TaxTMI 
TaxTMI 
2023 (6) TMI 810
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.... v, Metachem Industries [2002] 245 ITR 160 (MP), hence, it is prayed that the addition and consequential enhancement to the total income may kindly be deleted. 2. On the facts and in the circumstances of the case, the Learned AO has erred on facts and in law in making disallowance of Rs. 11,54, 593/- on account of sales commission and the Learned CIT (Appeals)-2, Raipur is not justified in confirming the disallowance on account of extraneous reasons, hence, it is prayed that the disallowance made by the Learned AO and confirmed by the Learned CIT (Appeals)-2, Raipur may kindly be deleted. 3. The Appellant craves leave to add, amend, alter vary and or withdraw any or all the above grounds of Appeal." 3. Brief facts of the case are that the assessee derives income from running business of manufacturing, trading of refractory and other allied items, besides rendering services on commission basis and filed its return of income for the year under consideration on 28.11.2015 declaring a total income of Rs. 7,43,550/-. During the course of assessment proceedings, on being queried by the Ld AO, the assessee produced its books of accounts, written submissions were made ....
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....assessment by the AO, assessee preferred an appeal before the Ld CIT(A), wherein, Ld CIT(A) has discussed the issue and observed as under:- "8.3 I have gone through the facts and the submissions of the appellant. The AO has questioned the clarification in respect of commission. The appellant has contended that the work was done by these parties. It was stated that the payments have been made for the services of sales performed by these persons which are recorded in the respective ledgers. As per the assessee total sales of Rs 92.89 lakh has been made by these six persons for which they were paid the commission of Rs 11,54,593/- Ld AR has submitted sale bills. As per details filed, M/s AVN Steeltech has made sales to JSW Steels, Mukund Ld and Neclanchal Ispat Ltd. Total sales was Rs 53,35,000/-on which commission 7.5% has been paid. On going through the bills raised by JSW Steels, Mukund Ld and Neelanchal Ispat Ld the bills have been raised directly on the purchaser party and in none of the bills there is any mentioned of selling agent. The fact is similar in respect of other recipients of commission. Thus, the argument of the assessee is not backed by any documentary evide....
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.... is placed on following Page No. of the Paper Book 1 M/s. AVN Steel Tech Prop. Vivek Kr. Nigam AKRPN4794M 400,000.00 242 to 244 2 M/s. Swarz Enterprises (Prop. Sujit Zemse) AACPZ6674M 18,500.00 - 3 V.K. Shrivastava CGLPS4768Q 1,648.00 251 to 258 4 Aruna Lata Nigam AXRPN8596N 200,000.00 245 to 250 5 Vinita Shrivastava AVPPS0684Q 534445.00 259 to 265_ Total 1,154,593.00 The Return of Income filed by the aforesaid parties have been duly accepted by the Income Tax Department. 10.3 Moreover, the commission has been paid to the very same parties in the subsequent year which stands accepted, therefore, there is no reason to take an adverse view in the year under consideration, kind attention is invited to Page 234 to 235 and 239 to 240 of the paper book which is internal page No. 2, 3, 7 and 8 of the assessment order wherein name of the parties has been mentioned by the Learned AO in the assessment order to whom commission was paid from which it is discernible that commission was paid to the very same parties." 7.3 Arguing on the issue further, Ld AR of the a....
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....ew in this respect can be taken and thus the disallowance of commission expenses deserves to be upheld. 7.6 We have considered the rival submissions and perused the material available on record. Admittedly, as per the facts available on records the commission paid by the assessee to various parties was a practice of the trade of the assessee. Such commission was paid in the other assessment years also. Ld AO has made the addition, assigning the reason that the assessee was unable to substantiate its contention by not furnishing the evidence in support of the job performed by the service providers. Assessee has furnished information and evidence like ITR, Computation form 16A of the commission recipients. AO has not initiated or conducted any further enquiry from the beneficiaries concerned. Merely on the basis of information which was not available with the Ld AO regarding qualification and experience of service providers, since some of them are connected people to the assessee the disallowance was made. No specific finding / reasoning to the disallowance was commented by the Ld AO. Ld CIT(A) also have analysed the issue, only on the basis of fact that the bills raised on the bu....
