TaxTMI 
TaxTMI 
TaxTMI 
2017 (7) TMI 1163
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....see in the present case is a partnership firm which is engaged in the business of galvanizing iron goods on labour job basis. The return of income for the year under consideration was filed by it on 29.09.201 declaring a total income of Rs. 9,62,727/-. In the Profit & Loss Account filed along with the said return, a sum of Rs. 3,15,44,707/- was debited by the assessee on account of "Consumable Stores". During the course of assessment proceeding, the claim of the assessee for expenses on consumable stores was examined by the AO. On such examination, he found that the expenses claimed by the assessee on consumable stores were about 69% of the total job charges while in the two comparable cases situated in the same locality namely M/s. Shree K....
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....nace of this case is run by coal & not by oil. Whereas the furnace of the assessee and the other two cases relied upon by me is run by oil. So, the ratio of the cases as relied upon by the assessee is not acceptable. The assessee could not point out any case where furnace is run by oil and percentage of consumable is nearly 69% on job charges. Thus assessee has failed to substantiate his huge claim of about 69% on job charges expenses in form of consumable by referring to a single case. 2. As regards to engineers certificate as discussed earlier it is to be noted that such engineer is not a production expert engineer. He has no expertise knowledge in production. He is an expert setting up of a plant only. 3. The case referred to by th....
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.... disallowance of Rs. 85,77,008/- made by the AO to Rs. 9,02,843/- for the following reasons given in his impugned order. "I have gone through the submission made by the appellant vide letter dated 25.08.2014. It is seen that the A.O. has not pointed out any fault in the books of accounts. The A.O. also not pointed out any bogus claims of expenses against any item. In fact, he has not conducted any enquiry to ascertain the genuineness of expenses contained in consumption of consumables or other items of expenses. If he thought that the excess claim or unreasonable expenses or bogus expenses have been claimed then there was a need to enquire into and decision should have been bases on the findings of the relevant enquiries. But the A.O. has....
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....- (excluding partner's salary) is 25.27% of the turnover, which in my view is extremely high. In my view, the A.O. has no material to reject the book profit shown by the Appellant. Consumption of oil or coal may depend on various factors like technical, operational or commercial. Without rejecting the books of accounts, it is not permissible for the A.O. to be guided by net profit or gross profit margin of some other businessmen. It is only when the books are rejected that the A.O. gets the authority or has the option of using G.P. or N.P. from some other source in similar circumstances. The A.O. has not been able to demonstrate. If Shrikrishna Engineering and Md. Mohiuddin are identically placed. Therefore, this addition cannot be sustaine....
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....preciating the specific adverse findings recorded by the AO in the assessment order. He also contended that no basis whatsoever has been given by the Ld. CIT (A) for the disallowance to the extent of 2% sustained by him on account of consumable stores. 7. The learned counsel for the assessee on the other hand submitted that the books of accounts regularly maintained by the assessee were neither rejected by the AO nor any material or specific defects were pointed out by him in the bills and vouchers maintained by the assessee in support of its claim for expenses on account of consumable stores. He invited our attention to the comparative details given at page 21 of his Paper Book to show that the expenses claimed by the assessee on consumab....
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....claimed on consumables were nearly 65% of the job charges earned. A certificate issued by a Plant Engineer was also filed by the assessee to show that the percentage of consumable expenses in the industry of assessee's type was 75 to 80%. As rightly contended by the learned counsel for the assessee, it appears that the Assessing Officer however brushed aside all these submissions made by the assessee to justify the consumable expenses of 69% claimed by it and disallowed the same to the extent of 19% point. The Ld. CIT(A) however appreciated all these relevant aspects of the case in the right perspective and also considered the past result of the assessee's case for the immediately succeeding two years wherein the consumable expenses claimed....