officer be restored. 3. The assessee filed income tax return on 28/9/2011 at a total income of ₹ 1,81,18,370/-. The case of the assessee was selected for scrutiny and statutory notice u/s 143(2) of the Income Tax Act was issued on 26/9/2012 and was duly served on the assessee. The authorized .....

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e the turnover has gone up the profit had declined and the decreasing profit was mainly due to abnormal increase in two expenses i.e. the profit monitoring expenses which has gone from ₹ 31,65,768/- to ₹ 84,21,250/- and Erection and Commissioning charges which has gone up from ₹ 4,65,768/- to ₹ 66,10,810/- and the net profit had decrease due to substantial increase in these expenses. The assessee was asked to justify this abnormal increase in two expenses. Thus, the asses .....

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sessee was rejected and half of the above expenses we have heard both the parties and perused the material available on record disallowed. Thus, over all a sum of ₹ 75,16,013/- was disallowed from the expenses and was added to the total income of the assessee. 4. Aggrieved by the assessment order, the assessee preferred appeal before the CIT(A). The CIT(A) held that the Assessing Officer made estimated disallowances because of some expenses which had gone up, however, the Assessing Officer .....

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A). 5. The Ld. DR submitted that the Assessing Officer has rightly disallowed the expenses to the extent of 50%, as to increase business no one will get a less profit. Thus, the Ld. DR submitted that the CIT(A) failed to see this aspect and the order may be set aside. 6. We have heard both the parties and perused the material available on record. Despite sending the notice no one has appeared for the hearing. We have perused all the records and gone through the order of the CIT(A) wherein the CI .....

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has made estimated disallowances because some of the expenses have gone up. However, he had not brought on record a single instance of expenses not being vouched properly, any instance of any of these expenditures being artificially inflated or being of a bogus nature. There is no allegation that the expenditure has occurred out of any other activity. He has not brought on record any instance of the expenditures being used for purposes other than business. He has not specified in any cogent man .....

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on a suspicion of leakage. No suspicion can be the basis of a sustainable addition. In the absence of any specific reference to any expenditure that the AO had found to not be incurred or to be incurred for a purpose other than business or incurred in a manner that made them eligible for deduction, an estimated disallowance only on account of the fact that an expenditure may have increased in comparison to the previous year is not justified. In the circumstances there does not appear to be any r .....

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