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....sessee nor the creditors have written off the balances from their respective books ?". 3. Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified in deleting the addition of Rs. 11,50,000/-u/s, 68 of the Act , made by the AO who treated this entry also as the other two identical reimbursements which was treated as income by the assessee Firm itself, as income of the assessee?". 4. Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified in deleting the addition of Rs. 26,27,464/-, made by the AO who treated the stock purchased on 31.03.2015 i.e. on the last day of the financial year as suppressed closing stock due to lack of any entry regarding consumption or sale of the said stock and the closing stock did not include the said purchase?". 5. Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified in deleting the addition of Rs. 2,89,21,363.89/- received from Eco Master Beads India (P) LTD made by the AO who treated the advances received as suppressed income by categorically mentioning in the assessment order that the narration against th....
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.... and no loan was used for making investment. On the observation of Ld CIT(A), the Ld CITDR submitted that the decision is erroneous, devoid of merits, unlawful, thus, requested to reverse the order of Ld CIT(A) and to restore the addition made by the Ld AO. 11.1 In response, Ld. AR submitted a written synopsis on ground no 1 of the revenue, which reads as under: - 1. Ground No.1 of Revenue's Appeal directed against addition of Rs. 2,42,085/- u/s.14A. The assessee had no exempt income and sufficient own funds, hence, the disallowance u/s 14A is not sustainable. Reliance is placed on the following decisions: S. No. Case Law Issue / Held Remarks 1. South Indian Bank Ltd. vs. CIT (2021) 438 1TR 001 No disallowance u/s 14A when interest free own funds available with the assessee exceeds the investments. Hon'ble Supreme Court of India 2. Maxopp Investment Ltd. vs. CIT (2018) 402 ITR 0640 No exempt income then no disallowance u/s 14A. Hon'ble Supreme Court of India 3. PCIT vs. Oil Industries Development Board (2019) 262 Taxman 103 No exempt income then no disallowance u/s 14A. Hon'ble Supreme Court of India 4....
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....RPR/2016 dated 30.03.2022, wherein the finding of Tribunal is as under: "6. We have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions. As is discernible from the orders of the lower authorities, the Assessing Officer taking cognizance of the fact that the assessee had made investment of Rs. 1,29,24,000/- in unquoted shares of Chhattisgarh Captive Coal Mining Limited, a joint venture company, thus, called upon the assesee to explain as to why corresponding expenditures may not be disallowed by triggering the provisions of section 14A r.w.r.8D. As the reply filed by the assessee did not find favor with the Assessing Officer, therefore, he worked out the disallowance u/s.14A r.w.r.8D at Rs. 13,29,277/-. 7. Before us, it was submitted by the Ld. Authorized Representative (for short 'AR') that as the assessee has not earned any exempt dividend income during the year under consideration, therefore, no part of the expenditure in question could have be....
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....d by the Ld CIT(A). It was also a fact that there was no exempt income of the assessee during the relevant AY, therefore, disallowance u/s 14A r.w.r. 8D is not called for. After deliberating thoughtfully on the aforesaid issue in question, we find, that as stated by the Ld. AR, and rightly so, when the assessee company had admittedly not received any exempt income, which is apparent from the records, during the year under consideration, no disallowance u/s.14A could have been made in its hands. Ld CIT(A) has correctly dealt with the issue considering facts of the case and therefor the finding of the Ld CIT(A) on this issue needs no further interference. In the result Ground No 1 of the revenue in the instant appeal is dismissed. Ground No 2: Deleting the addition of Rs. 64,59,510/-u/s. 41(1) of the Act. 12. Ld CITDR, on this issue has submitted that the assessee was asked to file list of sundry creditors for last 3 years to examine the movement of the balances and genuineness of liability shown in its books of accounts. It was the observation of the ld. AO that as per the details provided by the assessee, six parties were found with very old balances and are casually continui....
