TaxTMI 
TaxTMI 
2021 (6) TMI 943
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.... on the facts of the case in confirming the application of section 145(3). The provision so invoked and confirmed by the CIT(A) being contrary to the provisions of law and facts, the same may kindly be quashed. Consequently, the trading addition partly confirmed by the ld. CIT(A) of Rs. 1,50,000/- may kindly be deleted in full. 2.2. Alternatively and without prejudice the above The ld. CIT(A) erred in law as well as on the facts of the case in partly confirming the trading addition upto Rs. 1,50,000/- out of Rs. 9,44,277/- made by the AO. The addition so made and partly confirmed by the CIT(A) being contrary to the provisions of law and facts, the same may kindly be deleted in full. 3. Rs. 1,02,656/-: The ld. CIT also erred in law as well as on the facts of the case in fully confirming the disallowances made by the AO out of the following expenses claimed by the assessee: S. No. Head of Expenses Expenses claimed by the assessee Disallowed by the ld. AO Disallowance (Rs.) 3.1 Telephone Expenses Rs. 1,34,874/- 10% of total expenses claimed i.e. Rs. 10,26,581/- 13,487/- 3.2 Travelling Expenses Rs. 1,15,898/- 11,589/-....
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.... made detail submissions before the Assessing Officer. However, the same has not been correctly appreciated by the Assessing Officer. It was submitted that the results declared by the assessee this year are much better in as much as the GP declared this year at 4.83% on sales of Rs. 53,20,85,035/- as against GP rate of 3.54% on sales of Rs. 62,51,07,501/- in the immediately preceding year. 7. It was submitted that similar issue have arisen in the case of the assessee for A.Y 2012-13 wherein the Tribunal vide its order dated 21.10.2019 in ITA No. 1305/JP/2018 has deleted the trading additions so made by the Assessing Officer for the reason that the variation in the yield ratio is very meager and in some of the cases, it is less than 1 %. It was submitted that this year also, fall in yield is negligible being below 1 % and GP declared this year at 4.83% is much better than the GP of 3.54% in earlier year. It was accordingly submitted that there is no basis to sustain the disallowance so made by the Assessing Officer and which has been partly confirmed by the ld. CIT(A). 8. Per contra, the ld. DR submitted that the books of accounts have been rightly rejected by the Assessing of....
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....under: "7.2. I have considered the assessment order, appellant's submissions and documents on record. The assessee had maintained the complete books of accounts along with various ledgers and journals. The purchase, sales and expenses were fully vouched & verifiable and these facts were also accepted by the AO. The AO had invoked the provisions of section 145(3) and issued a show cause notice after noticing discrepancies such as non maintenance of stock register, production registers, inward registers outward registers etc. but also considered the written submission of the appellant and had not rejected the books of account at all u/s 145(3). In a similar issue, The Hon'ble High Court, Rajasthan in the case of Malani Ramjivan Jagannath vs. ACIT 20T CTR (Raj) 19 held as under:- "In doing so, it had ignored all admitted facts in the face of which there about the sales and purchases, non maintenance of stock register lost its significance so far as arriving at GP rate is concerned." Further the Hon'ble ITAT, Jaipur in the case of Ambika textile Industries vs. DCIT held that huge trading addition can't be made without pointing any defect in th....
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....from his findings which read as under: "I have perused the record I find that there is slightly downfall in the yield shown by the appellant in this year as compare to the average of 3 years which is as under:- Item Average of 3 Year Yield This Year Yield Ground Nut Oil 27.89% 27.58% Mustard Oil 35.03% 34.80% The difference is Ground Nut Oil is 0.31% and difference in mustard seeds oil is 0.23%. The A/R argued that the yield difference is due to the quality of the seeds and the oil content therein largely depend upon rains. This year, there were lesser rain as compared to the preceding year and hence there is a minor fall. There are various other factors which affect the rate of yield however, to keep the same rate of yield every year is beyond human control. There is substance in the submission of the A/R that yield % depends on the quality of Ground Nut, Mustard Seeds and it cannot same in every year. The Gross profit of the appellant is better in this year as compare to the last year. The appellant this year declared GP rate of 4.83% on sales of Rs. 53,20,035/-. The Gross profit rate of this year is better as compare to the l....
