TaxTMI 
TaxTMI 
2023 (7) TMI 1144
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....r assessment year 1997- 98. 3. The Department has raised the following grounds of appeal:- "1. The Ld. CIT(A) has erred in admitting additional evidence, without subjecting it to the test of Rule 46A. 2. The Ld.CIT(A) has erred in law and on facts in deleting the addition of Rs. 22,49,990/- as unexplained investment in capital assets, without properly appreciating the facts of the case and the material brought on record. 3. The Ld.CIT(A) has erred in law and on facts in deleting the disallowance of Rs. 16,97,925/- made by the AO on account of without properly appreciating the facts of the case and the material brought on record. 4. The Ld.CIT(A) has erred in law and on facts in deleting the disallowance of Rs. 15,09,258/- made by the AO on account of provision of various expenses, without properly appreciating the facts of the case and the material brought on record. 5. The Ld.CIT(A) has erred in law and on facts in deleting the disallowance of Rs. 23,83,022/- made by the AO on account of interest payments, without properly appreciating the facts of the case and the material brought on record. 6. The Ld.CIT(A) has erred in la....
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....ned investment in capital assets on the ground that the assessee has not been able to prove that investments in the said asset have in fact been made and source thereof has also not been explained. 8. In appeal, ld. CIT(A) allowed the appeal of the assessee primarily on the ground that the Assessing Officer has not found any defects in the books of accounts and in the assessee's books, auditors have not mentioned any adverse comment in the audit report. 9. Before us, the ld. Departmental Representative submitted that from the perusal of the order passed by ld. CIT(A), it is evident that there is no basis for allowing the appeal of the assessee with respect to this ground of appeal. In response, the counsel for the assessee relied upon the observations made by the ld. CIT(A) in the appellate order. 10. Before deciding the issue, it would be useful to produce the relevant extracts of the order passed by ld. CIT(A) for reference. "9.2.1 Regarding the addition of Rs. 22,49,990/- as unexplained investment in capital assets, the correct figure is Rs. 11,78,831/- and not Rs. 22,49,990/- as mentioned by the AO. These assets have been shown in regular books of accounts of ....
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....ny bank statement reflecting that the aforesaid payment was made to the lessor. Though, copies of lease deeds have been furnished and cheque details have also been furnished on plain paper, and it has been further submitted that all payments towards lease rents were paid through banking channels, however, the assessee has not been able to produce copies of bank statement evidencing that the payments have in fact been made to the lessor. Since the assessee has not been able to furnish copy of bank statement to substantiate that lease payments have been made to the lessor, the addition is liable to be sustained. 16. In the result, ground no. 3 of the Department's appeal is allowed. Ground No. 4 (Ld. CIT(A) erred in deleting the disallowance of Rs. 15,09,258/- on account of provision for various expenses) 17. The brief facts in relation to this ground of appeal are that the assessee had made provision for various expenses amounting go Rs. 15,64,126/- and the Assessing Officer had disallowed the entire provision of Rs. 15,64,126/- in the assessment order. 18. In appeal, the ld. CIT(A) substantially allowed the appeal of the assessee and gave relief to the assessee to the ex....
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....e the same cannot be disallowed once the learned A.O. has not found any defects in books of account and similarly auditors have also not pointed out any anomalies. The addition is deleted and the assessee gets relief of Rs. 9,88,622/-." 23. On going though the records of the case, we observe that the aforesaid amount was disallowed by the Assessing Officer on specific ground that no documentary evidence has been filed by the assessee in support of the claim. Further, from perusal of the order passed by ld. CIT(A), it is observed that ld. CIT(A) has not given any basis whatsoever for allowing the assessee's appeal with respect to provision for power expenses amounting to Rs. 9,88,622/-. Accordingly, in the light of the above facts, the relief allowed by the CIT(A) with respect to unpaid power bills is directed to be set aside, since the assessee has failed to produce any evidence to substantiate the claim. 24. In the result, ground no. 4 of Department's appeal is partly allowed. Ground No. 5 (Ld. CIT(A) erred in deleting disallowance of Rs. 23,83,022/- on account of interest payments) 25. The brief facts relating to this ground of appeal are that during the course of ass....
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.... filed any documentary evidence giving details of communication address of the parties to whom interest was paid nor were any details filed as evidence to show actual payment of interest to the aforesaid three parties. Accordingly, looking into the instant facts of the case, the relief granted by the ld. CIT(A) to the assessee with respect to this ground of appeal is directed to be set aside. 29. In the result, ground no. 5 of Department's appeal is allowed. Ground No. 6 (ld. CIT(A) erred in deleting disallowance of Rs. 50,44,504/- on account of stock difference) 30. The brief facts in relation to this ground of appeal are that during the course of assessment, the assessee was asked to explain its stock difference amounting to Rs. 50,44,504/- debited to the profit and loss account. However, in absence of any reply by the assessee, the Assessing Officer made an addition of the aforesaid amount and added the same to the total income of the assessee. 31. In appeal, the counsel for the assessee submitted that the assessee has prepared its profit and loss account in horizontal format. Under this format, as per the accepted norms of disclosure, the opening and closing stock i....
