TMI Blog2020 (12) TMI 865X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee, whether it was unreasonable. DR submitted that the salary paid for the work done was reasonable. That it is also not the case of the Department neither in the order of AO nor in the order of the CIT(Appeal) that the assessee s sons were not at all involved in the business of the assessee or that there was no work done by them in respect of the business of the assessee. That both, the AO and the Ld. CIT(Appeal) has estimated the adhoc disallowance without specifying reasons for such disallowance without making specific examination of facts and therefore, is unsustainable in the eyes of law. Considering the totality of facts and circumstances, we set aside the order of the Ld. CIT(Appeal) and direct the Assessing Officer to delete the addition on this ground from the hands of the assessee. Adhoc disallowances on telephone expenses on vehicle expenses and on depreciation - 10% adhoc disallowance was made by the Revenue Authorities - HELD THAT:- We would have appreciated the disallowance if the Revenue could have brought forward some specific evidences of such personal usage by the assessee. This fact is not there in the entire exercise neither in the order of the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce made in respect of estimated gross profit amounting to ₹ 25,56,706/-. 3. During the course of assessment proceedings it was noted by the Assessing Officer that gross profit ratio for the year under consideration i.e. 2011-12 was at 4.23%. That for the assessment year 2010-11, the assessee had gross profit percentage of 6.64% and the Assessing Officer wanted to ascertain the reasons from the assessee that gross profit percentage which is reduced from 6.64% to 4.23% in this year from last year and therefore, the assessee should explain the fall of gross profit percentage in terms by substantiating with filing submissions with copies of sale bills to show that the sale price is reduced from last year which is ultimately affecting the fall in gross profit percentage terms or that by submitting purchase bills to show purchase cost is increased, for which also, there is fall in gross profit percentage. The assessee filed submissions before the Assessing Officer with detailed clarification and the submissions did not find favour with the Assessing Officer and vide Para 2.5 of his order, the Assessing Officer adopted average gross profit of 4 years of the assessee after conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or rejection of books of account is not tenable. The judicial decisions in the case of Alluminum. Industries (P) Ltd. V. CIT (1995) 80 Taxman 184(Gau) and Rais and Co. V. Asstt CIT (2003) 172 Taxation 79 (Cal-Trib), on which the appellant has relied upon, are not squarely applicable to his case, as the reason for the rejection of the books were given by the A.O. and has rightly rejected the books u/s 145 of the Income Tax Act, 1961. 8. However, the reasoning adopted by the A.O. that, my predecessor has confirmed the similar addition made for the A.Y. 2009-10 and hence the addition now made is genuine, is not correct. The circumstances and the facts for the A.Y. 2009-10 were totally different as it was the assessment consequent to the survey u/s133A which was conducted at the business premises on 05/03/2009. A huge discrepancy in the quantity of stock was found vis-a-vis stock recorded in books. Hence the addition in the A.Y.2009-10 was totally based on the facts arid records in possession with the department as well as the statements recorded during the survey action. But as far as the case of the A.Y. 2011-12, which is before me, is concerned, the A.O. has made addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rief facts with regard to this ground are that the assessee had paid salary and bonus of ₹ 5,04,000/- to his three sons i.e.₹ 1,68,000/- each. The Assessing Officer had disallowed 64% of ₹ 5,04,000/- i.e. ₹ 3,22,560/- and added the same to the total income of the assessee on the ground that proper documentary evidences were not submitted by the assessee in respect of the work done by these persons. 8. The Ld. CIT(Appeal) vide Para 9 of his order considered disallowance of 25% of salary as reasonable and confirmed the addition of ₹ 1,26,000/- out of the addition made of ₹ 3,03,120/- made by the Assessing Officer. The assessee, therefore, was given relief of ₹ 1,96,560/-. 9. We are of the considered view that the salary and bonus paid per annum to each of the son of ₹ 1,68,000/- i.e. ₹ 14,000/- per month including bonus. Considering these facts, it was asked to the Ld. DR whether this amount of ₹ 14,000/- paid as salary per month to each sons for doing business work of the assessee, whether it was unreasonable. The Ld. DR submitted that the salary paid for the work done was reasonable. That it is also not the case of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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