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TMI Blog2018 (11) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... ses of the assessee M/s Imperial Auto Industries Limited, 202, Kaushal Bazaar, 32- 33, Nehru Place, New Delhi and also its premises opposite the Railway Goods shed. Certain cash, documents and books were seized and impounded during the course of search operation from the business premises of the assessee company. 2.1 The return of income for the year under consideration was filed on 15.10.2010 declaring an income of Rs. 13,15,50,160/- which included Rs. 5 crore declared by the assessee during the course of search operation. The assessment was completed u/s 143(3) r/w section 153(1)(b) of the Act on 28.12.2011 at an income of Rs. 14,83,41,420/- after making the following additions/disallowances:- i) Unaccounted cash transactions - Rs. 1,05,04,160/- ii) Difference in cash balance as per books and cash counted physically on the date of search - Rs. 13,150/- iii) 1/5th of conveyance expenses disallowed - Rs. 22,78,951/- iv) Short and excess recoveries - Rs. 1,79,257/- v) 1/5th of vehicle running and maintenance expenses - Rs. 17,35,564/- vi) Liquidated damage charges added back - Rs. 5,05,972/- vii) 1/5th of business promotion expenses - Rs. 15,74,205/- 2.2 Aggrieved, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in not allowing the adjustment of cash found and seized during search amounting to Rs. 52,00,000/- towards payment of advance tax liability." Grounds raised by the department are as under:- "(i) Whether on the facts and in the circumstances of the case the Ld. CIT(A) was right in deleting the addition of Rs. 1,05,04,160/- made by the AO being the difference of undisclosed cash transactions were recorded in seized documents Annexure A- 1 to A-4 at Rs. 11,00,44,160/- and the amount disclosed on account of these documents was Rs. 9,54,20,000/-? "(ii) Whether on the facts and in the circumstances of the case the Ld. CIT(A) was right in deleting the disallowance of a sum of Rs. 1,79,257 claimed to be debited to profit and loss account under the head "short and excess recoveries especially when no explanation was offered and no documentary evidences were produced by the assessee?" "(iii) Whether on the facts and in the circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 5,05,972/- made by the AO on account of liquidated damage charges ignoring the fact that the expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d no option but to proceed on the basis of material before him. The Ld. CIT DR vehemently argued that the disallowances/additions being challenged by the assessee were made on a sound basis by the Assessing Officer and were accordingly sustained/partially sustained by the Ld. Commissioner of Income Tax (A) and in view of the findings of both the lower authorities, the same should be upheld. 5.0 Coming to the department's appeal, the Ld. CIT DR submitted that the Ld. Commissioner of Income Tax(A) had deleted the addition pertaining to unexplained cash transactions of Rs. 1,05,04,160/- on the ground that there was a duplication of the diaries in seized documents Annexure A-1 to A-4 and it was submitted that the Ld. Commissioner of Income Tax (A) had merely accepted the assessee's claim that there was a duplication in adding the figures whereas the onus was on the assessee to establish beyond doubt that there was a duplication. 5.1 With respect to the department's ground challenging the deletion of disallowance of Rs. 1,79,257/- on account of short and excess recoveries, the Ld. C.I.T. DR submitted that this amount had been deleted by the Ld. Commissioner of Income Tax (A) although ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses, no disallowance had been made in assessment years 2005-06, 2006-07, 2007-08, 2008-09 and 2009-10 and it is further noted that the basis of disallowance in the impugned year is a mere estimation on the part of Assessing Officer wherein he has disallowed 1/5th of the expenses without assigning any reason for such disallowance. We also note that the Assessing Officer has not pointed out any specific defects in the books of accounts/details produced before him with regard to these expenses. It is also undisputed that the books of accounts of the assessee were duly audited and they were produced before the Assessing Officer. It is settled law that in absence of any corroborative finding, ad hoc disallowance cannot be upheld. If the Assessing Officer is not satisfied with the submission of the assessee, then he has to make a disallowance after making specific reference to such documents/vouchers. In the present case before us, no specific identification has been done. Therefore, in view of the facts, it is our considered opinion that the three estimated disallowances as confirmed by the Ld. Commissioner of Income Tax (A) is unsustainable. Accordingly, we allow ground nos. 1, 2 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x (A) on the issue as the Ld. Commissioner of Income Tax (A) has adjudicated the issue after duly considering the quantum of turnover of the assessee as well the details submitted before him. The Ld. CIT DR also could not point out any factual error in the findings of the Ld. Commissioner of Income Tax (A) in this regard. Accordingly, we dismiss ground no. 2 raised by the department. 9.2 Ground no. 3 challenges the action of the Ld. Commissioner of Income Tax (A) in deleting addition of Rs. 5,05,972/- with respect to liquidated damages and it is seen that the Ld. Commissioner of Income Tax (A) has given relief to the assessee after duly considering the fact that these expenses relate to normal course of business and were fully allowable as business expenditure. The Ld. Commissioner of Income Tax (A) has noted that in view of the nature of business being conducted by the assessee on a large scale which entails making supplies to various agencies including government agencies, such claims were bound to arise. We also note that the Assessing Officer has disallowed the entire amount of expenditure claimed as liquidated damages without pointing out any specific instance where such clai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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