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.... M/s Krishna Associates Main Market, New KhursiparBhilai, Durg (C.G.) 6 Shri Jitendra Shrivastava 248, Ward No.37, Balgovind Chowk,Gali No.l, Rajnandgaon Bansh Pal Para, Rajnandgaon-491441 2.3 The payments have been made to all the aforesaid creditors in the subsequent years through proper banking channel, details whereof are enclosed in the list placed on Page No. 37 to 80 of the Paper Book. 2.4 Thus the aforesaid liabilities did not cease to exist, in other words, there was no cessation or remission of the aforesaid creditors and therefore, the provisions of Section 41(1) do not apply. 2.5 Reliance is placed on following judicial pronouncements wherein it has been held that no addition u/s 41(1) is warranted if the creditor is appearing in the Balance sheet. S. No. Title Citation Authority 1. PCIT Vs. Batliboi Environmental Engineering Ltd. (2022) 6 NYPCTR 731 (Bom) Hon'ble High Court of Bombay 2. ACIT Vs. Popular Vehicles & Services Ltd. (2006) 5 SOT 739 (Coch) Hon'ble ITAT, COCHIN BENCH Nitin M. Panchamiya Vs. ACIT (2012) 148 TTJ (Mumbai) 96 Hon'ble ITAT, MUMBA Prayer: It is p....
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....n which, the benefit has been so obtained by him. However, in the case before us, we find that neither of the aforementioned mandatory conditions have been satisfied. Neither the A.O has been able to conclusively prove that the liabilities in question which the assessee company had projected as outstanding in its balance sheet had in fact ceased, nor has he given any cogent reason as to why the same was to be assessed in its hands during the year under consideration i.e. A.Y.2013-14. On the contrary, we find that the only reason given by the A.O was that the said respective liabilities had remained unpaid till 31.03.2014. We are unable to concur with the aforesaid observation of the A.O, as the same is seriously short of the preconditions which were indispensably required before giving the liabilities in question a color as that of "ceased liabilities", and much the less in the year under consideration. Neither is anything discernible from the orders of the lower authorities which would reveal that the liabilities in question had ceased, nor anything can be gathered therefrom as to on what basis the alleged remission or cessation of the liabilities in question were to be assessed d....
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....eting the addition made by the ld. AO. Under the factual matrix of the case and according to the settled legal position on the issue, we are in agreement and in concurrence with the judgment of the ld. CIT(A). In such a situation, since the matter has rightly adjudicated, also no material evidence against the contentions of the assessee were brought before us by the revenue, we do not see any reason to grant a verdict different from the decision observed by the ld. CIT(A), we therefore, have no hesitation to uphold the findings of the ld. CIT(A). In the result ground No. 2 of the revenue is dismissed. Ground No. 3: Deleting the addition of Rs. 11,50,000/- u/s 68 of the Act. 13. Apropos ground 3, Ld CIT-DR drawn our attention to para 5 on page 5 of the assessment order, wherein Ld AO has observed that there was a credit balance in the balance sheet of the asseseee, recorded under the head "Reimbursement for BG" for Rs. 11,50,000/-, explanation for the same were sought from the assessee, in response the assessee submitted that the amount was received from the party to whom they were rendering services and copy of ledger account has been filed. Taking into consideration the subm....
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.... 14.06.2014 Uco Bank, Bhilai 250000/- Steel Authority of India, Dugapur 2 02981GFIN000414 26.06.2014 25.06.2014 Uco Bank, Bhilai 200000/- Neelanchal ln\spat Nigam Limited, Bhubaneswar 3 0298IGFIN000214 07.04.2014 07.04.2014 Uco Bank, Bhilai 500000/- Steel Authority of India, Asansol 4 0298IGFIN000114 10.03.2014 10.03.2014 Uco Bank, Bhilai 200000/- SAIL A/c Alloys Steels Plant, Durgapur Total 1150000/- 3.3 The foreign company namely Refratechnik Steel GmbH transferred sum of Rs. 11,50,000/- to the assessee's bank account for the purposes of furnishing Bank Guarantee in the form of Fixed Deposit to the service receivers, accordingly, at the instance of Germany based company, the assessee got prepared fixed deposit receipt copy whereof is placed on Page No.83 to 99 of the paper Book, the aforesaid fixed deposits were kept as margin money for Bank Guarantee, copy of Bank Guarantee issued by the bank wherein name of foreign company is explicitly appearing is placed on Page No.99 of the paper Book. 3.4 Thus, there is a direct nexus between the....
