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TMI Blog2022 (5) TMI 930X X X X Extracts X X X X X X X X Extracts X X X X ..... rd expenses of Rs.48,62,129/-. 1.(iii) Disallowance of 25% of freight outward expenses of Rs.20,69,876/- 1.(iv) Disallowance of 25% of loading and unloading expenses of Rs.8,77,735/-. 1.(v) Disallowance of 25% of stores and spares expenses of Rs.25,67,185/-. 1.(vi) Disallowance of testing charges of Rs.12,74,532/-. 1.(vii) Disallowance of bank commission and bank guarantee expenses of Rs.2,00,000/- 1.(viii) Disallowance of 25% of packing expenses of Rs.2,67,092/-. 1.(ix) Disallowance of Rs.3,58,636/- out of brokerage expenses. 1.(x) Disallowance of depreciation of Rs.47,70,928/-. 2. The Ld.CIT(A) has erred in law and on facts in admitting the additional evidences in violation of conditions specified in Rule 46A without appreciating the fact that during the course of assessment proceeding ample opportunities were given the Assessing Officer to produce the evidences and even during remand proceedings, the A.O. did not find the additional evidences submitted by the assessee as convincing and conclusive. 3. The appellant craves leave to amend alter any ground or add a new ground which may be necessary. 3. The only interconnected issue raised by the Reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osed. 10.Details of Testing charges alongiwth bills are enclosed. 11. Details of Bank commission are enclosed. 12. Details of Excise expenses are enclosed. 13. Details of Inspection Fee alongwith bills are enclosed. 14. Export commission of Rs.2,77,961/- paid to I.T.C.Ltd., 207/215, High Street, Orpington, Kent BRS OPF. 15. Details of Other expenses alongwith R.T.O. expenses are enclosed. 3. Reply of Para (d) of your letter Copy of bills for addition to fixed assets for current Asst.Year 2008- 09 are enclosed marked Annexure-S" 5.1 However, the AO was not satisfied with the submission of the assessee on the reasoning that the assessee has not furnished adequate details for the necessary verification. As such, the details furnished by the assessee were containing the copies of the ledgers along with the name of parties. But there was no detail about the amount which were paid to the different parties. 5.2 The AO, likewise, further noted that the assessee has filed the copies of the invoices/bills in support of brokerage expenses of the earlier year. Accordingly, the AO disregarded the contention of the assessee and made the disallowance of different expens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the year under consideration claimed the brokerage expense of Rs. 4,48,168/- only. The AO from the note to accounts attached with the financial statement found that an amount of Rs. 3,28,797/- is prior period expenses, thus he disallowed the same. Similarly, the AO found that the genuineness of remaining expense of Rs. 1,19,376/- was also not proven as the assessee failed to furnished necessary document and evidences. Thus the AO disallowed 25% of the remaining amount i.e. 29,844/- only aggregating to Rs. 3,58,636/- and added the same to the total income of the assessee. Depreciation 5.7 The AO found that the assessee during the year has made an addition of Rs. 2,53,35,712/- to the fixed assets and claimed depreciation and additional depreciation of Rs. 24,04,744/- and Rs. 23,66,184/- respectively. However, the assessee failed to submit necessary document to prove the genuineness of the addition of fixed assets. Thus, the AO disallowed the depreciation as well as additional depreciation aggregating to Rs. 47,70,928/- and added to the total income of the assessee. 5.8 In view of the above, the AO made the addition of various expenses as discussed above aggregating to Rs. 1,98,1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terial. 7.1 The CIT(A) observed that the assessee has furnished the necessary bills and genuineness of the payments and duly recorded the expenses in the books of accounts. Thus, the learned CIT(A) held that in such circumstances, the ad-hoc disallowances of the expenses are not tenable and directed the AO to delete the same. Testing Charges 7.2 The learned CIT(A) observed that the AO has disallowed testing charges on account non availability of supporting document. However, during appellate proceeding, the assessee has furnished relevant ledger and supporting document establishing correctness of the expenses. Hence, the ld. CIT-A directed the AO to delete the addition made by him. Bank Commission and Guarantee expenses: 7.3 The learned CIT (A) held that the assessee has submitted bank details during assessment proceeding as well as during appellate proceeding. Thus adhoc disallowances of Rs. 2 lakh out of expenditure paid to bank is not sustainable. Accordingly, the ld. CIT-A directed the AO to delete the addition made by him. Brokerage Expenses: 7.4 The learned CIT (A) found that addition of the brokerage expenses of Rs. 3,28,792/- was made on account of prior period e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ials available on record. From the preceding discussion, we note that it was alleged by the AO that the assessee has not furnished the requisite details in support of various expenses. Thus, the AO, in the absence of such details, has made the disallowance of various expenses on ad hoc basis. The list of such expenses reads as under: i. Labour charges, ii. Freight inward expenses, iii. Freight outward expenses, iv. Loading and unloading expenses, v. Stores and spares expenses, vi. Packing material expenses. 