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....course of assessment, the Assessing Officer observed that the assessee had claimed bank interest expenses amounting to Rs. 1,15,75,698/-. However, the Assessing Officer added the above sum on the ground that the assessee gave no explanation for obtaining the loan or the utilization of aforesaid fund. 36. In appeal, the assessee submitted that it had paid interest to banks on various credit facilities as per copes of bank statement submitted to the Assessing Officer during the course of assessment proceedings. It was submitted that these bank accounts are not new loans and that they are continuing from earlier years. Further, it was submitted that the Assessing Officer has not made any adverse observation to the effect that the bank loans taken by the assessee are non-genuine. Accordingly, the assessee is eligible for deduction of bank interest expenses. Accordingly, the CIT(A) allowed the appeal of the assessee with respect to this ground of appeal with the following observations:- "19.2 I have carefully considered submission of the appellant as well as the observation of the A.O. From the audited Balance sheet schedule 3 (Page No. 122 of Paper Book) it is seen that ass....
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....ly the Assessing Officer disallowed claim of depreciation amounting to Rs. 1,14,211/- and added the same to the total income of the assessee 42. In appeal, the ld. CIT(A) confirmed the addition on the ground that assessee could not prove the use of these assets for business purpose. 43. Before us, the counsel or the assessee invited our attention to pages 20-24 of the paper book giving details of addition to fixed assets. The counsel for the assessee submitted that primarily depreciation has been claimed on purchase of new vehicle during the impugned assessment year. Accordingly, it was submitted that ld. CIT(A) erred in confirming the addition without appreciating the facts placed on record. 44. On going through the details placed on record, we are of the considered view that the assessee is eligible for claim of depreciation in respect of new vehicle purchased during the year under consideration. The details of additions to fixed assets, along with supporting evidence have also been placed on record before us. 45. In the result, ground no. 1(i) of assessee's cross objection is allowed. Ground No. 1(ii) Disallowance out of prior period item (n Rs. 54,868/-) 46. T....
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....oss was in respect of bank guarantee furnished by the assessee in respect of purchase contract with a Singapore party. The assessee drew our attention to page 99 of the paper book in which details of foreign fluctuation have been explained. 52. On going through the records of the case, we observe that the assessee has not furnished any supporting details viz. copy of bank guarantee, copy of purchase contract with Singapore party etc. to substantiate the claim of foreign exchange to substantiate the genuineness of the claim. This fact has also been correctly observed by the ld. CIT(A) while upholding the addition. Accordingly, we find no infirmity in the order of ld. CIT(A) so as to call for any interference. 53. In the result, ground no. 1 (iii) of assessee's cross objection is dismissed. Ground No. 1 (iv) insurance claim ( 13,10,590/-) 54. The brief facts in relation to this ground of cross objection are that the during the course of assessment, the assessee was requested to furnish details of insurance claim written off, amounting to Rs. 13,10,590/-. However in absence of any details filed by the assessee, the above amount was added to the total income of the assessee....
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....T(A) did not pass speaking order while confirming the addition, but the assessee has also not filed any supporting whatsoever either before the Assessing Officer or before ld. CIT(A) and also before the Assessing Officer in remand proceedings to support the genuineness of the aforesaid claim. 61. Accordingly, ground no. 1(v) of assessee's cross objection is dismissed. Ground No. 1(vi) liquidity damages (Rs. 7,91,427/-) 62. The brief facts relating to this ground of cross objection are that during the course of assessment proceedings, the Assessing Officer requested the assessee to furnish details of liquidity damages amounting to Rs. 7,91,427/-. In absence of any details having been furnished by the assessee, the Assessing Officer added the aforesaid amount as income of the assessee. 63. In appeal, the ld. CIT(A) confirmed the addition on the ground that assessee has been unable to demonstrate that the liquidity damages are not a capital expenditure and are not on account of purchase of any capital asset. 64. Before us, the counsel for the assessee drew our attention to page 105 of the paper book and submitted that the liquidity damages were claimed on account of sho....
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.... to examine the nature and/or genuineness of the aforesaid claim, and further no details with respect to miscellaneous expenditure have also been furnished before us as well. Accordingly, in the interest of justice, the matter is being restored to the file of Assessing Officer to enable the assessee to file necessary details with respect to miscellaneous expenditure incurred by the assessee along with supporting documents in support of its claim. 71. In the result, ground no. 1(vii) of assessee's cross objection is allowed for statistical purposes. ITA No. 415/Ahd/2016 filed the Department 72. This appeal filed by the Department against the deletion of levy of penalty u/s. 271(1)(c) of the Act on the ground that since appeal of the assessee has been allowed in quantum proceedings, penalty u/s. 271(1)(c) is not liable to sustained. 73. The Department has taken the following grounds of appeal "1. The Ld.CIT(A) has erred in law and on facts in deleting the penalty levied by the AO of Rs. 1,57,96,275/- u/s.271(l)(c) of the Act, without properly appreciating the facts of the case and the material brought on record. 2. On the facts and in the circumstances o....