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....2,00,000/- and Rs. 4,15,630/- were expenses incurred by the assessee in earlier year, debited to profit & loss account in earlier year. When recovered in this year, was credited as income in the P&L account. Nature of these amounts was different than that of Rs 11,50,000/-. Therefore, Ld CIT(A) has rightly concluded that the findings of assessing officer do not lead to any conclusion that the amount should be treated as assessees income and has deleted the addition. Thus, It is prayed that appeal filed by the Revenue may kindly be dismissed. 13.3 We have considered the rival submissions, perused the material evidence placed before us. Admittedly, the amount available in the credit side of balance sheet of the assessee shown as reimbursement of bank guarantee was reflecting the amount of bank guarantees extended to various parties as per the terms of agreement between the assessee as an agent and M/s Refratechnik GmbH as the principle. The ld. AO could not establish the fact that how and why the amount of the bank guarantees has to be treated as income of the assessee. The ld. CIT(A) has correctly appreciated the facts of the issues and deleted the addition. The revenue has reite....
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....osing stock by the ld. AO were made on behalf of the M/s Refratechnik, the ultimate buyer M/s Neelachal Ispat Nigam Ltd. has also issued a purchase order in favour of M/s Refratechnik, copy of the same was submitted in the paper book at page 107 to 112. The assessee has purchased the required material from M/s Gita Refractories which was directly send to M/s Neelachal Ispat Nigam Ltd., invoices of M/s Gita in favour of M/s NINL were placed at page 103 to 106 of paper book, date of the said invoice was in the month of January and February, 2015. Ld. AR further submitted that all the said purchases were debited to the account of Refratechnik, to substantiate this fact our attention was drawn on page 195 of the paper book consisting the copy of ledger account of the Refratechnik in the books of assessee. Against the contention of the department that the information furnished before ld. CIT(A) were submitted as additional evidence covered by provisions of rule 46A, ld. AR submitted that all the books of accounts, details and information were available before the ld. AO also, but ld. AO has decided the issue in haste without causing any further inquiry or further explanation from the as....
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....nd the same is evident also from the invoice issued by GRPL wherein the name of Refratechnik Steel GmbH is explicitly appearing, copy of invoice of GRPL is placed on Page No. 103 to 106 of the Paper Book. The scope of work was not limited merely supplying the product it was coupled with application of maintenance of ladle refractory on total refractory maintenance which was supplied by Refratechnik Steel GmbH. As a result, there was no stock and addition made was contrary to facts. Prayer: It is prayed that appeal filed by the Revenue may kindly be dismissed. 14.2 We have considered the submissions of the rival parties and perused the material available on record. The explanations advanced by the assessee before revenue authorities supported with information and evidence were found to be plausible, ld. CIT(A), who had analyzed the issue after considering all the material facts, therefore, in our considered view has substance to concur with. Ld. AO's observation was based on half facts which is evident from the observation of the ld. CIT(A) while deciding this issue that in the ensuing year the explanation for the similar transaction has been accepted by the revenue, thu....
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....t can't be advance. As observed above, instead of including the receipt in income, the assessee had shown the same as 'Advance'. The entire amount shown as 'Advance' should have been declared as receipts in the Profit & Loss account. 8. Similarly, in the account of Refratechnik Gmbh Reimb (Advance), several payments were received in foreign currency and in odd figures. The entries appearing on 18/12/2014 & 27/01/2015 of Rs 21.05 lakhs, 1.32 lakhs and 7.03 lakhs bear the narration as "agst commission on export import". It proves that the invoice value which was received against some liaisoning work and clearly should have been formed part of business receipts and nothing else. The narration clearly shows that the assessee has received the commission income. Total of such commission receipts are Rs. 1,08,95,414/-. The assessee firm had neither shown this as sales/receipts nor was it shown against work in progress in audited financial statements. All the details called for were deliberately denied. It is a case of apparent suppression of receipts and resulting concealment of income to the tune total of Rs. 3,98,16,777/- (Rs. 2,89,21,363.89 and Rs. 1,08,95,....
