TaxTMI 
TaxTMI 
TaxTMI 
2020 (5) TMI 231
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....count of disallowance of operating expenses. 3.For that on the facts and in the circumstances of the case, the Ld. C1T(A) grossly erred in confirming the addition of Rs. 9,27,919/- made by the A.O. on account of travelling expenses, which he ought to have allowed in entirety. 4.For that on the facts and in the circumstances of the case, the Ld. CIT(A) was not justified in confirming the addition of Rs. 3,35,960/- made by the A.O. under the head subscription and donation. 5.That the appellant craves leave to add, alter or delete all or any of the grounds of appeal. 3. Ground No. 1 raised by the assessee relates to addition made by the Assessing Officer of Rs. 1,75,00,000/- on account of alleged suppressed sales. 4. Brief facts qua the issue are that during the F.Y. 2013-14 relevant to A.Y. 2014-15 the assessee was engaged in the business of Iron ore (fibre) trade. The major portion of its trade was export of materials. The Assessing Officer noticed from the perusal of documents filed by the assessee that there is a discrepancy between the value of total sales as shown in audited profit & loss account and the value of total sales as shown in the month wise sales statement....
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.... (c) Vizag Rs. 9.06 cr 50 Rs. 102.70 cr Thus, the Assessing Officer made addition of Rs. 1.75 crores, being the difference between Rs. 102.70 cr - Rs. 100.95 cr. The ld. Counsel explained the difference of Rs. 1.75 crores as follows: (1) Assessee explained the reason for difference with supporting evidences, at assessment stage itself. Scanned copy for the A/R's explanation has been incorporated in the body of the assessment order (at page 6). (2) The assessee received advance of Rs. 1.75 cr. From M/s Bagadia Brothers (P) Ltd for supply of iron ore on 8.8.2013 but the said advance was returned back on 9.9.2013 without supply of materials. (3) The said amount was entered in the stock register for iron ore fines (Haldia) in the outward column by mistake. However, quantity column was left blank as no materials were supplied. [Ref: Stock register for iron ore fines (Haldia) for the month of August, 2013 at page 43]. (4) Thus, the higher total monthly figure of Rs. 4,27,79,500/- (August) was carried forward to the monthwise iron ore fines (Haldia) stock register (page 48 of P/B) thus inflating the overall figure by Rs. 1.75 cr. (5) The mistake wa....
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....as been inadvertently entered into the stock register and therefore it resulted into difference but if the said sum is excluded then there will not be any difference in the quantity of the stock register. The ld. D.R. has also fairly agreed with the reconciliation of stock submitted by the assessee, as noted above. Considering the explanation submitted by the assessee and taking into account the stock reconciliation statement, we note that there is no any suppressed sales, hence we delete the addition of Rs. 175,00,000/- 9. Ground no. 2 raised by the assessee relates to addition of Rs. 21,52,08,544/- made by the Assessing Officer on account of disallowance of operating expenses. 10. At the outset itself, the ld counsel for the assessee submitted the reconciliation and justification in respect of operating expenses which is reproduced below: Sl. No. Particulars Closing Stock Iron Ore (Rs.) Purchases (Rs.) 1. As per Audited Final Accounts a) 20,64,13,150 (c) 38,45,90,040 2. As per Assess's Submission b) 12,56,98,536 (d) 90,24,16,626 a) As per note 13 to the Final Accounts (page 21 of paper book) total value of closing stock is Rs. 22,65,24,747/....
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.... did not have any objection if the matter is remitted back to the file of Assessing Officer for fresh adjudication. We have heard both the parties and perused the material available on record. We note that one more opportunity should be given to the assessee to explain the above mentioned reconciliation of operating expenses and justification thereof. Therefore, we remit this matter back to the fie of the Assessing Officer with a direction to examine the reconciliation of operating expenses and adjudicate the issue in accordance to law. 11. Ground no. 3 raised by the assessee relates to addition of Rs. 9,27,919/- made by the Assessing Officer on account of travelling expenses which he ought to have allowed in entirety. 12.We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished. We note that AO made ad hoc disallowance of travelling expenses to the tune of Rs. 9,27,919/- .The ld. Counsel submitted that Assessing Officer framed assessment u/s 143(3) of the Act, therefore without rejecting books of accounts, the Ad hoc disallowance is not permitted. However, ld DR for the Revenue pointed out that....