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of <h1>Appeal granted in part, adjustments made for freight, labor expenses, household withdrawals.</h1> The Tribunal partly allowed the appeal, setting aside certain additions related to disallowance of freight charges and labour expenses made on estimation ... Adhoc addition made towards trading results – decline in G.P. rate by 0.07% - overvaluation of stock - Held that:- Over valuation of closing stock cannot be a reason for making addition to the trading results because over valuation would itself result into higher profits. Similarly, the figure of opening stock can also not be interfered. No other specific defect has been pointed out by the AO and addition seems to be merely on adhoc basis, which cannot be made as per the law. Deletion of addition made on estimation basis is directed. Addition u/s 40(a)(ia) – non-deduction of tax at source from Freight Charges – assesse placing reliance on Merilyn Shipping & Transports (2012 (4) TMI 290 - ITAT VISAKHAPATNAM ) – Held that:- It is not clear from records whether the amount was paid during the year or not. Matter remitted back to file of AO Addition on account of low Household withdrawals – Held that:- In the present inflationary times, some minimum withdrawals are required by everybody. Since no details of withdrawals have been furnished, addition of Rs.1,00,000/- is restricted to Rs.50,000/- - Decided partly in favor of assessee Issues Involved:1. Disallowance of Freight Charges under section 40(a)(ia) of the Income Tax Act, 1961.2. Disallowance of Labour Expenses on estimation basis.3. Disallowance of Household Expenses on estimation basis.Analysis:Issue 1: Disallowance of Freight Charges under section 40(a)(ia)- The Assessing Officer (AO) added Rs. 91,316 to the income of the assessee as no TDS was deducted on freight expenses for a specific truck.- The appellant argued that since the amount was paid during the year, no disallowance should be made, citing a Special Bench decision.- The Tribunal found ambiguity in whether the amount was paid during the year, remanding the matter back to the AO for fresh examination based on the Special Bench decision.Issue 2: Disallowance of Labour Expenses on estimation basis- The AO made an ad hoc addition of Rs. 1,00,000 towards trading results due to discrepancies in the valuation of closing stock and other factors.- The CIT(A) restricted the addition to Rs. 1,00,000 after considering submissions but rejected the appellant's explanations.- The Tribunal held that the overvaluation of closing stock cannot be a basis for addition and that the addition was made on an ad hoc basis without specific defects, thus deleting the addition.Issue 3: Disallowance of Household Expenses on estimation basis- The AO estimated household withdrawals at Rs. 15,000 per month, making a total addition of Rs. 1,00,000, which was confirmed by the CIT(A).- The appellant argued that the addition was purely estimated and provided details regarding family members being income tax assesses.- The Tribunal reduced the addition to Rs. 50,000 considering inflationary times and lack of details on family members' withdrawals.In conclusion, the Tribunal partly allowed the appeal, setting aside certain additions and directing a reduced addition towards household withdrawals.
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