TaxTMI 
TaxTMI 
2010 (2) TMI 727
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.... time of hearing the learned counsel for the assessee did not press grounds of appeal No.1 which relates to the legality of the notice issued u/s. 143(2) of the Income-tax Act, 1961 (the Act) for which the learned DR has no objection. Accordingly this ground by the assessee is dismissed as not pressed. 3. Grounds of appeal No. 2 by the assessee and the only ground taken by the Revenue relate to the part relief given by the CIT(A) by sustaining addition of Rs.10 lakhs out of Rs.40 lakhs made by the Assessing Officer by disallowing manufacturing and administrative expenses. 4. Facts of the case, in brief, are that the Assessing Officer during the course of assessment proceedings vide questionnaire dated 24th August, 2005 a....
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.... that the entire books of account had undergone statutory audit and the audit report was duly enclosed with the return of income furnished on 24.11.2003. The comparative statement of manufacturing expenses and administrative expenses was filed to demonstrate that there was no abnormal increase in the various heads of expenditure during the year under consideration. Accordingly it was submitted that no estimated addition should be made and, therefore, the addition of Rs.40 lakhs should be deleted. 6. However, the CIT(A) was not fully satisfied with the arguments advanced by the learned counsel for the assessee. He observed that Tax Audit Report cannot become the base for accepting the income declared in the return of income. The in....
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....see has not discharged the onus cast on it. Merely because the accounts have been audited and the auditors pointed out no mistake cannot absolve the assessee from the onus cast on it. Further the search by CBI is a pointer towards some manipulation by the assessee somewhere. Therefore, the book results cannot be fully accepted especially in absence of production of the same before the Assessing Officer. We also do not find much force in the submission of the learned counsel for the assessee that the expenditure under the head 'manufacturing expenses' has gone down during the y ear from Rs.45.76 lakhs to Rs.28.32 lakhs since the turnover has also gone down from Rs.22.98 crores to Rs.10.41 crores. We further find the CIT(A) after considering ....
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....ssee. 10. Before the CIT(A) it was submitted that the business activities were totally stopped and it became very difficult to recover any amount from the debtors. Relying on the decision of the Special Bench of the Tribunal in the case of Oman International Bank reported in 102 TTJ (Mum) (SB) 207 it was submitted that the claim of deduction under the head 'bad debts' has to be allowed. 11. However, the learned CIT(A) was not convinced with the arguments advanced by the assessee. Relying on the decision of the Hon'ble Madras High Court in the case of South India Surgical Company Ltd. vs. ACIT, 201 CTR 289 wherein it has been held that the assessee has to establish that the debts which have been written off have become ba....
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.... of any evidence regarding the age of the creditors and confirmations from the creditors regarding the liability of Rs.15,74,580, the Assessing Officer made an addition of Rs.15,74,580 u/s. 41(1) of the Act. While doing so he observed that in respect of creditor M/s. Jamnadas Bhimji and Co. recovery suit has been filed by the aforesaid party for the recovery of Rs.13.31 lakhs. However, as per the assessee company there was no liability to pay M/s. Jamnadas Bhimji and Co. Similarly for the remaining creditors of Rs.2,42,598, the Assessing Officer observed that the assessee could not file any evidence regarding the liability. 15. Before the CIT(A), it was submitted that the Assessing Officer cannot dictate the assessee to write off ....
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....gainst the assessee for recovery of the amount and the assessee has made a statutory legal claim that it had nothing to pay to the aforesaid party. We find the assessee in its Balance Sheet had shown an amount of Rs.13,31,981.51 under the head 'current liabilities and provision' as sundry creditors for goods (disputed). There is also no dispute to the fact that the aforesaid party has filed a suit for recovery of the amount from the assessee. We, therefore, do not find any justification as to how the liability has ceased to exist. Merely because the assessee has made a legal claim that no amount is payable by it to the party, the fact remains that in the Balance Sheet it appears as liability and the other party has filed a case for recovery....