2015 (12) TMI 1542

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....d in deleting the additions made by the AO on account of Freight Expenses, Packing Expenses, Power & consumption Expenses, Machinery Expenses and Tools & Consumable Expenses to the tune of Rs. 1,85,76,401/- by holding that the AO had not made enquiries, whether the expenses were genuine or not or whether these were of capital or revenue in nature. 2. That on the facts and circumstances of the case and in law the Ld. CIT(A) erred in appreciating the fact that the AO had specifically by questionnaire asked the assessee to file bills/vouchers for various expenditure but the assessee failed to produce the same. Secondly, as the accounts were unaudited reliance could not be placed on book entries alone without examining supporting bills....

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....could not produce some bills of Rs. 8113,559/- and further for machinery repairs assessee submitted explanation about that it is day to day maintenance expenses , for tools and consumable expenses submission of the assessee was that these expenses are for tools and dies consumed on day to day basis and also incurred for maintenance of quality of the manufacturing. Ld AO not convinced with the explanation of assessee made disallowance of expenses on adhoc basis as under :- a. Freight expenses 20 % Rs. 45,86,126/- b. Packing expenses 13 % Rs. 20,36,214/- c. Power and consumption expenses Rs. 81,13,559/- d. Machinery expenses 20% Rs. 14,57,839/- e. Tools and Consumables 20 % Rs. 23,83,663/- 3. On Appeal, CIT (A....

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....re. He further submitted that all the expenses are supported by proper bills and voucher and also with evidence of payments depicted in ledger account and further all the expense are wholly and exclusively incurred for the purposes of the business no disallowance should have been made. He relied on several judgments of various courts supporting that ad hoc disallowance cannot be made. 7. We have carefully considered the rival contention as well as the orders of lower authorities. It is a fact that there is increase in various expenses of compared to previous year. Further there is also higher percentile increase than the increase in sales of the company. Ld AO has rightly made the queries on this front and obtained the explanation of the....