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....and our reference was drawn to the findings of the Co-ordinate Bench which are contained at para 10 of its order which reads as under:- "10. We have heard the ld AR as well as the ld DR and considered the relevant material on record. The A.O. has disallowed 10% of the telephone expenses on the ground that the assessee did not maintain any call register and in absence thereof, personal element cannot be ruled out. Once the telephone expenses are verifiable from the telephone bills itself then this cannot be a case of unverifiable expenses. Further the personal element is only suspected by the A.O. and not found. Even otherwise, when the telephones are used in the business premises of the assessee and the expenses are verifiable from the telephone bills itself then the same cannot be disallowed on mere suspicion. Similarly, the travelling expenses were also disallowed as 10% on the ground of personal element. The A.O. has not doubted the expenditure incurred by the assessee and if the expenses are not found to be excessive having regard to the nature of business and volume of business of the assessee then such an ad hoc disallowance on personal element is n....
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....dly be deleted in full." 17. It was submitted that due to inadvertent mistake, this ground was not raised before the Tribunal at the time of filling memorandum appeal i.e. Form-36. This ground does not require any fresh investigation of facts in as much as the same are available on record. Per contra, the ld. DR objected to the raising of the additional ground of appeal. After hearing both the parties and considering the fact that the assessee has taken this ground before the ld. CIT(A) and therefore, emerging from the impugned order and all the relevant facts being available on record, the additional ground being raised is hereby admitted for necessary adjudication. 18. In this regard, the ld. AR submitted that the facts as noted by the AO are that in the Profit & Loss account, the assessee has claimed Rs. 28,76,659/- on account of commission payment to various persons against total turnover of Rs. 53,20,85,035/- which is 0.54% of the turnover. During the course of assessment proceeding, the relevant details have been obtained and from the details so submitted, it is observed that out of the total commission payment of Rs. 28,76,659/-, Rs. 24 Lacs have been paid to related p....
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....me persons, they are entering into agreement and negotiating rates of commission and terms of agreement only and this cannot be ignored. Accordingly, the addition made by the AO is hereby restricted to the tune of 15% i.e. Rs. 3,15,000/- appellant gets relief of Rs. 17,85,000/-. The ground is treated as partly allowed" The facts of this case are totally similar as decided by the CIT(A)-1 Jodhpur. In this case the commission are paid to the same persons and the service also rendered by the recipient. The total commission in this year is Rs. 28,76,659/- which is 0.54% of total turnover. In the last year the commission payment is Rs. 27,15,336/- which 0.43%. The Net profit in this year is 1.07% as compute to last year 0.87% which is better in this year. It is also a fact that members of an HUF can very well discharge the functions for their HUF. Here I am the view that the commission is an expenditure incurred solely and exclusively for the purpose of the business and fully allowable. Further there had been no loss of revenue as all the payees had already declared the said amount in their hands and paid tax accordingly. The objected that for entering into an agreement or cont....
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....o disallowances of Rs. 3,60,000/-. Pertinently however, he did not at all provide any basis of making disallowance of 15%. He did not bring the Fair Market Value on record. In case he found the claim to be excessive (although not alleged so) so as to invoked S.40A(2), unless this was done, no disallowance w.r.t. S.40A(2) could have been made as held in the case of Upper India Publishing House (P) Ltd. vs. CIT (1979) 117 ITR 0569 (SC) held as under: "Reference-Question of fact/Academic question-The question whether a particular expenditure on rent is excessive and unreasonable or not is essentially a question of fact-The other question as regards applicability of s. 40A(2)(a) becomes academic as the same cannot have any application unless it is first held that the expenditure on rent was excessive or unreasonable." In fact, a reading of the order of the ld. CIT(A) clearly shows that the disallowance has been partly sustained only due to suspicion but absolutely without any basis. 22. Per contra, the ld. DR relied on the finding of the lower authorities and submitted that similar disallowances have been made in the preceding assessment year 2012-13 as well and the ld C....