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....nst the assesee. Ld. CIT(A) has dealt with the issue in exhaustive and justified manner, understand the transactions, accounting treatment and analyzed the same in light of the supporting evidences, therefore, has rightly deleted the addition. The ld. AR also submitted a written submission on the issue, extracted as under:- Ground No.5 of Revenues Appeal directed against addition of Rs. 2,89,21,363.89 as appearing in the Balance sheet of the assessee as advance against party holding the same as income of the assessee. 5.1 The assessee and a South Korea based company namely M/s Ecomaister Co. Ltd. (ECL) had entered into Research and Development Agreement on 20.09.2014 whereby it was decided to collaborate for developing a new technologies project. The project pertains to certain research and development over a newly developed quick hardening cement formula, copy whereof is placed on Page No.117 to 123 of the Paper Book, kind attention is invited to Clause 1.6 of the said agreement on page No.118 of the Paper Book wherein the purpose of remittance has been clearly spelt out. 5.2 It is discernible from the said clause in the agreement that the purpose was fu....
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....ind attention is invited to Clause 3.6 of the said agreement which is placed on Page No.119 of the paper Book from which it is discernable that there was no element of income in the impugned sum of Rs. 289.21 Lacs inasmuch as it was neither any compensation nor any consideration. Kind attention is invited to Clause-8 of the said agreement which deals with advance payment terms which is placed on Page No.121 of the paper Book. 5.7 The inference drawn by the Learned AO is contrary to the documentary evidences on record in the form of aforesaid agreement between the assessee and ECL which unequivocally establishes that the sum of Rs. 289.21 Lacs received by the assessee was held as liability and did not constitute income at all in the hands of the assessee. 5.8 Assessee is regularly following Mercantile system of accounting. Income has to be completed u/s 28 with reference to Section 145 of the Income Tax Act, Reliance is placed on the following decision:- s. No. Title Citation Authority 1. Atharva Rainbow Infratech vs. DCIT-l(l), Raipur ITA No. 177/RPR/2016 dated 01.04.2022 Hon'ble ITAT, Raipur Bench 5.9 Moreover, there is nothing on....
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....er the faceless assessment scheme wherein the assessee was asked to discharge the onus u/s 68 in respect of sum of Rs. 289.21 appearing in the balance sheet of the assessee as advance from ECL and sum of Rs. 14,73,484/- appearing in the Balance Sheet against M/s Refratechnik Steel GmbH, copy of the notice u/s 142(1) dated 31.12.2020 issued by the Learned AO during scrutiny assessment for A.Y 2018-19 is placed on Page No. 179 to 180 of the paper book, the assessee had furnished detailed explanation vide reply dated 14.01.2021 the explanation given by the assessee in respect of sum of Rs. 289.21 Lacs and sum of Rs. 14.73 Lacs was duly accepted and no adverse inference was drawn under the faceless assessment completed u/s 143(3) vide order dated 19.03.2021 for A.Y 2018-19, copy of the assessment order passed and u/s 143(3) for A.Y 2018-19 is placed on Page No. 181 to 184 of the paper book, kind attention is invited to para 3 of the said order which is placed on page No. 182 to 183 of the paper book equivalent to internal page number 2 of the assessment order where in the Learned AO has specifically mentioned about the sum of Rs. 289.21 Lacs received from ECL and outstanding balance of....
