AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (10) TMI 1019
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....f Rs. 88,15,024/- on account of undervaluation of closing stock on the basis of additional evidences submitted during appeal proceedings without granting opportunity to the AO for verifying the same and thus violating the Rule 46A. 2. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in granting relief of Rs. 8,93,558/- on account of disallowance of commission expenses only on the basis that TDS was deducted and the transactions were through bank whereas the assessee could not prove the genuineness of the commission transactions nor could he produce any contract for the same. 3. The appellant prays that the order of the CIT (Appeals) on the above grounds be set aside and that of the AO be restored." 4. Ground No.1: In this ground, the revenue has agitated the action of Ld. CIT(A) in deleting the addition of Rs. 88,15,024/- made by the AO on account of undervaluation of closing stock. During the course of hearing, it was stated by the Ld. DR that since the assessee was not able to prove that correct method of accounting was followed, therefore, AO had applied average cost of valuation of stock and valuation of closing stock was done accordingly. He....
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....an & Co. [19581 reported at 33 ITR 182 (SC). In the decision rendered in the case of CIT v. Advance Construction Co. (P.) Ltd. [2005] reported at 275 ITR 30 (Guj.)held as follows: "14........., it is necessary to note that under section 145 of the Act income chargeable under the head 'profits and gains of business or profession' shall be computed in accord method of accounting regularly employed by the assessee. The only exception is: where the method employed is such that in the opinion of the Assessing Officer income cannot be properly deduced therefrom the Assessing Officer shall then compute the income upon such basis and in such manner as he may determine. The provision, therefore, specifically provides that the choice of method of accounting lies with the assessee, the only caveat being that it has to show that the chosen method has been regularly followed. The section is couched in mandatory terms and the department is bound to accept the assessee's choice of method regularly employed, except for the situation, wherein the Assessing Officer is permitted to intervene, in case it is found that true income, profits and gains cannot be arrived at by the method empl....
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....uation of stock. From the submissions made by the appellant during scrutiny proceedings, dated 04/03/2013, it is seen that the appellant had enclosed copies of bills etc. in support of the valuation. Accordingly, in view of the above facts and the settled position of law in this regard, the addition of Rs. 88,15,024/- cannot be sustained and is deleted. Accordingly, Grounds No. 1 to 3 raised by the appellant are allowed. 4.3. We have carefully gone through the facts of the case and well reasoned findings recorded by the Ld. CIT(A). It is noted that the assessee has been following FIFO method for valuation of its stocks in all earlier and subsequent years and no addition has ever been made. The assessment order was passed u/s 143(3) for A.Y. 2009-10 accepting FIFO method of stock valuation. It is further noted that assessee had submitted copies of bills and other evidences to justify valuation based upon FIFO method. Further, nothing wrong could be pointed out by the Ld. DR in the detailed and well reasoned findings of Ld. CIT(A). Further, it is noted by us that closing stock of the impugned year had become opening stock of the next year. Thus, viewed from this angle also, overall ....
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....ringing contrary material on record, as stated by him. The law does not enjoin upon the assessing authority to, in order to disallow a claim for expenditure, disprove the same, but the assessee to prove the same; the payment through banking channel, which would only be proved by submission of bank statement/s (or the bank certificate, or the like), and which was not furnished despite being called for, would though a positive attribute, is not sacrosanct, nor is the fact of the same being subject to TDS. The primary charge of the A.O. as afore-stated, is toward non-evidencing the rendering of service, and which has not been rebutted in any manner. The assessee has no-where explained the modus operandi or even the manner in which the services were rendered, which is sine qua non for the claim of the commission, being only the service charges in relation thereto. Some of the classical cases in respect of expenditure in general (refer: Ram Bahadur Thakur Ltd. vs. CIT [2003] 261 ITR 390 (Ker); CIT vs. Navsari Cotton & Silk Mills [1982] 135 ITR 546 (Guj)), and commission expenditure in particular (refer: Lachminarayan Madan Lal vs. CIT [1972] 86 ITR 439 (SC); Lakshmiratan Cotton Mills Co....