TMI Blog2019 (12) TMI 670X X X X Extracts X X X X X X X X Extracts X X X X ..... e order of the CIT(A) and direct the AO to delete the said addition made on account of closing stock. Thus, this ground of appeal raised by the assessee is allowed. Allowable business expenses - HELD THAT:- We have examined the orders of the lower authorities and also the remand report and observe that the disallowance was made purely on ad hoc basis without assigning any specific reason or giving any finding that the expenses were not incurred in connection with the business of the assessee wholly and exclusively. Disallowance made by the ld.CIT(A) needs to be restricted to 10% of the miscellaneous expenses and 5% of the labour expenses and gift to the parties and 5% of the travelling expenses. Consequently, the assessee gets relief of ₹ 71,625/- under the head miscellaneous expenses and under the head labour expenses , gift to the parties and travelling expenses . Accordingly, this ground of appeal raised by the assessee is partly allowed. - ITA No. 1203/MUM/2018 - - - Dated:- 3-12-2019 - SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER For the Appellant : Shri Piyush Chhajed CA For thre Respondent : Shri V. Vinod Kum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and report of the AO and the comments of the appellant on the remand report of the AO. After consideration of the material on record, various grounds of appeal raised by the appellant are decided as under:- 4.1. So far as first ground of appeal challenging the action of the AO in not considering total income of ₹ 17,81,124/- as per second return of income filed by the appellant and computing income as per original return of income filed by the appellant is concerned, it is seen that the AO did so because total income as per original return of income was ₹ 3,29,61,000/- and the appellant did not provide any explanation during the course of assessment proceedings regarding the drastic reduction in total income as per the second return of income vis-a-vis the original return of income filed by the appellant. The second return of income filed by the appellant was not a valid revised return of income, therefore, the AO could not be faulted for starting the computation by taking total income as per original return of income as a base. In any case, starting point of computation of total income need not be the total income as per the return of the appellant. The AO can ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal 26935 . 32 / 26935 . 32 33,77,92,000 / 30,66,38,164 The AO has further stated as under:- In support of the above assessee has furnished closing stock certificate (signed by the auditor) as on 31/ 03/2011 which certified that the closing stock was physically taken by the auditor and also valuation is made by the auditor. Assessee has also furnished purchase invoice copies in support of the rate of items along with the reconciliation statement showing opening stock, purchases, sales and closing stock. Considering the supporting documents furnished in support of its value of revised closing stock shown in the revised return filed on 29/03/2013 showing the total income at ₹ 17,81,124/- appears to be correct and the same may now be accepted . The certificate of the auditor, showing valuation of closing stock is as under: - Item M.T. Cost Market Rt. Lower Rt. Value- Amt Barley 14857.95 11000 12000 11000 163437450 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the income filed by the appellant, however, the appellant is entitled to the benefit of deduction of ₹ 26,000 towards depreciation not claimed in the original return of income filed by it. First ground of appeal is decided accordingly. 6. After hearing the rival contentions of both the parties and perusing the material on record including the tax audit report, original return as well as revised return, we observe that the assessee has inadvertently mentioned the wrong figures of stock in the original return which has lead to corresponding increase in the net profit of the assessee resulting into high and unrealistic net profit, which was rectified by filing revised return on 29/03/2013. After examining the original as well as revised return along with tax audit return and audited financial accounts, we are of the view that there is an inadvertent mistake on the part of the assessee while preparing the original return which was correctly rectified by way of revised return on 29/03/2013. Moreover, the AO, in the remand report dated 24/03/2017 which was called for during the course of appellate proceedings before the ld.CIT(A), submitted that after considering the det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,90,000 1,43,251 2,92,120 49,000 4,84,371 2 Travelling expenses 10 % of the travelling expenses of Rs . 44,47,962 4,44,796 Total 9,29,167 10. After hearing the rival contentions of both the parties and perused the material on record, the AO made the ad hoc disallowance of ₹ 2,40,39,080/- which was restricted by the ld.CIT(A) to ₹ 9,29,167/- on the basis of remand report called for during the appellate proceedings. The details of the disallowance upheld by the ld.CIT(A) has been given hereinabove in the table. We have examined the orders of the lower authorities and also the remand report and observe that the disallowance was made purely on ad hoc basis without assigning any specific reason or giving any finding that the expenses were not incurred in connection with the business of the assessee wholly and exclusively. We are of the view that the disallowance made by the ld.CIT(A) needs to be restricted to 10% of the miscella ..... X X X X Extracts X X X X X X X X Extracts X X X X
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