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of <h1>Tribunal Partially Allows Appeal, Deletes Disallowances & Additions</h1> The Tribunal allowed the appeal in part, deleting disallowances and additions. The disallowance under section 40A(2)(b) for detergent powder purchased ... - Issues Involved:1. Disallowance u/s 40A(2)(b) for detergent powder purchased from M/s Gum Products.2. Disallowance u/s 40A(2)(b) for detergent powder sold to M/s Manvantar Trading & Investments P. Ltd.3. Addition of Rs. 1,16,000 in respect of Rama Kirana Stores.4. Charging of interest u/s 234B.5. Jurisdiction issue.Summary:1. Disallowance u/s 40A(2)(b) for detergent powder purchased from M/s Gum Products:The assessee contested the disallowance of Rs. 25,14,250 u/s 40A(2)(b) for detergent powder purchased from M/s Gum Products. The AO noted that the detergent powder was purchased at Rs. 11.29 per kg and sold at a loss, concluding that the price was excessive. The CIT(A) upheld the AO's decision, stating that the assessee failed to provide evidence of similar payments to unrelated parties. The Tribunal, however, found that the authorities ignored substantial evidence proving the detergent powder was of export quality and ultimately exported to Russia. The Tribunal cited various judicial precedents and CBDT Circular No. 6(P), concluding that the disallowance was unjustified and deleted the addition.2. Disallowance u/s 40A(2)(b) for detergent powder sold to M/s Manvantar Trading & Investments P. Ltd.:The AO disallowed Rs. 10,73,612 u/s 40A(2)(b) for selling detergent powder to M/s Manvantar Trading & Investments P. Ltd. at a lower rate compared to other parties. The CIT(A) confirmed this addition. The Tribunal, however, differentiated the facts from the purchase case, noting that the detergent powder sold was of local/inferior quality. The Tribunal also held that s. 40A(2)(b) applies to payments, not sales, and cited judicial precedents to support this view. The addition was deleted.3. Addition of Rs. 1,16,000 in respect of Rama Kirana Stores:The AO added Rs. 1,16,000, including interest, as income from undisclosed sources due to the assessee's failure to produce the depositor or confirmation letter. The CIT(A) upheld this addition. The Tribunal found the assessee's request for setting aside the issue reasonable and restored the matter to the AO for fresh adjudication after giving the assessee an opportunity to present evidence.4. Charging of interest u/s 234B:The AO charged interest u/s 234B for failure to pay advance tax, which the CIT(A) confirmed. The Tribunal held that since the assessee filed a loss return, it was not liable to pay advance tax. The Tribunal cited the Kerala High Court's decision in Lord Krishna Bank Ltd. vs. ITO and a Tribunal decision in M. Mani vs. Asstt. CIT, concluding that the interest u/s 234B was unjustified and deleted it.5. Jurisdiction issue:The ground regarding jurisdiction was not pressed during the hearing and was accordingly dismissed.Conclusion:The appeal was allowed in part, with significant deletions of disallowances and additions, and the issue regarding Rama Kirana Stores was remanded for fresh adjudication.
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