https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=461161 https://www.taxtmi.com/caselaws?id=461161 Validity of assessment u/s 153A - HELD THAT:- As the assessment order passed u/s 143(3) r.w.s. 153A of the Act for all the assessment years under appeal are liable to be quashed in view of the decision of the Hon ble Supreme Court [ 2023 (4) TMI 1056 - SUPREME COURT ] as well as subsequent instructions notified by the CBDT Instruction No. 1 of 2023 dated 23.08.2023 vide letter F. No. 279/Misc./M-54/2023-ITJ. Accordingly, the additional grounds raised by the Revenue for the assessment years 2010-11, 2011-12 and 2012-13 are dismissed. Addition made towards disallowance of expenditure towards special salary commission charges - As we are of the opinion that the additions made by the AO are unwarranted, which was rightly deleted by CIT(A). Thus, we find no infirmity in the order of the ld. CIT(A) on this issue. Accordingly, the ground raised by the Revenue is dismissed for the assessment years under appeal. Addition u/s 40(a)(ia) - Payment made to contractors w/o deducting TDS - assessee has submitted that the contract-labourers are in the muster roll of the assessee and are covered by the ESI/PF Act - HELD THAT:- No incriminating material like contract agreement, etc. was brought on record. CIT(A) has observed that the AO was misled by the statement given by Shri Murugesan as reported in the appraisal report and never bothered to examine the liability of the assessee to deduct tax at source independently with reference to the facts of the case. In view of the above undisputed facts, the ld. CIT(A) has rightly deleted the disallowance made u/s 40(a)(ia) of the Act by holding that the assessee has directly engaged labourers borne in the Provident Fund records and made payments through the head labourer and therefore, there was no liability to TDS. CIT(A) has rightly deleted the disallowance made under section 40(a)(ia). Addition on brought notes - purchases made through bought notes - HELD THAT:- By considering the submissions that inasmuch as the entire amount was offered to tax as bought note purchases and the same was credited in the profit loss account, which the Assessing Officer wrongly mentioned in the assessment order as Rs..1,74,32,430/-, thereby adding a further sum of (Rs..1,74,32,430 1,71,32,430) Rs..3,00,000/- was not called for. Considering the above facts, we find that the ld. CIT(A) has correctly deleted the addition of Rs..3,00,000/-, which was erroneously added to the total income of the assessee. Thus, the ground raised by the Revenue is dismissed for AY 2011-12. Disallowance of expenditure by cash purchase - CIT(A) deleted addition - HELD THAT:- We find that no cash payment was made by the assessee. Moreover, all the purchase of copras are through agent and the payments were made to these agents through banking channel i.e., RTGS. No reason to interfere with the order passed by the ld. CIT(A) on this issue and accordingly, the ground raised by the Revenue is dismissed for the assessment years under appeal. Disallowance of expenditure violating the provisions of Section 40A(3) and bogus purchase - HELD THAT:- CIT(A) has noted from the assessment order that the AO has admitted the fact that payments were made through RTGS. AO has not made a mention in the assessment order that for the purchase of copra, cash payments were made by the assessee and moreover, the AO has also not disputed the purchase of copra. CIT(A) has rightly observed that the disallowance by treating the RTGS payments as cash payment was not correct and consequently, deleted the addition for the assessment year 2012-13. AO failed to establish that the assessee made purchases by paying cash. It is a fact that the entire payments were made by the assessee through RTGS to its agent. It is a mere allegation by the Assessing Officer that the assessee purchased the copras by paying cash. The assessee, in fact, made payments through RTGS only. In turn, the agents issued bearer cheques according to their convenience. Therefore, AO was not justified in invoking the provisions of section 40A(3) in the case of the assessee - ground raised by the Revenue is dismissed. Addition made towards suppression of purchase along with estimated gross profit - HELD THAT:- AO took the value of purchases as appearing in the SAP from May 2011 to March 2012 (i.e., for 11 months) and compared the figures of purchases as taken from the parties ledgers from April 2011 to March 2012 (12 months), In effect the Assessing Officer, by mistake compared the 11 months figures of the assessee with that of 12 months figures of the parties. Naturally there is every likelihood of arriving at a variation. Based on this (wrong) methodology the AO arrived at the suppression of purchases. Thus CIT(A) has observed that the addition was due to erroneous adoption of purchase figures, the AO made an huge unwanted addition and thus, the CIT(A) was reluctant to sustain the addition. We also find that the AO was not able to establish suppression of purchases made by the assessee. Suppression of closing stock - HELD THAT:- Assessee has duly submitted the reconciliation statement and reasons for the difference before the AO which was unfortunately not considered. Before the ld. CIT(A) the assessee has produced copy of the actual value of closing stock (with quantity) as furnished to the Central Excise Department. After considering the detailed written submission filed by the assessee as was submitted before the Assessing Officer, which was not considered by him, the ld. CIT(A) observed that the closing stock as on 31.03.2012, as reported in the return of income by the assessee do not warrant any further alteration and it shows the correct position as on that date. Accordingly, the ld. CIT(A) deleted the addition towards suppression of stock correctly. - ground raised by the Revenue is dismissed. Case-Laws Income Tax Wed, 13 Sep 2023 00:00:00 +0530