TaxTMI 
TaxTMI 
2015 (8) TMI 127
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.... of the Board. He also submitted that both the Cross Objections filed by the assessee are not pressed. 3. Learned D.R. of the Revenue could not controvert this submission of Learned A.R. of the assessee that the tax effect in the appeal of the Revenue for assessment year 2001-02 is below Rs. 4 lacs. Hence, the appeal of the Revenue for this year is not maintainable in view of Board's instruction. We dismiss the same accordingly. 4. In the result, the appeal of the Revenue for assessment year 2001- 02 and both the Cross Objections of the assessee are dismissed. 5. It was admittedly agreed by both the sides that the issues raised by the assessee in its both the appeals for assessment year 2001-02 and 2003-04 are identical and the facts are also identical. Regarding the appeal of the Revenue for assessment year 2003-04 also, it was agreed by both the sides that these issues raised by the Revenue are inter connected with the appeal of the assessee for the same year. 6. Ground No. 1 of the appeal of the assessee for assessment year 2001-02 and ground No. 1 of the assessee's appeal for assessment year 2003-04 as well as the connected ground No. 1 of the Revenue's appeal for a....
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....been indicated by the Assessing Officer in the assessment order for making this disallowance and the same was made by making a general observation that complete supporting evidence was not brought on record without indicating even one particular evidence, which was asked for by the Assessing Officer and could not be produced by the assessee. Similarly, in assessment year 2003-04 also, the Assessing Officer has made similar observations that the assessee failed to produce complete supporting evidence without pointing out even one particular evidence, which was required by the Assessing Officer and could not be produced by the assessee. Considering all these facts, we delete the complete disallowance under the head commission payment in both the years. Accordingly, ground No. 1 of the assessee's appeal is allowed in both years and ground No. 1 of Revenue's appeal is rejected. 10. Ground No. 2 of the assessee in both the assessment years are as under: Ground No. 2 for assessment year 2001-02 is as under: "That the learned CIT(A) has erred in confirming the disallowance to the extent of Rs. 47,345.85 made on account of telephone expenses." Ground No. 2 for assessment year 2....
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....nder: "3. The Ld. CIT(A) has erred in law and on facts in restricting the disallowance made by the AO of Rs. 15,47,220/- out of freight and cartage expenses to 15% of the total expenses without giving any reasons for restricting the disallowances and not appreciating the facts that most of the disallowances were made on account of cash payment for which no records were maintained by the assessee company." 16. Learned D.R. of the Revenue supported the assessment order in both the years whereas it is submitted by Learned A.R. of the assessee that no specific defect has been pointed out by the Assessing Officer in the assessment order or by learned CIT(A) in his order and therefore, the entire disallowance should be deleted. 17. We have considered the rival submissions. We find that in the assessment order for assessment year 2001-02 in para3, it is noted by the Assessing Officer that the assessee has claimed an expenditure of Rs. 33.14 lacs under the head freight & cartage outward as against Rs. 2.92 lacs in the immediately preceding year. The Assessing Officer asked the assessee to justify the same. It is noted by the Assessing Officer that the assessee could not justify th....
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....nt year 2003-04 also, the increase in expenses, as compared to assessment year 2001-2002 is 326% whereas the turnover of assessment year 2003-04 is Rs. 16978.55 lac as against turnover of Rs. 5701.37 lac in assessment year 2001-2002. Hence, the increase in turnover is less than 300%. Even if we compare the expenses claimed by the assessee and turnover of assessment year 2003-2004 and assessment year 2001-2002, the increase in expenditure in assessment year 2003-04 over and above the expenditure of assessment year 2001-2002 is excess about 30% but since the expenses of assessment year 2001-02 itself are excessive and we feel that the disallowance of 30% out of expenses in assessment year 2001-2002 is not excessive, the disallowance of 30% in assessment year 2003-2004 is also reasonable because in assessment year 2003-2004 also, it is noted by the Assessing Officer that freight & cartage outward payment of Rs. 51.57 lac have been made in cash, which was not verifiable as per the Assessing Officer in Para 7 of the assessment order for that year. Hence, in both the years, we find that the disallowance made by the Assessing Officer of 30% of expenses under the head freight and cartage o....
