9911796707
TMI Blog2024 (6) TMI 1130X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld CIT (A) failed to consider that Effluent/waste generated being treated departmentally the provision being written back and credited in A.Y 2011-12 to Profit & loss Account, Provision was made to comply matching concept and is tax neutral. 2. The Id CIT(A) erred in confirming disallowance of provision made by the appellant for likely expenses to be incurred for job-processors of Rs. 42,95,509/-on account of Contractor's claim for rate revision of job charges. Provision was required to be made, having regard to principle of prudence and matching. Ld. CIT (A) failed to consider that said provision being written back and credited in A.Y 2011-12 to Profit & loss Account as no more required, Provision was made to comply matching concept was otherwise tax neutral. 3. The Ld CIT(A) erred in confirming disallowance of both provision made for Rs 84,96,600/- and Rs. 42,95,509/- as referred in GR 1 & 2 without considering the fact that said provision is written back in A.Y.2011-12, hence allowance of the provision was tax neutral. 4. The Ld. CIT(A) erred in confirming non allowance of provision of Rs. 5,40,000/- made for sales-returns without properly appreciating the facts that s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r provision of waste disposal expenses and in the earlier years assessee has paid to the third parties for the effluent treatment and waste disposal but from this year assessee had installed its own plant. However till 31st March, 2010 the production/functioning could not be started due to technical glitches. Looking to the past expenditure and nature of expenses likely to be incurred, assessee made provision to Rs. 84,96,600/-. He further submitted that, this provision has been credited back to the profit and loss account in the assessment year 2011-12 and offered it as income and in support he filed profit and loss account of succeeding year including the accounts wherein amount has been credited back on 24-12-2010 for the same amount of Rs. 84,81000/-. Thus, he submitted that this amount has finally been credited to income and tax rate for previous year being the same, therefore, no adverse inference should be drawn. Similarly, with regard to processing charges, he pointed out that it has been credited back in the next assessment year for the same amount and in support he has also filed the copy of profit and loss account and ledger account of processing charges wherein this amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und no. 2 relating to provision for processing charges of Rs. 42,95,509/-, once again no such details of the working of the expenditure has been provided nor any such details of basis of provision, hence the estimate of provision cannot be ascertained consequently such a provision cannot be allowed. However, this amount of provision has been credited back in the next year. Accordingly, AO is directed to verify the same if the same has been credited back. Thus, similar direction is given on this issue also and consequently, ground nos. 2 and 3 are treated as partly allowed for statistical purposes. 10. With regard to non-allowance of provision of Rs. 5,40,000/- made for sales return, it has been pointed out that the same has been disallowed by the Tribunal in the earlier year. 11. The brief facts are that the assessee has created a provision for sales return on estimate basis of Rs. 5,40,000/- on some perceived loss of sales return and some hypothetical assumption of principles of prudence. In the earlier year similar disallowance has been upheld by the Tribunal in A.Y. 2008-09. The relevant finding of the CIT (A) following the ITAT order reads as under:- "Assessee himself state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 'an assessee in default' under provisions of Sec 201. 4. Ld. CIT (A) failed to appreciate that disallowance for non deduction of tax was made without any show cause notice to assesse. 5. Ld. CIT (A) erred in holding that in case of payments to Foreign Payee in lieu of Lower Deduction Certificate u/s 197, payment is disallowable even income was not liable to tax in India. 6. The Ld. CIT(A) erred in confirming disallowance out of brokerage paid to a foreign agent of Rs. 1,66,828/- without appreciating the fact that such foreign agent does not have a permanent establishment in India and no income is taxable in the hands of such agent in India. 7. The Ld. CIT(A) erred in confirming non allowance of provision of Rs. 12,00,000/- made for sales-returns without properly appreciating the facts that such provision for loss of profit on sales returned, was required to be made to arrive at correct profit for the year, having regard to principles of prudence. 8. Ld. CIT (A) ought to have reduced income of the year as appellant increased its profit by taking credit of Provisions written Back as made in A.Y 2010-11 Rs. 84,96,600/- and Rs. 42,95,509/- and not allowed as deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng given above, this ground is dismissed. 18. Lastly ground no. 8, the assessee has raised that the ld. CIT(A) ought to have reduced the income of the year as it has increased its profit by taking the credit of provision written back in A.Y. 2011-12 of Rs. 84,81000/- and Rs. 42,96,600/-, as it was not allowed deduction in A.Y. 2010-11. Since we have already directed the A.O.to examine this issue and reduce the income for A.Y. 2011-12 by these amounts as same has not been allowed as deduction for A.Y. 2010-11. 19. In the result, the appeal of the assessee is partly allowed. ITA No. 3585/Mum/2023 A.Y. 2017-18 20. The assessee has challenged the addition of Rs. 10,32,38,955/- being purchases effected from four parties situated in the State of Jammu and Kashmir. 21. The brief facts are that assessee has declared purchase goods of Rs. 27,71,20,605/-. The A.O. issued show cause notice u/s. 133(6) to four of the parties based in J&K namely: (i) M/s. Coromandal International Ltd. (ii) Modern Papers, (iii) Opima Farm Solutions Ltd. & (iv) Hyderabad Chemical Pvt. Ltd. The purchases from these parties aggregated to Rs. 10,32,38,955/-. The A.O. had observed that they were sent notices u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tails vide this office notice dated 06.07.2023, the assessee chose not to file the specific details as thought necessary by the appellate authority to decide this appeal matter favorably. It is still not found in a position to submit the necessary facts. Hence, it is believed that, had such important information been provided at the proper forum and at right time by the Appellant Assessee the issue would not have arisen. And even when it can le now during the appellate proceedings, it is kind of evasive. Hence, such excuses are held to be a post-thought in substance, as it is not possible to verify them now w.r.t the then ground realities or facts i.e. for example whether the purchase parties in question (at that point in time) had any offices, places of business etc. outside of JSK also or whether the owners / their Manager's/CA's/AR's/Accountants etc, running the said purchase parties were all located & stuck inside of J&K or also out of J&K at that point in time etc. Hence, in view of these facts and circumstances the claim of the appellant that, the AO erred in completing the assessment without providing full and proper opportunity to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , assessee has submitted all these details, simply based on that notice u/s. 133(6) only on ITBA portal has not been responded cannot be the basis for disallowing the entire purchases when book results and trading account/ sales has not been disturbed. The assessee had submitted that that these notices were sent in December, 2019 and at that time there was no internet and communication was break down following revocation of Article 370 on 4th August, 2019. Thus, these parties were not aware of any such notices nor through ITBA portal. Till January, 2020 2G services were also not working, thus it was impossible for these parties to respond. Further, the assessee has purchase transaction from these parties in the past and subsequent years and all the assessment were completed u/s. 143(3) and no adverse inference has been drawn. Before us, following details and explanation has been given by the assessee before us of these parties:- 25. In view of the aforesaid details/submissions, we do not find any reason to treat entire purchases as non-genuine simply because notices sent u/s. 133(6) through ITBA portal was not responded ignoring the other evidences and details available on record. ..... 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