TaxTMI 
TaxTMI 
2015 (8) TMI 222
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....of Rs. 41,600/- made by the AO on account of contravention of provisions of section 40A(3). 5. The CIT(A) has erred in deleting addition of Rs. 11,10,028/- made by the AO out of salary expenses. 6. The Ld. CIT(A) has erred in deleting the addition of Rs. 51,707/- made by the AO on account of negative cash balance. 7. The appellant craves leave to add, alter or amend any / all of the grounds of appeal before or during the course of the appeal." 3. The brief facts of the case are that the assessee, an individual, is the proprietor of two concerns namely M/s. Overseas Associates and M/s. Dyechem Sales Corporation. M/s. Overseas Associates is engaged in the business of trading in surgical instruments, whereas M/s. Dyechem Sales Corporation is engaged in the activities of procuring orders on behalf of manufactures of chemicals on commission basis. The assessee filed his return of income on 29.9.2009 declaring a total income of Rs. 1,66,60,730/-. The case was selected for scrutiny under CASS. In compliance to the statutory notices served on the assessee, books of accounts were called for and were verified on test check basis and the assessment was completed in terms of order ....
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.... details and explanation filed by the assessee, the Assessing Officer did not raise any further clarification or enquiry regarding these three parties whose accounts were squared up by writing off the amounts outstanding against their names. From the facts on record, Ld. CIT(A) observed that the assessee had a long business relations with these parties and they were not only old but valuable customers/suppliers of the assessee who given significant business to the assessee. The Ld. CIT (A) takes note that the amounts written off in the case of Ajit Hospital and Gopal Surgical were in respect of sales made by the assessee to these parties. Whereas, in the case of Aesculap the amount represented the excess payment made by the assessee to foreign supplier. The assessee had filed details of bad debts written off with copies of accounts of debtors of the amounts written off stating that they were business transactions and we have perused the same which is placed in pages 1 to 19 of the paper book and finds that the explanation of the assessee is corroborated by the documents placed on record. Having considered all the facts of the case, we find that the Assessing Officer was not justifi....
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.... account of Amitabh Mendiratta for the period 01.04.2008 to 01.03.2009 and it shows the same amount as opening balance. And page 24 of paper book shows ledger account of Amitabh Mendiratta which reflects opening balance as Rs. 2,44,850/-. We also note that from a perusal of page 20 reveals that Shri Amitabh Mendiratta had been paid an amount of Rs. 5,93,633/- for retainership in the FY 2005-06 and Rs. 6,14,700/- for FY 2006-07; and for FY 2007-08 he was paid Rs. 3,91,780/- and Rs. 2,44,850/- was due for him (page 22 of paper book). Thus, the AO's finding that this amount due to Amitabh Mendiratta is bogus have to fail in the light of the aforesaid evidences on record. A perusal of the above letter of assessee shows that Amitabh Mendiratta was a retainer of the assessee who left the institution on 31.03.2008 and went abroad. The amount shown as sundry creditor by the assessee is the amount due to said Amitabh Mendiratta. Just because the assessee could not give the confirmation about the said amount which is due for Amitabh Mendiratta does not mean that it is a bogus entry made by the assessee. We find that the AO mis-directed himself by not going through the entire explanation g....
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....of the assessee. We find that the Ld. CIT(A) has perused the reply of the assessee dated 8.12.2011 which has been referred by the Assessing Officer in his order. On perusal of the said reply of the assessee, she finds that the books of accounts were maintained on mercantile basis in respect of incomes and expenditure; and any commission due from the parties and any commission due to sub-dealers have been accounted for on accrual basis. The ld. CIT (A) took note of the fact that the assessee had fully explained the accounting of the impugned commission income. According to the ld. CIT (A), the Assessing Officer had failed to appreciate the correct factual position. The ld. CIT (A) has taken note that the assessee had accounted for these two amounts in his books of account since these had been actually received during the relevant year. The ld. CIT (A) has observed in respect to commission expenses were concerned, they had been paid to the assessee's agents in India who had rendered services to the assessee. The ld. CIT (A) has made a finding that the payments of commissions were made after deducting corresponding TDS as per law. In the said facts and circumstances, ld. CIT (A) h....
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....keeper and it was for purchase of gifts for overseas business associates, as there was no other alternative but to pay in cash. Ld. CIT(A), considering the practical problem with the local and small time shopkeepers, justified the cash payment for purchase of gift and she deleted the addition. In our opinion, the view adopted by the Ld. CIT(A) is not correct because she was doubting whether the gift purchase by assessee was for a single transaction on a given day. We find on perusal of page 95 of PB, sale bill of gift for Rs. 41,600/- dated 08.08.2008, which was paid in cash, so is in contravention of section 40A(3) of the Act. Therefore, we find that the AO has disallowed the amount of Rs. 41,600/- on valid ground. In our view, the AO rightly held that since the assessee failed to furnish any evidence to prove that these payments did not fall within any of the exceptions of Rule 6DD, there was a contravention to the provisions laid down in section 40A(3) as stated before. Therefore, in our opinion, the addition made by the AO amounting to Rs. 41,600/- needs to be upheld, accordingly, we uphold the action of the AO on this account and allow the Ground No. 4 raised by the Revenue. ....
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....d that the Ld. CIT(A) has observed that Assessing Officer had not made out of case for making the impugned disallowance and that the Assessing Officer had made vague observation to disallow a major part of the salary debited to the P&L A/c. According to the Ld CIT(A) the Assessing Officer had also wrongly worked out the difference of Rs. 3,27,400/-. The Ld CIT(A) notes that the Assessing Officer had not taken into account the names of all the employees while reproducing the names in para 9 of his order. According to Ld CIT(A) the Assessing Officer did not give any clear finding or reasons for making such a disallowance nor brought any adverse material on record. In the absence of any such adverse material, Ld. CIT(A) observed that there is no justification for the Assessing Officer to make such an impugned addition. In the instant case, we find that the AO has reproduced a chart presented by the assessee in page 5 & 6 of his order. From a perusal of the said chart, we find that out of 14 employees to whom the assessee claims to have paid the salary, only 3 were not given salary by cheque. Other 11 employees were paid by account pay cheque and cash. The assessee had produced the app....
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....he day by Cash book credited on the day by Resultant daily balance 28.2.2009 Debit balance Rs. 4293/- NIL Rs. 46,600/- (Salary and imprest expenses) Negative balance Rs. 41,707/- 1.3.2009 NIL NIL Rs. 10000/- (Imprest expenses) Negative Balance Rs. 10,000+41,707=51,707/- 2.3.2009 Nil Actual bank withdrawal Rs. 67,200/- Nil Debit balance Rs. 67,200/- 3.3.2009 Actual bank withdrawal Rs. 25,000 Rs. 20/- Debit Balance Rs. 92,200/- Hence, the Assessing Officer worked out the negative balance as aggregating to (Rs.41,707 + Rs. 10,000) Rs. 51,707/- and added to the income of the assessee. Ld. CIT(A) deleted the addition of Rs. 51,707/- by relying on a letter of assessee dated 8.12.2011 wherein she observed that AO did not appreciate the contents of letter properly and failed to comprehend that what was done was only a book entry for both credits and debits. According to Ld CIT(A) the disbursement of Rs. 46,600/- was only made on 2.3.2009 when the cheque was encashed. Regarding the amount of Rs. 10,000/- the Ld CIT(A) was of the opinion that it was explained by the assessee that since 1.3.2009, being Sunda....