2014 (10) TMI 500

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....epartment is in appeal before us and has taken following grounds of appeal: 1. "On the facts and in the circumstances of the case, the CIT(A) has erred in law in deleting the addition of Rs. 7,11,260/- out of Rs. 8,54,080/- made by the AO on account of low Gross Profit by applying the GP rate of 9.7% as against 12% applied by the Assessing Officer by ignoring the fact that in the case of Smt. Amrit Rani Prop. M/s Niranjan Dass & Sons, GP was shown @ 16.46% during the relevant accounting period and in the case of Bhagat Ram Godha Ram, Punjabi Market, Saharanpur, GP was shown @ 12.30%; 2. On the facts and in the circumstances of the case, the CIT(A) has erred in law in deleting the disallowances of Rs. 1,62,545/- out of Rs. 2,50,950/- made by the AO on account of various expenses by ignoring the fact that these expenses were either excessive or fully un-vouched & unverifiable; 3. On the facts and in the circumstances of the case, the CIT(A) has erred in law in deleting the addition of Rs. 10,875/- made by the AO on account of difference in closing balance in respect of some creditors by ignoring the fact that the difference in credit balance was noticed at the time of assess....

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....4,50,000/-Rs.28,56,843/- Total Rs. 1,42,820/-     Thus, he restricted the addition to Rs. 1,42,820/-. 5. Ld. DR submitted that AO had adopted the GP rate of similar businesses and, therefore, the same should have been accepted. 5.1 We have considered the submissions of both the parties and have perused the record of the case. 6. Admittedly, the AO has not rejected the books of account but assessee in course of survey had surrendered the amount of Rs. 4,50,000/- to cover up the discrepancy in stock and other items found at the time of survey. Therefore, the books of account were not reliable. The estimation made by ld. CIT(A) is quite reasonable considering the entirety of facts and circumstances particularly because in the case of M/s Niranjan Das & Sons, Saharanpur, the concern was dealing in retail trading of gents suiting and shirting, whereas the assessee dealt in wholesale as well as the retail trading of ladies suits. Therefore, there was no basis to draw comparison with this firm. Similarly, M/s Bhagat Ram Godha Ram was dealing in retail as well as wholesale trading of branded gents suiting and shirting, whereas assessee dealt in whole....

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.... 2,50,950/-   9. Ld. CIT(A), after considering the remand report of the AO and rejoinder of the assessee, deleted the addition of Rs. 50,000/- under the head "direct expenses", inter-alia, observing that there was only marginal increase by .08% due to increase in freight rate. Further, the assessee had also provided the details of freight and cartage rate paid against each purchase bill for the period from 20.11.2008 to 31.03.2009. He further observed that assessee had maintained goods receipt note which were attached with the purchase bills. Further, the AO in the remand report merely reiterated its findings given in the assessment order and did not controvert the details and evidences furnished by the assessee. As regards the addition of Rs. 75,000/- in respect of other expenses, the ld. CIT(A) restricted the addition to Rs. 34,512/- being 15% of the expenses claimed by assessee. As regards the disallowance under the head 'salary of Rs. 1 lakh', ld. CIT(A) restricted the disallowance to Rs. 50,000/-, inter-alia, observing as under: "The facts of the case, submissions made by the appellant, remand report of the AO and rejoinder of the appellant have been carefully co....

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....nfirm the order of ld. CIT(A) on this issue. 12. In the result, this ground is dismissed. 13. Brief facts apropos ground no. 3 are that in course of assessment proceedings, notices u/s 133(6) were issued to the creditors shown in the balance sheet. In respect of the following creditors, difference in credit balance was noticed as under: S.No. Name & add. Of the Creditors Balance, as shown by the assessee Balance, as shown by the Creditor Difference 1. Varundev Overseas (P) Ltd. 41,860/- 36,440/- 5,450/- 2. Bemi Tex 65,575/- 60,150/- 5,425/- Total 10,875/-   13.1 Therefore, the AO made an addition of Rs. 10,875/- Ld. CIT(A) deleted the addition, inter-alia, observing as under: "The facts of the case, submissions made by the appellant, remand report of the AO and rejoinder of the appellant have been carefully considered. It is observed that the AO had made addition of Rs. 10,875/- as there was difference in closing balance shown by Varundev Overseas (P) Ltd. (Rs. 5450/-) and Bemi Tex (Rs. 5,425/-). On the other hand, the appellant has contended that the appellant was allowed at an agreed ra....

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....e addition of Rs. 81,500/-on the ground that the appellant had made withdrawals for household expenses only at Rs. 38,500/- which held as low keeping in view the status of the appellant. On the other hand, it has been vehemently argued that the appellant's family consisted of self, son and daughter-in-law and total contribution made by the family members was at Rs. 3,43,000/-. It has further been argued that the quantum of contribution made by each family members is the outlook of the appellant and it is not a case of the AO to decide the same. It is observed that though the appellant has not significantly contributed towards withdrawals for household expenses but at the same time the AO cannot lose sight of the fact that the other family members have also contributed to such expenses which aggregate to Rs. 3,43,500/- which are held as adequate to meet the requirements of the appellant's family. In light of the above facts it is held that the AO was not justified in making addition of Rs. 81,500/-. The same is directed to be deleted. Ground No. 11 is allowed." 18. Having heard both the parties, we do not find any reason to interfere with the order of ld. CIT(A) because the findi....