2016 (6) TMI 39

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....(A) was not justified in sustaining disallowance of legal expenses amounting to Rs. 6,91,171/- even though assessee has established genuineness and justification of the claim. (ii) That the disallowance is on mechanical basis without proper appreciation of facts and recording of proper finding. 2. (i) That on the facts and circumstances of the case, the CIT(A) was not justified in sustaining addition of Rs. 1,56,24,699/- in respect of alleged unaccounted sale without their being any evidence or material in respect of the same. (ii) That in this case, survey was carried out and on the basis of evidence and material, the unaccounted sale was duly subjected to tax and as such their cannot be any presumption about any further sale. ....

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....he ground that these expenses have been incurred by the assessee in relation to its sister concern. 3. Aggrieved by the order of the Ld. that you the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) confirmed the additions made by the Ld.AO. 4. Aggrieved by the order of the Ld. (A), the assessee is in appeal before us now. 4.1. Ground No.1: This ground pertains to the disallowance of the legal expenses amounting to Rs. 6,91,171/- the ld.AR submitted that the legal expenses amounting to Rs. 4,44,171/- in respect of Peregrine Guarding Ltd., the assessee had duly submitted the bills and vouchers in respect of the same before the Ld. CIT (A) as well as the Ld.AO which has been enclosed at pages 33 to 35 of the paper b....

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....lls and vouchers produced in the paper book depicts that the assessee have been taking legal advisers from advocates and consultants. Considering the kind of activity carried on by the assessee there is a need for day-to-day consultation with advocates and consultants in respect of the sale of plant and machinery. The authorities below have contended that certain bills pertains the previous year relevant to the assessment year under consideration, the same has been received in the current assessment year. Merely because the assessee has received the bill in the current assessment year the same cannot be disallowed for the reason that it is an ongoing pendency in the legal profession that a memo of appeal is raced by the professional consult....

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....Andhra Pradesh High Court in the case of Rajnik and Co. Vs. ACIT reported in 251 ITR 561. 8. We have produced the orders of the authorities below as well as the documents filed by the assessee in the paper book, and the judgments relied upon both the sides. 8.1. On consideration of the facts we find that the addition has been made by the Ld.AO on the basis of surmises and guess work. The reasoning given by the Ld.AO for making such addition is entirely on guess work and not based on any cogent material obtained during the course of search. It is well settled legal position, in respect of income tax assessment proceedings that, although strict rules of evidence act do not apply to the income tax proceedings, assessment cannot be made o....