TMI Blog2019 (9) TMI 763X X X X Extracts X X X X X X X X Extracts X X X X ..... th any supporting evidences nor could rebut the finding of the CIT(A). Explanation furnished by the appellant appear to be lame excuses in order to somehow justify the increase. Apart from giving such vague and unsubstantiated excuses, the appellant has not brought any material on record to justify the increase. Assessee could not justify as why huge sums of cash payments have been made to the industrial units engaged in chilling process. - Decided against assessee Disallowance for depreciation on Tetra Pack machine - as per DR this machine was received on 03/10/2005 and, therefore, it was put to use by the assessee for less than 180 days and, thus, assessee was entitled for half of the depreciation admissible for the entire year - HELD THAT:- On being specifically asked by the Bench to the assessee to submit any evidence of machinery put to use or ready to put to use before 30th September, 2005, he expressed his inability in producing any such evidence. - Decided against assessee Disallowance on account of repair and maintenance of machinery, generator running and maintenance and miscellaneous expenses - HELD THAT:- Assessee failed to rebut the finding of the Ld. CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... At the outset, Ld. DR submitted that the tax effect involved in the appeal filed by the Revenue is below the prescribed monetary limit in CBDT Circular No. 17 of the 2019 dated 08/08/2019, however, he submitted that said circular may not apply on the pending appeals. The Ld. DR further submitted that whether the appeal falls under exclusion criteria as per para 10 of the Circular No.3/2018 as amended on 20/08/2018, need verification at the end of the Assessing Officer. 3.1 The Ld. counsel of the assessee, on the other hand, submitted that said circular is applicable equally on the pending appeals also, therefore, the appeal of the Revenue might be dismissed as withdrawn. 3.2 We have heard the rival submissions of the parties. In view of the amount of addition of ₹ 1,31,05,390/- involved in the appeal of the Revenue, there is no dispute between the parties that the tax effect involved is less than the prescribed monetary limit of tax effect of ₹ 50 Lakhs for filing appeals before the Income Tax Appellate Tribunal (ITAT) vide Circular No. 17 of 2019 and the dispute raised is only in respect of the applicabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Chilling Centres for chills as compared to the previous years. The appellant company paid chilling charges for 2,17,95.182. kgs of milk during the year under appeal as compared to 1,66,963 kgs of milk chilled during the previous year. (2) That the Hon ble Commissioner of Income Tax (Appeals) has erred in law and on the facts of the case by upholding the disallowance of ₹ 1,02,232/- made by the learned Assessing Officer by providing half year depreciation on tetrapack machine by the appellant company without appreciating the fact that the said machinery was bought, installed and put to use by the appellant company in the month of September, 2005 itself, thus entitled to a full year depreciation. (3) That the Hon ble Commissioner of Income Tax (Appeals) has erred in law as much as on the facts of the case by upholding the disallowance of ₹ 2,50,000/- made by the learned Assessing Officer on account of expenses incurred under the head Repairs Maintenance of Machineries, Generator Running and Maintenance and Miscellaneous Expenses . The disallowance has been made arbitrarily and on an estimated basis which is not sustainable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer verified ledger and vouchers for the chilling expenses produced by the assessee, however, he found that all the vouchers were self generated and most of the payments were made in cash. According to the Ld. Assessing Officer, as per version of the assessee, if in immediately preceding year, 30 % of the purchase were made from parties other than Milan Dairy (70% purchases were claimed from Milan Dairy), the milk purchase amount from third parties would work out to ₹ 38,27,89,101/- which undergone chilling process, whereas the chilling charges of ₹ 25,043/- were only debited. But in the year under consideration, 33% purchase of milk has been claimed from the Milan Dairy and balance 67% of the purchase of milk, amount of which, works out to ₹ 88,79,05,218/-, for which chilling charges has been claimed at ₹ 9,31,943/-. In view of the Assessing Officer when comparison of the chilling charges with the purchase price of the milk undergone chilling in the year under consideration with the preceding assessment year is made, the expenses incurred in the year under consideration were found to be quite unrealistic. The learned Assessing Officer correspo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh sales were unavoidable in the dairy business. 