TaxTMI 
TaxTMI 
TaxTMI 
2017 (10) TMI 1261
X X X X Extracts X X X X
X X X X Extracts X X X X
....s. 46,18,747/- and delivery charges of Rs. 12,95,256/- were debited by the assessee. On examination of the relevant details, it was found by the AO that the payments towards carriage inward and delivery charges were mainly made in cash and the same were not fully verifiable. He also noted that the assessee has two mini trucks from which annual income of Rs. 42,000/- each was declared by the assessee under section 44AA of the Act. He held that the said mini trucks were used by the assessee for the transportation of cement, iron rods and other building material in which he was dealing and while inflating the expenses on account of transportation, the assessee had avoided scrutiny of the same by claiming the of section 44AA. He, therefore, disallowed the carriage inward and delivery charges claimed by the assessee to the extent of Rs. 29,57,000/- being 50% of the total expenses claimed by the assessee. 5. The disallowance made by the AO out of carriage inward and delivery charges was disputed by the assessee in the appeal filed by the Ld. CIT (A) and after considering the submission made by the assessee as well as the material available on record, the Ld. CIT (A) deleted the said dis....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ges and carriage inward, the nature and scale of business of the appellant and the inevitability of the need to incur such charges which have to be incurred in cash and cannot be backed by regular bills, the addition made by the Assessing Officer cannot be sustained. Hence, the addition of Rs. 29,57,000/- on account of alleged inflation of transportation cost is deleted. 6. At the time of hearing before us, the learned DR relied on the order of the Assessing Officer in support of the revenue's case on this issue while the learned counsel for the assessee strongly relied on the order of the Ld. CIT (A) and submitted that the written submission filed by the assessee on this issue before the Ld. CIT (A) and reproduced by him in the impugned order may be taken into consideration while deciding this issue. 7. We have considered the rival submissions and also perused the relevant material available on record. It is observed that a huge disallowance out of carriage inward and delivery charges was made by the AO mainly for the unverifiable element allegedly involved in the said expenses without pointing out any specific instances in support. No case was also made out by him to show that....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f sale of cement bags in cash as alleged by the AO. The Ld. CIT (A) found merit in the said submission made by the assessee and deleted the addition made by the AO on account of alleged understatement of sale of cement in cash for the following reasons given in paragraph no 6 of his impugned order: "I have considered the facts of the case and the appellant's submission. The Assessing Officer came to the conclusion that in respect of 157247 cement bags which were sold by way of cash, the appellant had manipulated the cash memos at will and understated the consideration by Rs. 25/- per bag on an average. The reasons given included the fact that the gross profit margin and net profit margin were very low and the sale price in respect of cash sales on certain dates examined on a test check basis was lower than the credit sales on the same dates for which cheque payments were received. As regards the low gross profit and net profit, the appellant has contended that the trading results for the year under consideration were better than those in the earlier years, the GP margin for the A.Y. 2010-11 being 3.34% as against 2.88% and 1.73% declared respectively for the A.Y. 2009-10 and 2008....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r than the price at which cash sales have been made. It is also a normal occurrence in business that sales which are immediately paid for by cash are invariably made at a lower or a discounted price than credit sales for which payments are received after passage of time. It can also not be denied that two different kinds of cement will be traded at different prices. The finding of the Assessing Officer that majority of the cheque sales have been made to Rajpur Sonarpur Municipality and Ramkrishna Mission Residential College has also been shown to be incorrect by the appellant. I also find that the Assessing Officer has also been shown to be incorrect by the appellant. I also find that the Assessing Officer has not been able to bring on record any concrete evidence regarding manipulation of cash memos by understating the selling price therein. Therefore, the Assessing officer's action to doubt the entire cash sales by merely indicating lower sale price of cash sales. In general (without listing any specific instances), on a few dates and to arrive at a figure of understatement of cash sales is not correct in view of the absence of any tangible evidence to support the theory that the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... cash sales by the assessee thus was not well founded and the same was not based on any concrete or cogent material. Keeping in view all these facts of the case, we find no infirmity in the impugned order of the Ld. CIT (A) deleting the addition made by the AO on account of the alleged understatement of cash sales by the assessee and upholding the same, we dismiss ground no 5 of the revenue's appeal. 13. The issue raised in ground no 6 relates to the deletion by the Ld. CIT (A) of the addition of Rs. 17,57,796/- made by the AO on account of the alleged low gross profit shown by the assessee on the sale of TMT Bars. During the course of assessment proceedings, it was noticed by the AO that the assessee has declared a GP of only 5% on the total sales of 1.75 crores of TMT Bars. According to him, TMT Bars were not sold below 15% of GP and the assessee thus had understated the sale of TMT Bars by 10% to reduce its GP from 15% to 5%. Accordingly, an addition of Rs. 17,57,796/- was made by the AO to the total income of the assessee being 10% of the total sales of TMT bars amounting to Rs. 17,57,796/-. 14. The addition made by the AO on account of low GP on sale of TMT Bars was disputed....