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..... Ld. AR in furtherance of the arguments has drawn our attention to para 1.6 of the agreement placed at page 118 of the paper book, which reads as under: "1.6 Remittance: Remittance will for the purpose of this agreement shall be the sum of money given in foreign exchange by the sponsor to the recipient against furthering the research and development of product in India. The origin country of remittance shall for the purpose of this agreement will not be the same as its destination." 15.4 The ld. AR has further submitted correspondence received from Ecomaister and also the confirmation, to substantiate that money was received for R&D work and the amount was liable to be returned to Ecomaister, if it was not utilized towards R&D. (such confirmation and correspondence were placed at page 131 to 134 of the paper book). It was also the submission of the ld. AR that the amount so received from Ecomaister was further paid to another company namely M/s Pragati Construction for carrying out the R&D work, the report submitted by M/s Pragati Construction was accepted by M/s Ecomaister and therefore, there is no reason for considering the amount received by the assessee to be trea....
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....w technology of quick hardening cement manufacturing unit to be manufactured from the used product by product from steel manufacturing process. Such by-products are procured from ladle furnace of steel plant. Unlike the traditional cement which takes several days to set this new product will set in few hours as per clause 3.1 of the agreement with M/s. Echomaister Co. Limited, South Korea. The advance so received by the assessee will be used by the assessee in development of this product. Assessee furnished complete details viz., copy of ledger account, complete address, phone numbers and details when supply was made to them in subsequent year or when the balances were liquidated. In response, the assessee filed only copy of ledger account of M/s. Ecomaister Co. Ltd, and M/s. Refratechnik: Steel GMBH Reimbursement (Advance). The ledger account showed that an amount of Rs. 2,89,21,364/- was received from M/s. Ecomaister Co. Ltd. The assessee firm had invested an amount of Rs 2.77 Crores in its shares and one of the partners of the assessee firm is Managing Director of the said company. Thus, it is a group company of the assessee firm. The narration against entry dated 27.1.2015 read....
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....fore or after the effective date." As per this agreement did. 20.09.2014 the assessee has received advances on 27.1.2015 and on 25.02.2015 totaling to Rs 2,89,21,364/-, This was grouped and accounted for the head current liabilities at "Advance from party" in the financials Copy of the Foreign Inward Remittance Certificates (FIRC) issued by the Authorized Dealer (AD Banker) HDFC is enclosed and the purpose of remittance as mentioned therein is: "Expenses for setting up technical equipments for demonstrating new technology". From this it is evident that the amounts were received for expenses to be incurred on their behalf for demonstrating a new technology and not received as income for supply of products. The assessee had ultimately made agreement with another concern M/s. Pragati Infratech Pvt. Ltd, Bhilai on 01.06.2018 on behalf of M/s. Ecomaister Co. Ltd. as per the agreed terins and conditions to develop the product and various correspondence and discussion made from time to time. M/s. Pragati Infratech Co. Pvt. Ltd, Bhilai has finally developed product design and technical knowhow and trail production have been accepted by M/s. Ecomaister Co. Ltd. The Id. AO has quest....
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....d expenses on behalf of that company. As per agreement dated 15.12.2009 the assessee will offer to M/s. Refratechnik Steel GMBH the products for sale at the best obtainable market price. The amount was paid to the assessee for supply of material to M/s. NINL as payment to directors vide agreement dated 15.12.2009 between assessee and M/s. Refratechnik Steel GMBH. The assessee was entrusted with distribution of products. The assessee has paid an amount of Rs. 85,68,312/- towards coast of material supplied to M/s. NINL and Rs. 11.5 lakhs as Bank Guarantee and FDR with banker. When the amount was received as advance for material and services the AO's conclusion that the amount is concealed income as there was no sale is misplaced. Assessee has furnished copies of FIRC (Foreign Inward Remittance Certificate) issued by the Bank HDFC. In the next asst. year 2016-17 the assessee has started receiving commission income from this company and has credited an amount of Rs. 25,39,867/- as income from this project. In view of these facts there is no doubt that the amount received from Refratechnik was advance for -expenses to be incurred in execution of work as per agreement executed with t....