9.1 However, the learned CIT (A) was pleased to delete the addition made by the AO on the reasoning that the assessee has furnished all the requisite details in support of the expenses. 9.2 Admittedly, the necessary details in support of the expenses were filed by the assessee at the fag end of the assessment proceedings. Accordingly the AO in his remand report dated 24th April 2018 has categorically admitted the fact that such details filed by the assessee were not verified due to shortage of time. The AO in his remand report has made reference to the details filed by the assessee on 27th December 2010 vide letter dated 22nd December 2010. 9.3 However, we find th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of section 131(1)/133(6) of the Act. 9.7 The 2nd allegation of the AO was that the assessee has not furnished the details of the TDS. However on perusal of the paper book filed by the assessee, particularly pages 693 to 724, we note that the assessee has furnished details of TDS deducted and the copies of the TDS return acknowledgment. 9.8 The 3rd and the 4th allegation of the AO was that the assessee has not furnished the bills of the parties as well as the copies of the vouchers for payment. Indeed, it was the onus of the assessee to furnish the requisite details as desired by the AO. On perusal of the paper book, we also note that such details were not furnished by the assessee. However, in our considered view in the absence of such details, there cannot be any disallowance of the expenses. It is for the reason that the AO was provided the addresses of the parties to whom the payment was made, their ledger accounts showing the amount was paid through the banking channel after the deducting the TDS against such exp.nses. If the AO had any doubt on the genuineness of the expenses in the absence of the bills and vouchers, the AO was very much empowered to call for the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... event, the AO had any doubt on the genuineness of such expenses, he was empowered under section 133 (6)/131 of the Act to carry out the necessary verification. But he has not done so. 9.13 Coming to the ad hoc disallowance of Rs. 2 lacs towards bank commission/bank guarantee expenses, in this regard we note that the assessee has furnished the copies of the ledger of such expenses which is placed on pages 439 to 478 of the paper book. The assessee in support of its expenses has also filed the bank statements which are placed on pages 251 to 438 of the paper book. The details of such expenses were very much available during the remand proceedings before the AO. Therefore the same cannot be disallowed on adhoc basis. 9.14 Coming to the disallowance of brokerage expenses of Rs. 3,58,636/-, in this connection we note that the assessee in the revised return of income has already made the disallowance of brokerage expenses on account of non-deduction of taxes. In other words the assessee has claimed brokerage expenses of Rs. 4,48,167/- which were disallowed by the assessee suo-moto in its revised return of income. Therefore, any further disallowance will lead to the double addition to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee. Thus we are of the view that the impugned expenses incurred by the assessee were genuine. However, the same cannot be allowed in the under consideration for the reason that the assessee failed to deduct the TDS in the year under consideration. 9.16 Coming to the disallowance of depreciation of Rs. 47,70,098/-, in this regard we note that the assessee has furnished the details of the bills of the major assets which are placed on pages 536 to 651 and 673 to 674 of the paper book. However, no defect of whatsoever has been pointed out by the AO in these details. Accordingly we are of the view that there cannot be any disallowance of depreciation as alleged by the AO. 9.17 The learned DR at the time of hearing has not brought anything on record contrary to the finding of the learned CIT (A). In view of the above and after considering the facts in totality, we do not find any reason to interfere in the finding of the learned CIT (A). Accordingly we uphold the same. Hence the ground of appeal of the Revenue is dismissed. 9.18 Moving further, we also note that the Revenue in the ground of appeal has also challenged the fact that the learned CIT (A) has admitted the additional ev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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