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2019 (5) TMI 888

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..... record. She is one of the family members of the director the increased payment of salary by ₹ 5000/- per month is considered to be excessive and the disallowance of salary in her case to the above extent is confirmed which works out to ₹ 60000/-. In the case of Shri Pankaj Jajoo it has been explained that comparison with last year is not justified as last year salary for two months was paid it was also pointed out that increase in salary is of ₹ 5000/- per month only which looking to the qualification of Shri Pankaj Jajoo who as an engineer was looking after the production was justified. Coming to the salary payment to newly employed personnel, salary is paid to Shri V.S. Gaud at the rate of ₹ 12000/- per month as Accounts Officer and to Shri Sanjay Dixit at the rate of ₹ 10000/- per month as Accountant. As against this salary at the rate of ₹ 25000/- per month has been paid to Smt. Richa Jajoo and Smt. Divya Jajoo employed as office in charge and factory supervisor. No special qualification/experience of Smt. Richa Jajoo and Smt. Divya Jajoo have been placed on record to justify the higher salary paid to them except stating that being family me .....

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..... ent and the assessment u/s 143(3) of the Income Tax Act, 1961 (hereinafter called as the Act ) was framed vide order dated 21.3.2013. While framing the assessment, the assessing officer observed that assessee is manufacturing and trading in absorbent cotton and gauge and also trading in medicines. Turnover during the year is ₹ 7,04,16,818/-. It was further observed that sales during the year was ₹ 7,04,16,818/- and profit before tax was declared at ₹ 17,22,229/-. However, turnover in the immediate previous financial year was ₹ 6,96,06,648/- and profit before tax was declared at ₹ 18,13,435/-. The A.O. noticed that there was increase in salary expenses by 268% as compared to the last year. On the contrary, the turnover has increased marginally to 6.96%. The A.O. rejecting the explanation offered by the assessee estimated gross profit and made addition of ₹ 93,35,000/-. The A.O. also made addition out of salary expenses of ₹ 9,74,000/- and out of travelling expenses of ₹ 3 lakhs. Aggrieved by this, the assessee preferred an appeal before the Ld. CIT(A), who after considering the submissions partly allowed the appeal. Thereby, the Ld. CI .....

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..... ecial qualification of Smt. Santosh Jajoo or her work experience to justify the increase in her salary of ₹ 10000/- as against that of ₹ 5000/- in the case of Shri S.B. Jajoo and Shri Pankaj Jajoo has been placed on record. In view of the above and the fact that she is one of the family members of the director the increased payment of salary by ₹ 5000/- per month is considered to be excessive and the disallowance of salary in her case to the above extent is confirmed which works out to ₹ 60000/-. 5.3 In the case of Shri Pankaj Jajoo it has been explained that comparison with last year is not justified as last year salary for two months was paid it was also pointed out that increase in salary is of ₹ 5000/- per month only which looking to the qualification of Shri Pankaj Jajoo who as an engineer was looking after the production was justified. Considering the above the salary paid to Shri Pankaj Jajoo cannot be held as excessive or unreasonable hence no disallowance is called for. 5.4 Coming to the salary payment to newly employed personnel, it is seen that salary is paid to Shri V.S. Gaud at the rate of ₹ 12000/- per month as Accounts Officer and .....

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..... to the order of the Ld. CIT(A) and the same is affirmed. Ground raised in this appeal is dismissed. 12. Ground No.3 of the revenue s appeal reads as under: 3. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law by deleting the addition of ₹ 93,35,000/- made by the A.O. on account of suppression of sales by ignoring the finding of the A.O. 13. Ld. D.R. supported the order of the A.O. and submitted that the A.O. has thoroughly examined the facts and hence the addition is justified. He submitted that Ld. CIT(A) has wrongly deleted the addition. 14. On the contrary, Ld. Counsel for the assessee submitted that before the Ld. CIT(A), discrepancy was reconciled. He submitted that the turnover has increased to ₹ 86.65 lakhs as against ₹ 32.84 lakhs last year. Therefore, the Ld. CIT(A) was justified in deleting the addition. 15. We have heard the rival submissions, perused the materials available on record and gone through the orders of the authorities below. The Ld. CIT(A) has decided this issue in para 7.1 by giving finding on fact, which reads as under: 7.1 From the assessment order it is seen that the addition is primarily based o .....

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