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....- 01.04.2014 5,00,000/- 04.07.2014 2,50,000/- 04.07.2014 2,00,000/- 11,50,000/- Reimbursement against expenses incurred during the F.Y 2014-15 by the assessee on behalf of Refratechnik Steel GmbH for JSPL 11,77,102/- 85,68,312/- 6.3 It is submitted that the entire amount of Rs. 85,68,312/- was utilized by the assessee in its capacity as agent towards purchase of material and contractors payment for lining charges on behalf of Refratechnik Steel GmbH which was supplied to NINL, the ledger account of Refratechnik Steel GmbH in the books of accounts of the assessee is placed on Page No. 193 to 197 of the Paper Book. 6.4 To conclude the entire amount of Rs. 108.95 was received by the assessee towards reimbursement and as such did not have any element of income and therefore, the question of recognizing the same as income did not arise. The assessee had received commission income of Rs. 46,24,959/- from the said Refratechnik Steel GmbH in the F.Y 2015-16, copy of ledger account of Refratechnik Steel GmbH from the books of accounts ....
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....aper book consisting of ledger account of the Refratechnik GmbH Reimb. (Advance) for the F.Ys 2014-15 and 2015-16. Out of the impugned amount received as advanced a sum of Rs. 26,27,424/- was paid to Gita Refractories towards purchases on behalf of Refratechnik. It is submitted that, The assessee was acting as an agent of the Refratechnik and has not made any amount by supply or services. FIRC (Foreign Inward Remittance Certificate) was misinterpreted by the ld. AO since there was a common purpose available for remittances pertaining to services, reimbursement and commission etc., thus, without any cogent evidence the AO was not justified in treating the receipt as income. It was the submission that nature of receipt is also proved as advance as the assessee has adjusted a sum of Rs. 11,50,000/- against the bank guarantees issued on behalf of Refratechnik and Rs. 11,77,102/- were incurred as expenses on behalf of Refratechnik, etc. The ld. AR further submitted that the assessee has received an amount of Rs. 74,34,697/- from Refratechnik in assessment year 2016-17 and the same was also shown as advanced and not as income, the same was duly accepted in the scrutiny assessment by the ....
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....as under: "10. As per ITS information received from Export-Import Summary of Central Board of Excise and Customs import transactions were made in the name of Smt. Sapna Shrivastava under PAN BOHPS1607F the invoice value of all four transactions was Rs. 23,51,987/- whereas the post assessment assessable value was Rs. 27,03,786/-. In the course of assessment proceedings in the case of Smt. Sapna Shrivastava, Partner, the assessee has explained that it has made purchases and IEC name was of the firm but PAN of Partner Smt. Sapna Shrivastava was used as the firm was earlier her proprietary concern. The details of foreign purchases were shown in the case of firm at Rs. 26,55,892/-. Therefore, the difference between the post assessment assessable value of Rs. 27,03,786/- as per ITS information and the value shown by assessee at Rs. 26,55,892/- is added at Rs. 47,894/- to the total income as unexplained investment u/s 69 of the Act and subjected to tax u/s 115BBE of the Act." 16.1 LD AR made written submission on ground no 7 of the revenue, which reads as follows: 7. Ground No.7 of Revenues Appeal is directed against addition of Rs. 47,894/- by invoking Section 69 in ....
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....07.2014, Rs. 40,000/- to Shri Santosh for making payment to some Shri Sameer Patra on 14.11.2014, Rs. 25,000/- to Shri Santosh on 19.01.2014. Looking the nature of expenses and mode of payment, which are more of personal and non-business nature or payment of kickbacks, the entire claim is apparently not allowable. Therefore, after considering the facts and of Rs. 2,0 circumstances of the case, an amount of Rs. 2,00,000/- is disallowed on estimate basis and added to the total income being not relatable to business purposes." 17.1 LD AR on the other hand has made written submission on ground no 8 of the revenue, which reads as follows: 8. Ground No.8 of Revenues Appeal directed against disallowance of Rs. 2,00,000/- on adhoc basis under the head Business Promotion expenses. 8.1 The Learned AO has made adhoc disallowance without pointing out any specific instance of non business expenditure incurred by the assessee which was debited to Profit and Loss Account and since the book results have been rejected and books of account have undisputedly been accepted as correct, therefore, the action of the Learned AO in resorting to adhoc disallowance of expenses is self-co....