6.3 The Ld. CIT(A) after analyzing submission of the assessee, rejected the contention raised by the assessee. Regarding the quantity of milk of 2,17,95,182 Kgs. of milk as compared to only 1,66,963 kgs. milk chilled in the immediately preceding year, the assessee failed to brought any evidence/explanation on the record. The Ld. CIT(A) was not convinced with contention that rate of the chilling charges varies from ₹ 0.10 to ₹ 0.25 per kg due to factors like position/status/financial influence of the owner or facility provided by the chilling centre or quantum of milk processed at the Centre etc. The explanation in respect of the cash payment was also not found justified by him as the payment in the range of ₹ 5 lakh -10 lakh had been made in cash to the chilling centres which were neither under unorganized sector nor run by illiterate people. In view of the observations, the Ld. CIT(A) held that the expenses were not incurred wholly and exclusively for the purpose of the business and accordingly, sustained the disallowance made by the Assessing Officer. 6.4 Befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f milk was chilled as compared to 1,66,963 Kgs. in the immediately preceding year. (ii) There was an increase of about 15 to 20% in the chilling charges. (iii) During the year, chilling charges were paid to six centres as compared to one centre during assessment year 2005- 06. (iv) The chilling charges were subjected to TDS. (v) Variation in rate of chilling charges was due to multiple factors like- location of chilling centres; availability of other chilling centres in the area/locality; position/status/financial influence of the owner of the chilling centres; facility provided by the chilling centres; and quantum of milk processed at the centre. 6.7 Regarding increase in expenses as compared to last year, on being asked by the Ld. CIT(A) to support the claim of chilling of 2,17,95,182 Kgs. of milk during the year under consideration as compared to only 1,66,963 kgs milk chilled in the immediately preceding assessment year, the assessee failed to submit any evidence before the Ld. CIT(A). Before us also, the assessee did not file any evidence to rebut the finding of the Ld. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de in cash because the chilling centre demanded in the same. The aforesaid plea is not tenable as the chilling centers do not fall in an unorganized sector and are not run by illiterate/semi literate people as claimed by the appellant. It is also not acceptable that the chilling centers do not maintain bank accounts. It is seen that to two of the chilling centers payments of more than ₹ 10 lakhs were made during the year and to other two payments close to ₹ 5 lakhs were made. Surprisingly, despite being such heavy amounts, the same were paid in cash. It is difficult to believe that a well establish chilling centre would refuse to receive payment by cheque/ demand draft. The appellant s contention that the payments were subjected to TDS cannot bring a colour of genuineness to the transaction, if otherwise, it does not appear to be genuine. 6.9 Before us also, the assessee could not justify as why huge sums of cash payments have been made to the industrial units engaged in chilling process. 6.10 As the assessee has failed to rebut any of the finding of the Ld. CIT(A) with cogent evidences, we do not find any error in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 3 of the appeal relates to disallowance of ₹ 2,50,000/- on account of repair and maintenance of machinery, generator running and maintenance and miscellaneous expenses. 8.1 Before us, the learned counsel of the assessee has submitted that disallowance has been made on ad-hoc basis without identifying specific vouchers of expenses, whereas learned DR submitted that vouchers in respect of the expenses under reference were found to be self-made and not verifiable in absence of the bills of third parties and, therefore, action of the Ld. CIT(A) in upholding the same is justified. 8.2 We have heard the rival submissions of the parties on the issue in dispute. We find that the Ld. CIT(A) has uphold the disallowance observing as under: 7.7 As regards the disallowance of ₹ 2,50,000/- out of various expenses, the Id. AO as per the assessment order has mentioned that the same has been disallowed after discussion and examination of various documents. Since, the amount has been disallowed after discussion during the assessment proceedings, I am not inclined to interfere with the order of the Id. AO. Moreo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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