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2019 (10) TMI 1168

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..... CIT(A) has erred in confirming addition of Rs. 20,200/- being Gross Profit on alleged short stock of Rs. 5,64,441/-. 5. That on the facts and circumstances of the case, the Ld. CIT(A) has erred in confirming disallowance of Rs. 2,86,000/- out of salary paid by assessee. 6. That the appellant craves leave to add, amend or delete any of the grounds of appeal before the same is finally heard & disposed off. 3. Ground No. 1 and 6 are general in nature, so do not require any comments on our part. 4. Vide Ground No. 2 the grievance of the assessee relates to the sustenance of addition of Rs. 60,000/- on account of foreign tour expenses and Vide Ground No. 3 the grievance of the assessee relates to the confirmation of addition of Rs. 1,56,960/- on account of household expenses. As regards to these two issues the Ld. Counsel for the Assessee furnished the additional evidences under Rule 29 of the ITAT Rules 1963 and also submitted that the similar evidence were furnished in the preceding Assessment Year 2015-16 which was a subject matter of the Assessee's Appeal in ITA No. 1488/Chd/2018, and that the identical issues were raised in the said year. It was further submitted that this ....

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....ower authorities are hereby set aside and the matter is restored to the file of the Assessing Officer to decide the issue afresh. The Assessing Officer will consider the evidence so furnished by the assessee. Needless to say that the assessee will promptly appear before the Assessing Officer, as and when called for, and will not contribute in delaying the proceedings." So respectfully following the aforesaid referred to order dt. 30/09/2019, these two issues relating to foreign tour expenses and household expenses are restored to the file of the A.O. for a fresh adjudication as has been directed for the A.Y. 2015-16. 7. Vide Ground No. 4 the grievance of the assessee relates to the confirmation of addition of Rs. 20,200/- on account of Gross Profit on alleged short stock. 8. Facts related to this issue in brief are that the A.O. during the course of assessment proceedings, pointed out that during the course of search on physical verification the stock was found at Rs. 41,70,465/- whereas as per the books of accounts it was at Rs. 47,35,406/-, so, there was shortage of Rs. 5,64,441/-. He asked the assessee to show cause as to why the difference may not be treated on account of ....

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.... the help of employees by considering the number of sheets in the heaps lying in the godown in round figures. The details of inventory prepared itself shows that the stock taking were defected and the sheets have been inventorised by number and it is very difficult for survey party to count the number of sheets in the heap as the sheet are 0.25mm to 0.65mm, which is just like a blade and it is difficult to count at a glance. Further the rates of the purchases have been taken in round figures only, which is again not possible which shows the inventory was defective and should not have been relied upon by the Ld. A.O. Hence on the basis of estimation of stock no shortage can be worked out to make addition by applying G.P. Rate and that too without rejecting the books of account infact, there was no shortage of stock, the Ld. A.O. has wrongly made addition as the stocks cannot be worked out by applying G.P. Rate. It is the actual stock as per physical count which can only be considered. But it has not been done and the method has been wrongly applied. 10. The Ld. CIT(A) however confirmed the addition made by the A.O. by observing that the shortage of stock had been worked out by the ....

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.... was stated that there were two employees namely Shri Manish Sharma and Shri Chaman drawing salary of Rs. 6,500/- and Rs. 5,000/- respectively per month. The A.O. asked the assessee to show cause as to why excess salary debited may not be disallowed. The explanation of the assessee before the A.O. was as under: "It is respectfully submitted that the assessee has four employees and at the time of search in the morning only two employees were present. The other two employees were not allowed to enter the premises after the commencement of search. The details of salary are enclosed herewith and there is no cause for any disallowance of Rs. 2,41,000/- as proposed by you." 17. However, the A.O. was of the view that the explanation of the Assessee was an afterthought and that no other evidence like wages register, or attendance register was produced. He also pointed out that Shri Chaman had joined recently. He, accepted the salary paid to him for three months amounting to Rs. 15,000/-. The A.O. also pointed out that the salary of Rs. 78,000/- was paid to Shri Manish Sharma. He, therefore allowed salary of Rs. 93,000/- ( Rs. 15000 + Rs. 78000 ) out of total salary of Rs. 3,79,000/- and....