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TMI Blog2025 (5) TMI 947X X X X Extracts X X X X X X X X Extracts X X X X ..... before ITAT(grounds number 7 and 8), reads as under : "1 That under the facts and circumstances of the case and in law, the AO has erred in disallowed of Rs. 29,10,240/- and confirmed by Ld. CIT (Appeals) (NFAC) under the head of Discount/claim/shortage/deduction on proportionate basis in compression of last year without applied his mind but only on presumption, surmises and without any basis which is against principle of natural justice and unsustainable in law, Please be deleted. 2 That under the facts and circumstances of the case and in law, the order passed by the Ld. AO for disallowance of expenditure an amounting to Rs. 2910240/- and confirmed by Ld. CIT (Appeals) (NFAC) is arbitrary, capricious and insofar as it is prejudicial to the interest of the appellant, is bad and un-sustainable in the of law as the same is passed without considering the detail filed by the assessee under the head of discount/claim/shortage/deduction made by the purchaser out of sale bill issue by the assessee without pointed out any specific item of expenditure which is not allowable, excessive and not related to business Thus the disallowance is against the principle of natural justice please ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO observed that there was an abnormal increase in cash deposits in bank account during the demonetization period as compared to cash deposits in the bank account during pre-demonetization period, wherein the assessee explained that the assessee has withdrawn cash of Rs. 50 lacs from his Cash Credit(CC) account No. 9160300064325498 with Axis Bank Shivpuri on 07.11.2016 for making purchase from farmers through Krishi Upaj Mandi. There was cash available of Rs. 37,79,000/- after declaration of demonetization, which was deposited back by the assessee in his bank account on 10.11.2016. The Assessing Officer accepted the aforesaid contention of the assessee, and matter rested there itself as no additions to the income was made by the AO on that count. Further, the Assessing Officer observed that the assessee's turnover during the year under consideration vis-vis in the preceding year was as well General Administration and selling expenses for the corresponding period(s) were as under : "On examination of the trading cum P&L account of the assessee for F.Y. 2016-17, it is observed that assessee's turnover for these years is as under : F.Y. 2016-17 F.Y. 2015-16 Turnover/Sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had filed details of these expenses before the Assessing Officer but the Assessing Officer has not made any enquiry with respect to these expenses, but disallowed the expenses to the tune of Rs. 29,10,240/- under the head "Discount/Shortage/claim/deduction' being held to be excessive vis-à-vis preceding year expenses while making comparison with the turnover achieved for the aforesaid period. The ld. Counsel for the assesse has produced before the Bench vide letter dated 31.12.2024, copy of ledger account of the expenses incurred under the head ' discount/shortage/ claim/deduction', which were claimed to have been filed with the Assessing Officer, which is placed on record in . It was further submitted by the ld. Counsel for the assessee that the ld. CIT(Appeals) has dismissed the appeal of the assessee ex parte in limine without deciding the issue on merits mainly on the ground of nonsubmission of replies/response before the ld. CIT(Appeals). The said order is in contravention of provisions of section 250(6) of the Act. Prayers were made to set aside the matter back to the file of the Assessing Officer for fresh de novo assessment. 6.2. Learned Sr. DR submitted that there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntioned in the ledger account along with the amount debited towards expenses under the aforesaid head. The said ledger account is placed on record in file. I have observed that the Assessing Officer has not made any enquiry with respect to these expenses claimed by the assessee and merely on the ground that expenses have increased 4.85 times in the year under consideration vis-à-vis preceding year, while the sales have increased 2.47 times in the corresponding, the excess expenditure to the tune of Rs. 29,10,240/- were disallowed by the Assessing Officer. In my considered view the Assessing Officer ought to have made proper enquiries with the aforesaid parties to unravel truth instead of making the additions based upon the expenses incurred in the preceding year vis-à-vis corresponding turnover during these relevant period. Once the facts are brought on record by the assessee detailing these expenses along with the parties to whom these expenses were paid or pertained and/or incurred, the assessee has discharged its primary onus, and now it is for the AO to have made further enquiries with these parties as well wrt to claim for these expenses by the assessee, to unrav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o not sustainable, as the Assessing Officer has made additions based only on the reference to the percentage of expenses vis a vis turnover by comparing the current year with the preceding year of the turnover/sales with these corresponding expenses, without making any enquries to unravel truth. No specific defects are pointed out by the AO with respect to claim of these expenses by the assessee. Assessing Officer has not made any enquiry with the parties with respect to whom these expenses were claimed to be have been incurred or paid and/or stood credited by the assessee to arrive at the finding that these expenses were not incurred wholly and exclusively for the purpose of business. Thus, in the facts and circumstances of the case, both the orders of the Assessing Officer as well as CIT(Appeals) are set aside and the matter is restored back to the file of Assessing Officer for de novo assessment after giving proper opportunity of hearing to the assessee. Assessee is also directed to cooperate and furnish all the details during de novo assessment proceedings. I clarify that I have not commented on the merits of the issues arising in appeal. I order accordingly. 8. In the result, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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