TaxTMI 
TaxTMI 
2015 (6) TMI 320
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....ctroi, Staff & Workers welfare, traveling expenses, Diwali expenses, telephone expenses and Repair & maintenance even when the assessee had no evidence to support his claim that all these expenses were incurred wholly & exclusively for the purpose of business." 3. The brief facts of the case are that the assessee is the Proprietor of M/s. Raj Furniture, a Contractor who is engaged in interior furnishing on contract basis and sale of furniture. For the year in question, he filed his return of income at Rs. 1,43,52,382/- on 31.10.2006, which was processed as such u/s 143(1) of the Income Tax Act, 1961 ( herein after 'the Act') on 31.03.2008. In the assessment u/s 143(3), the final taxable income was determined at Rs. 1,59,85,810/-, in which certain disallowances were made by the AO, which were the subject matter of the appeal before the Ld. CIT(A), who was pleased to allow the appeal in favor of the assessee. Aggrieved by the order of the Ld. CIT(A) the Revenue is before us. 4. Apropos ground No.1 which is against deletion of disallowance of Rs. 10,00,000/- under the head "Purchase and Vendor Purchases" made by the AO. 5. Ld. DR submitted that as per the P&L a/c of the asses....
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....cted cases and also enquires on the creditors mentioned on page 3 of the impugned assessment order. However, no adverse inferences were drawn by the AO from the extent of investigation conducted by her. So according to the Ld. AR, when there was nothing against the assessee, the AO went through the previous records of the assessee and noticed that in the previous assessment year i.e. A.Y 2005-06, an addition of Rs. 5,00,000/-was made by the AO under this head because of the fact that the assessee could not produce supporting evidences and had surrendered the above amount. Therefore, the AO on the basis of the previous conduct of the surrender made as aforestated, she concluded that the assessee was in the habit of not keeping the complete records of expenses / purchases. As a result, she made a disallowance of Rs. 10,00,000/- under this head. 6.1 The ld AR submitted that the AO made the addition primarily for not producing vouchers which were destroyed during the accidental fire occurred due to no fault of the assessee. The assessee submitted the proof of fire at his premises by furnishing news paper cuttings and copy of FIR to substantiate his claim which has been accepted by t....
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....de the disallowance of Rs. 10,00,000/- purely looking into the past history of the case and that too, twice the amount surrendered in the last year. Neither the AO has adduced any material, rational basis nor any justification for the doubling the addition made during the year. We further find that the business results of the assessee are certified by the audited accounts by the Auditors, M/s Vimla Chand Jain & Co., Chartered Accountants as per the Tax Audit Report in Form No. 3CB and 3 CD dated 28.10.2006. These audited reports clearly reflect that on or before 28.10.2006, vouchers / bills were available with the assessee and on the basis of which the audit of the accounts was conducted and report in Form No. 3CB & 3CD alongwith the return of income was filed on 31.10.2006. But since an accidental fire happened on 23.9.2007 i.e. after the audit was conducted on 28.10.2006, it can be safely assumed that the Auditor had prepared the Report based on the vouchers/ bills with the assessee and so it is authentic, since the said audit report have not been challenged by the AO at all. Therefore, simply on the ground that in previous year, the assessee made surrender cannot be the basis fo....
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....its of the year under consideration which is arbitrary. The Ld. CIT(A) has noted that Diwali Expenses are allowable under section 37(1) of the Act, in view of the decisions in ACIT vs. Anil Alums (P) Ltd. (2005) 98 TTJ (Asr) 56 and Mr. Maya J. Daryani vs. IAC (1994) 50 TTJ (Del) 510. Travelling expenses are deductible under section 37(1) as per ratio in 5unita Mine chem. Ind. vs ITO (2008) 14 TTJ (Jd.) 98 and Ganesh Foundry vs ACIT (2003) 78 TTJ (Jd.) 736. Ld. CIT(A) observes that all the disallowances out of expenses listed have been made without any reason, and hence the disallowance was not warranted in view of the decisions in Lavrids Knudsen Maskinfabrik (India) Ltd. vs. Addl. CIT (2006)102 TTJ (Pune) 882 and 5ayaji Iron & Engg. Co. vs. CIT (2002) 253 ITR 749 (Guj). Moreover,ld CIT(A) has rightly observed that disallowances of any expense claimed on estimate basis without pinpointing any discrepancies in the books of account are not tenable and the Ld. CIT(A) has relied on the judgments viz. (i) Roger Enterprises Ltd. Vs. ITO (1995) 52TTJ(Del) 198 & (ii) Modi Exports Vs. ACIT (2008) 12 DTR-1 (Del Tribunal). 11. We concur with the Ld. CIT(A) that AO disallowed expendit....
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....heads to the tune of Rs. 9,07,350/- and additions made thereof. 1. Staff and workers welfare Rs.13,22,112/- Rs.2,64,422/- (@1/5th ) 2. Diwali Expenses Rs.3,29,915/- Rs.1,64,957 (@50%) 3. Telephone expenses Rs.7,46,199/- Rs.1,49,240/- 4. Charity & Donation Rs.1,28,225/- Rs.1,28,225/- (@100%) 5. Vehicle maint. Exp. & Dep Rs.7,17,206/- Rs.1,19,534/- 6. Employees contribution to PF and ESI Rs.80,972/- Total Rs.9,07,350/- 15.2 Assessee appealed before the Ld. CIT(A), who vide his impugned order has deleted all the additions mentioned at serial No. 1 to 3 & 5 to 6 and affirmed the action of the AO disallowing expenditure on account of charity and donation of Rs. 1,28,225/- mentioned at serial no. 4 i.e. Rs. 9,07,350 - Rs. 1,28,225 = Rs. 7,79,125/- was deleted by the Ld. CIT(A). 15.3 Against the above order of the Ld. CIT(A), Revenue has raised the ground no. 2 before us, but wrongly mentioned the amount of deletion of addition of Rs. 8,26,378/- i.e. (Rs. 9,07,350 - Rs. 80,972 on account of Employees Contribution to PF & ESI = Rs. 8,26,378), however, th....