TMI Blog2023 (6) TMI 737X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer gone through the said Financial Statements, he would have seen that there is no such difference in the alleged turnover. It is not the case of the AO that the assessee has made sales outside its books of accounts. We find that rectification is available in the audited financial statement itself. Therefore, we do not find any error or infirmity in the findings of the ld. CIT(A). This ground is also dismissed. Credit appearing in the books of accounts which has not been accounted in the books of account of the assessee - HELD THAT:- Explanation of the assessee that when the assessee does not receive any goods, it does not pass any entry and the other party, i.e. Reebok India Co. Ltd, having debited the assessee, passes credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owance differs in both the years. 5. Since the underlying facts are common in both the years, we are taking up the facts for A.Y. 2011 12. On perusal of the related party transaction, the Assessing Officer noticed the following payments made to persons specified u/s 40A(2)(b) of the Act: Party Particulars Amount (Rs. ) Today Merchandise Pvt. Ltd. (fellow subsidiary Commission paid 4.46,72,186 Living Media India Ltd. (Holding Company) Rent Paid 1,99,246 Living Media India Ltd. (Holding Company) Purchase of Goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion is on the basis of percentage to turn over and is never on the basis of percentage to gross profit. 9. After considering the facts and submissions, the ld. CIT(A) was of the opinion that adhoc disallowance of any expenditure is not permissible and the Assessing Officer has to give specific findings as to the effect that either the expenditure is not supported with bills/vouchers or not recorded in the books of account or it is bogus and excess claim of expenditure in question is barred by provisions of the Act. 10. The ld. CIT(A) further observed that it is the duty of the Assessing Officer to pinpoint which particular expenditure was not substantiated, or was not for business exigencies while making the disallowance. After referr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer has not gone through the Schedule 11 of Financial statement wherein the entire reconciliation has been provided. 17. After scrutinizing the details furnished by the assessee, the ld. CIT(A) was convinced that no sales have been made outside the books and there is no difference between the turnover as shown in the VAT Return and as shown in the financial statements. 18. Being satisfied, the ld. CIT(A) deleted the impugned addition. 19. Before us, the ld. DR supported the findings of the Assessing Officer. 20. On the other hand, the ld. counsel for the assessee reiterated what has been stated before the first Appellate authority. 21. We have carefully considered the orders of the authorities below. It is true th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount of Rs. 54,41,961/ to the income of the assessee. 25. Before the ld. CIT(A), the assessee explained that when sale invoice is raised by Reebok, and no goods have been received by the assessee, then, on informing Reebok India Co Ltd, the same was corrected by them in their books of account, and the assessee did not pass any entry in its books of account. It was explained that it is because of this Reebok India Co. Ltd first made credit entry and since the assessee did not receive any goods, it did not pass any entry in its books of account. 26. The ld. CIT(A) was convinced with such accounting treatment and directed the Assessing Officer to delete the impugned addition. 27. Before us, the ld. DR strongly supported the f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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