2021 (8) TMI 560

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....for hearing. 3. At the outset itself the Ld. AR Shri Miraj D. Shah pointed out that though the assessee has raised three grounds of appeal, ground Nos. 1 and 3 are general in nature which does not require any adjudication and the only relevant ground is ground No. 2, which is against the action of the Ld. CIT(A) in confirming the addition of Rs. 31,50,424/- out of manufacturing, selling and administrative expenses on ad hoc basis. 4. The brief facts as noted by the AO is that pursuant to the revisional order of the Ld. CIT u/s. 263 of the Income-tax Act, 1961 (hereinafter referred to as the "Act") interdicting the original assessment order passed u/s. 143(3) of the Act on 27.03.2014, the AO in the second round of assessment noted that the....

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....tion increased other expenses also increased when compared with that of the preceding years. Thus according to assessee, because of these factors manufacturing, selling and administrative expenses got increased in this relevant assessment year. However, this contention of the assessee was not found to be acceptable to the AO. Thereafter, through a chart has brought out as under: Particulars FY 2010-11 FY 2009-10 Increase in % Commission 2203534 479851 360% Delivery charges 22435777 7015761 220% Miscellaneous expenses 6865135 2854817 140% Total 31504446 10350429 204% Drawing attention to this chart, the AO observed that assessee could not explain the reason for sharp increase in the expenses on the aforesa....

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....substantial growth in sales turnover and income from other sources. However, according to the AO, the assessee has suffered losses which he asked the assessee to explain. Pursuant to the same, the assessee brought to the notice of the AO that the assessee had three units of which two are functioning from West Bengal and one from Raipur, Chhattisgarh. According to the assessee in the preceding AY 2010-11 the sales of its products took place in nearby areas of its units and, therefore, the transportation/delivery expenses incurred was less. However, in this relevant assessment year the assessee received sale orders from different parts of the country and, therefore, the goods had to be delivered at distant places which increased the cost of t....

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....ed the books of the assessee, he could not have estimated the disallowance. Per contra, the Ld. DR supported the action of the Ld. CIT(A) and contended that assessee could not furnish evidence in support of the higher expenses claimed to have been incurred though there was substantial increase in the manufacture and sales turnover. Therefore, the AO rightly disallowed 10% of expenses since assessee might have incurred personal expenses and therefore, Ld. CIT(A) has confirmed the same after finding that assessee failed to produce evidence for incurring of expenses. So, she does not want us to interfere in the order of the Ld. CIT(A). In his rejoinder, the Ld. AR submitted that though the Ld. CIT(A) has plenary and co-terminus powers as that ....