9911796707
TMI Blog2002 (11) TMI 818X X X X Extracts X X X X X X X X Extracts X X X X ..... rent paid. The Assessing Officer has disallowed the payment stating that the rent was paid to M/s. Kesraj of Dibrugarh for office premises of the firm. The said Landlord M/s. Kasraj run their cloth shop and also transport business from the same premises. The entire premises was taken by M/s. Kesraj from M/s. Panna Devi Ajitsaria on a monthly rent of Rs. 550. The partners of M/s. Kesraj and the assessee-firm are common and related to each other. The office of the Durgapur Tea Co. occupies hardly 150 sq. fit. in the total area taken on rent by M/s. Kesraj. From the IT record of M/s. Kesraj it is observed that the income shown by the firm in below Rs. 50,000 for all the years. The assessee-firm has much higher income and for the purpose of diversion of income of the firm to M/s. Kesraj for the purpose of reducing the tax liability for a small portion of room, rent of Rs. 3,500 per month is being paid whereas the main tenant M/s. Kesraj is paying only Rs. 550 per month to the Landlord. He, therefore, disallowed a sum of Rs. 24,000 considering the same as exclusive and unreasonable. 3. The learned CIT(A) considered the argument of the learned Authorized Representative of the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... So, it is observed that the cultivation expenses claimed by the assessee comes to Re. 0.71 per kg., whereas in the immediately preceding year the same was only Re. 0.40 per kg. The increases in expenditure in the year under appeal was Re. 0.31 per kg. which works out to 80% more over the cost in the proceeding year. The assessee could not satisfactorily explain the reasons for the same. The only explanations of the assessee was that there was increase in the wages of labourers which was governed by the Association of Tea Labourers. The Assessing Officer has observed that even after considering the increase in wages of labour which is about 10 to 15% increase over the previous year and also considering the increase in other related expenses the increase in the cultivation expenses in any case cannot exceed 20%. He, therefore, disallowed 60% of the increase in expenditure considering the same as unreasonable, excessive and added a sum of Rs. 2,35,534 to the income of the assessee. 7. The learned CIT(A) has observed that the Assessing Officer has not pointed out any defect in the accounts. No item of expenditure has been pointed out by the Assessing Officer which is unrelat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee nor gave any reason for estimating the quantum of expenditure disregarding the assessee's statement of accounts in this regard. No deficiency was pointed out in the method of accounting which was consistently followed by the assessee year after year. All purchases made were properly vouched and hence the addition made by the Assessing Officer are based merely on guess work and deserve to be deleted. It was further submitted that it is not understood as to which "principle of expenses for the cultivation" has been followed by the Assessing Officer in determining the expenditure, as there is no such "Principle of expenses for the cultivation" in the tea industries. The learned Authorised Representative of the assessee also argued that without disclosing to the assessee the material relied upon by the Assessing Officer, the rejection of the accounts of the expenditure on cultivation was not justified. For this, he placed reliance on the decision in the case of Sanker Trading v. State of Tripura [1991] 82 STC 22, 24 (Gau). It was also the submission of the learned authorised Representative of the assessee that for determining the test on commercial expediency fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oks of account have been audited. Hence, we are reminded of the decisions in the case of Raichand Kothari (HUF) v. CIT [1997] 93 Taxman 43 (Gau.) wherein it has been held that "if the books of account are not challenged those books of accounts should be considered as genuine". Further, in the case of Toleram Daga v. CIT 59 ITR 632 (Gau.) it has been held has that "it would appear that the accounts of the firm which had been produced in the case had been accepted and acted upon by the Department and no serious challenge had been made to their genuineness or that they were kept regularly in the course of business. That being the case the accounts are relevant and afford prima facie proof of the entries and the correctness thereof under section 34 of the Evidence Act." 16. We also observe that during the course of the arguments the learned Authorised Representative of the assessee submitted that where the legislature intend that reasonableness of the expenditure incurred has to be considered while allowing the same in computation of the income of the assessee, the same has been provided in the Act and the example for the same is section 40A, sub-section (2) of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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