2022 (2) TMI 978

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.... the file inasmuch as he was not justified to arbitrarily uphold the action of the Ld. Assessing Officer in disallowing a sum of Rs. 10,80,754/- being 6.5% out of Rs. 1,66,26,991/- paid as fabrication charges in cash on the alleged ground that some of the bills/vouchers are unverifiable." 3. Facts of the case, in brief, are that the assessee is a company engaged in the business of manufacturing, exporting and trading of hosiery/readymade goods. It filed its return of income on 23rd September, 2014 declaring a loss of Rs. 10,98,118/-. During the course of assessment proceedings, the AO noted that the assessee company has paid for job work amounting to Rs. 1,80,24,066/-. He asked the assessee to furnish complete details of such payment i.e.,....

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....ase in the year under reference the AO has examined the books of accounts and the AO has also given detailed reasoning with reference to additions made. The AO has further made an addition of only 6.5% of the total amount paid in cash, despite noticing concrete instances of defects in the bills produced by the appellant. The addition made by the AO is therefore reasonable and is upheld." 4. Aggrieved with such order of the CIT(A), the assessee is in appeal before the Tribunal. 5. The Ld. Counsel for the assessee submitted that no specific defect was pointed out by the AO and the addition was made on ad hoc basis which is not justified especially when the books of account are audited and the auditors have not pointed out any mistake. He su....

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....de by both the sides, perused the orders of the AO and the CIT(A) and the paper book filed on behalf of the assessee. We find, the AO, in the instant case, disallowed an amount of Rs. 10,80,754/- being 6.5% of the cash payment of Rs. 1,66,26,991 against the job work on account of glaring discrepancies in the fabrication charges for which cash payments were made. We find, the Ld. CIT(A) upheld the action of the AO, the reasons of which have already been reproduced in the preceding paragraph. We find, identical issue had come up before the Tribunal in assessee's own case for AY 2012-13 wherein the Ld. CIT(A) deleted the entire addition of Rs. 7,58,31,017/- which included an amount of Rs. 6,24,58,750/- paid in cash for fabrication work. We....

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.... Thus, for earning income, assessee shall have to incur expenses on fabrication charges. In the absence of any specific defect pointed-out in the maintenance of the books of account, there were no justification for the A.O. to disallow the entire amount of fabrication charges. The assessee has given a certificate in the paper book that all the documentary evidences were filed before A.O., which have not been rebutted through any evidence or material on record by the Revenue. The Ld. CIT(A) also verified the details and the books of account and came to the finding that the assessee has maintained proper books of account and that there are no violation of TDS provisions. The Ld. CIT(A) on proper appreciation of facts and verification of the r....