TMI Blog2018 (5) TMI 1155X X X X Extracts X X X X X X X X Extracts X X X X ..... to the file of AO for reconsideration Disallowance of 1% of purchase material - Held that:- Assessee has claimed certain expenditure in respect of material purchase but failed to support with evidence before the assessing authority, therefore, the AO has no alternative but to make the disallowance on the basis of estimated percentage. Even before us, the AR could not submit the details in respect of purchases which has been called for the lower authorities. Accordingly, we are of the opinion that the CIT(A) having considered these facts and the findings of AO has confirmed the action of AO which is in accordance with law - Decided against assessee Contract expenses - AO has disallowed 1% of total purchases of materials and also disall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 31,00,000/- For That, the aforesaid addition will not sustain as all the unsecured creditors are income tax assesseees disclosing those advances in their respective IT returns. 2.Disallowance of purchase of materials at ₹ 7,29,098/- For That, the aforesaid disallowance will not sustain as the same has made on adhoc basis @1% of total purchases of materials without bringing any adverse materials into the assessment record. 3.Disallowance of Contract expenses at ₹ 11.62.911/- For That, the aforesaid disallowance will not sustain as the said disallowance has been made on adhoc basis 2% of the total expenses claimed without bringing any adverse materials into record. 4.Addition of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that the CIT(A) has erred in confirming the addition of unsecured creditors u/s.68 of the Act irrespective of the fact that the assessee has filed information of Income Tax particulars and statements of loan confirmation and also submitted the paper book supporting the unsecured loan obtained. In respect of second disputed issue of disallowance of purchase of material the ld. AR submitted that the CIT(A) has erred in confirming the action of AO in disallowing 1% of purchase irrespective of the fact that books of accounts are audited and the AO has not pin pointed the particular expenditure. Similarly, the AO has estimated work expenses which is claimed in profit and loss account at 2% irrespective of the fact that the assessee has p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ortunity of explain this loan creditors along with documentary evidence, filed before us and before the AO. Hence, we restore this issue to the file of AO, who shall verify and examine the genuineness and creditworthiness of the transaction and identity of the parties and pass the order accordingly and the assessee shall cooperate in submitting the information for early disposal of the case. This ground of assessee is allowed for statistical purposes. 9. On the second disputed issue of disallowance of 1% of purchase material made by the AO, we found that the assessee has claimed certain expenditure in respect of material purchase but failed to support with evidence before the assessing authority, therefore, the AO has no alternative but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... side. Accordingly, we set aside the order of the CIT(A) and restrict the addition to the extent of 1% of work expenses and order accordingly. 11. On the last disputed issue with respect to payment of ₹ 4 lakhs made to M/s Deepak Steel, the contention of ld. AR that the AO on perusal of the ledger account found that the assessee has issued the cheque on 28.01.2010 through Axis Bank account to M/s Deepak Steel and the AO could not verify this amount and made the addition. Ld. AR submitted the copies of bank account before us and referred to the transaction on 28.1.2010 and clearance of the cheque from the Axis Bank. The AO has doubted the issue of cheque and therefore made the addition. The CIT(A) has confirmed the action of AO. Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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