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....ound No. 5 in assessee's appeal for assessment year 2003-2004 is as under: "That the learned CIT(A) has erred in confirming the disallowance to the extent of Rs. 1,14,31,332.00 made on account of consumable stores." 25. Ground No. 4 in Revenue's appeal for assessment year 2003-2004 is as under: "The Ld. CIT(A) has erred in law and on facts in restricting the disallowance made by the AO of Rs. 2,28,62,664/- out of consumable stores expenses to 5% of the total expenses without giving any reasons for restricting the disallowances and not appreciating the facts brought on record by the A.O. during the course of assessment proceedings." 26. Learned A.R. of the assessee submitted that the entire stores consumed is excise paid items as well as the entire production of the assessee company is subjected to Excise Duty and therefore, the ad hoc disallowance made by the Assessing Officer is not justified. 27. Learned D.R. of the Revenue supported the assessment orders in both the years. 28. We have considered the rival submissions. We find that the Assessing Officer has made following observations in the assessment order for assessment year 2001-02 before making disall....
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....he expenses under the head Consumable Stores shown this year is Rs. 22,86,26,638/-. In this regard, the assessee has furnished a Chart showing that per ton expenditure shown in A.Y. 2001-02 & 2002-03 was Rs. 1,949.81 & Rs. 5,097/- respectively as against which the expenses on Consumable Stores is Rs. 4,508,49/- per ton. Thus, the assessee pleaded that the expenditure when seen with reference to the per ton production this year as compared to preceding years has gone down reasonably. The assessee company has further stated that almost all the expenses are vouched and almost all the payments have been made by cheques. The above contentions/submissions of the assessee have been examined with reference to books of account produced during the course of hearing. During the course of scrutiny of this claim, the assessee failed to produce supporting evidence i.e. bills and vouchers in respect of various purchases made under this head. The assessee has also admitted to have no stock register for consumables from which the day to day consumption of consumables and its balance could be verified. This fact clearly suggest that the expenses claimed under this head were not open to verification ....
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....T, whereas the consumables have increased by 100% which is not only inexplicable but against all the' principle of Chemical Science. The assessee has not helped the matter by keeping mum on such disproportionate increase in consumption of consumables. The plea that out of total purchases of consumables at Rs. 1316 lacs, consumables worth Rs. 1052 lacs were excise-bearing, does not help the case of the assessee. The l.T.Act and Excise Act operate in two separate fields. In my view, the A.O has been quite generous in making the said disallowance @ 10%. Looking at the facts and circumstances of the case, the said disallowance is confirmed in toto." 31. In assessment year 2003-04, when the assessee carried the matter in appeal before the CIT(A), he held that the disallowance of 5% will meet the ends of justice because there is no disproportionate jump in the consumption of consumables in assessment year 2003-04. Hence, we make out a chart of turnover in assessment year 2000-2001 to assessment year 2003-04 as well as consumption of stores in these years, which is as under: Assessment year Turnover Consumption of consumable stock -------------------- &nb....
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.... ground No. 5 of assessee's appeal for assessment year 2001-02 is rejected and ground No. 5 of the assessee's appeal in assessment year 2003-04 is allowed and ground No. 5 of the Revenue appeal in assessment year 2003-04 is rejected. 32. Ground No. 6 in assessee's appeal for assessment year 2001-2002 is as under: "The learned CIT(A) has erred in confirming the disallowance of Rs. 1,10,332/- made on account of previous period items." 33. Learned A.R. of the assessee submitted that this ground is not pressed. Accordingly, this ground of the assessee is rejected as not pressed. 34. Ground No. 7 in assessee's appeal for assessment year 2001-2002 is as under: "The learned Assessing Officer has erred in not deciding the allowance of unabsorbed depreciation amounting to Rs. 31,86,056/-." 35. It was submitted by Learned A.R. of the assessee that since there is assessed loss as per the assessment order even after making various disallowance by the Assessing Officer, direction may be given to the Assessing Officer to allow carry forward of unabsorbed depreciation. 36. Learned D. R. of the Revenue supported the orders of the authorities below. 37. We have considered th....