TaxTMI 
TaxTMI 
2019 (10) TMI 1116
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....ome Tax Act, 1961 (herein- after referred to as "the Act") dated 22/03/2013 relevant to Assessment Year (AY) 2010-11. The assessee has raised the following grounds of appeal: 1 The Ld.CIT(A) erred on facts and in law in confirming disallowance of Rs. 5,47,863/- in respect of purchase of diesel and oil from Ashapura Petroleum- Lakhtar without appreciating the explanations and submission of the appellant in right perspective. 2 The Id CIT(Appeals) erred on facts and in law in confirming disallowance of Rs. 2,01,054/- in respect of purchases made from JP Stone Crusher P Ltd. without appreciating the explanations and submissions of the appellant in right perspective. The 1st issue raised by the assessee is that learned C....
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....arch 2010 to 29th of March 2010. ii. The photocopies of the bills filed by the assessee were tempered. There was overwriting and correction on the bills. iii. The assessee did not file the original bills. 3.2 The assessee in his rejoinder before the learned CIT (A) submitted that the diesel and the oil expenses were directly incurred in connection with the "LAKHTAR project". It has declared a contract receipt of Rs. 54,35,091.00 and the closing work in progress of Rs. 69,41,752.00 in respect of such project which was duly accepted by the Revenue. Under the "LAKHTAR project", it was constructing the canal wherein the digging and the removing of sand was done by using the tractors. 3.3 It was purchasing the di....
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....n the subsequent assessment years. 5. On the contrary the learned DR before us vehemently supported the order of the authorities below. 6. We have heard the rival contentions and perused the materials available on record. The facts of the case are not in dispute. Therefore we are not inclined to repeat the same for the sake of brevity and convenience. 6.1 From the preceding discussion, we note that the activity of the assessee under the"LAKHTAR project" was to construct the canal which certainly requires digging and removal of the sand from the earth. Essentially for this activity, the assessee has to use machinery and vehicles for the transportation of the sand. This fact was not disputed by the authorities below. 6.2 Similarly....
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....s. 48,268.00 b. Manilal Gordhandas Patel Rs. 1,70,844.00 c. Babubhai Prabhudas Patel Rs. 40,854.00 d. closing stock 61,154.00 3,21,120.00 Balance claimed in the profit and loss account 2,26,743.00 6.6 However, the AO has made the disallowance of Rs. 5,47,863.00, which appears incorrect amount of disallowance in the given facts and circumstances. Thus, in case the amount of diesel and oil expenses needs to be disallowed, then at the most it can be disallowed to the extent of 2,26,743.00 only. 6.7 The next question arises if the assessee is claiming the reimbursement of the diesel and oil expenses from the parties, then there is no question of charging the same in the profit and....
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....e year under consideration has claimed to have purchased the materials from JPSCPL amounting to Rs. 22,60,400.00 only. The AO during the assessment proceedings to verify the genuineness of the purchases from JPSCPL issued a notice under section 133(6) of the Act, but there was no response. Accordingly, the AO treated the same as bogus expenses and added to the total income of the assessee. 8. The aggrieved assessee preferred an appeal to learned CIT-A. The assessee before the learned CIT (A) filed the additional evidence under rule 46A of Income Tax Rule. Accordingly, the learned CIT (A) called for the Remand report from the AO who in turn submitted that the party, i.e. JPSCPL has shown corresponding sales in its books of accounts for Rs....
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....s below. iii. The assessee made the payment to JPSCPL in the course of the business. In view of the above, even the amount of rupees 2,01,054.00 is treated as an advance to JPSCPL; the assessee is entitled to write it off in the books of accounts if it becomes irrecoverable as it is arising in the course of the business. As the assessee has not shown the amount as an advance in its books of accounts, therefore it can be inferred that it has been written off by the assessee in the year under consideration. 12.2 In addition to the above, we are of the view that the disallowance cannot be made for the expenses claimed by the assessee merely on the ground that the other party has shown liability in its books of accounts. The trea....