2018 (11) TMI 543

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....me-tax Act, 1961 [hereinafter referred to as 'the Act' for short]. 3. Briefly stated, the facts of the case are that the assessee is a trader of sarees and ladies dress material. During the course of assessment proceedings notices u/s 133(6) of the Act were sent to several parties which were sundry creditors from whom raw materials were purchased by the assessee for its manufacturing and trading activities. The Assessing Officer found that in the case of M/s Hoshiar Singh Suresh Chandra Sarees Pvt Ltd. though the notice was served but there was no compliance. The assessee was confronted with the result of the enquiries made u/s 133(6) of the Act. The assessee was once again given an opportunity to produce the party alongwith c....

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....ade purchases from various persons. There is no denying that one of the parties, namely, M/s Hoshiar Singh Suresh Chandra Sarees Pvt Ltd. could not be produced before the Assessing Officer. At the same time, it is an undisputed fact that notice u/s 133(6) of the Act was served upon the said party. Nothing prevented the Assessing Officer to issue summons u/s 131 of the Act to the said party. Be that as it may, I fail to understand how the provisions of section 41(1) of the Act apply on the facts of the case in hand. There is no question of cessation of liability and, therefore, the ld. CIT(A) grossly erred in confirming the addition under the said section. There is no finding by the Assessing Officer that the purchases were bogus and corresp....

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.... Rs. 21,12,731/-. 12. Before the ld. CIT(A), the assessee contended that the details and bills of expenses were produced but the ld. CIT(A) did not buy the same to be correct. However, the ld. CIT(A) was of the opinion that for the purpose of business, certain expenses must have been incurred by the assessee. Therefore, to test the reasonableness of the expenses, the ld. CIT(A) made the following working: Sale for A/Y 2007-08 2,77,00,870 Sale for A/Y 2006-07 2,83,74,544 Ratio 0.9762578     For AY 2007-08 For AY 2006-07 Proportionate Allowable exp. Difference Disallowance Advertisement expenditure 265823 351296 342955.4613 -77132.4613 0 Travelling Expenditure 198627 ....