TaxTMI 
TaxTMI 
2024 (5) TMI 1597
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....thereby violating the principles of natural justice. Hence, the impugned order passed by the Learned CIT (Appeal) without dealing with the grounds of appeal on merit is liable to be declared as illegal and bad-in-law. It is prayed that the order passed by the Learned CIT (Appeal) may kindly be set aside. 2. On the facts and in the circumstances of the case, the Learned CIT (Appeal), NFAC, Delhi has erred in confirming the adhoc disallowance of Rs. 1,84,55,604/- made by the Learned A.O. arbitrarily out of Purchase of raw material, Hamali Expenses, Transporting expenses and Wages expenses merely to prevent the possible leakage of revenue, hence, the disallowance so made is bad-in-law and contrary to facts and therefore, liable to be deleted. It is prayed that the disallowance of Rs. 1,84,55,604/- made by the Learned A.O. and confirmed by the CIT (Appeal) may kindly be deleted. 3. On the facts and in the circumstances of the case, the Learned CIT (Appeal), NFAC, Delhi has erred in confirming the disallowance of Rs. 1,89,557/- made by the Learned A.O. being 30% of Rs. 6,31,855/- on account of non-deduction of tax at source from interest paid to NBF....
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....explained, particularly, when the source is self-explanatory from audited financial statement, hence, the addition so made is bad-in-law as well as on facts and hence, liable to be deleted. It is prayed that the addition of Rs. 70,39,496/- made by the Learned A.O. and confirmed by the CIT (Appeal) may kindly be deleted. 8. On the facts and in the circumstances of the case, the Learned CIT (Appeal), NFAC, Delhi has erred in confirming the adhoc disallowance of Rs. 33,35,270/- made by the Learned A.O. out of salary paid by the assessee to truck drivers, helpers, supervisors, clerk and mechanic on estimated basis which is bad-in-law, arbitrary, irrational and unjustified and against the principles of natural justice, hence, the addition so made is bad-in-law as well as on facts and liable to be deleted. It is prayed that the addition of Rs. 33,35,270/- made by the Learned A.O. and confirmed by the CIT (Appeal) may kindly be deleted. 9. The Appellant craves leave to add, amend, alter vary and / or withdraw any or all the above grounds of appeal. 3. Ld. AR further submitted an application for admission of additional ground of appeal, the same is extra....
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....erence in absence of proper evidence, had made an addition at 10% of such loans and advances for Rs. 70,39,496/- u/s 69 of the Act. 4.4 It is also observed by the Ld. AO that the assessee had debited an amount of Rs. 66,70, 540/- in his P & L A/c on account of salary for trucks. Assessee was required to furnish necessary evidence, but the assessee had only furnished the details without any evidence to substantiate the expense. The response of the assessee could not convince the Ld. AO, consequently, half of the aforesaid salary expenses were disallowed, stating that the salary expenditure claimed by the assessee is very high, improper and illogical moreover no evidence to support such claim was furnished by the assessee. In terms of such observations and amount of Rs. 33,35,270/- was disallowed by adding it back to the income of the assessee on account of un-substantiated payment towards salary. 4.5 With the aforesaid observations, after adding all the aforesaid disallowances, Ld. AO determined assessee's total income at Rs. 3,59,28,600/-. 5. Being aggrieved by the aforesaid disallowances, assessee preferred an appeal before the Ld. CIT(A), but with no ....
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....aming best judgment assessment. Identical view has been taken in large number of cases quoted on behalf of the assessee and many more. The pre-condition for estimating business income, where the assessee maintains books of account is that the books of assessee should be found to be unreliable or otherwise not realistically capable for demonstrating the income of assessee. Without this first step, the fact that the gross profit/net profit is low cannot by itself be a ground for taking a view that it is open to the AO to make good, alleged deficiency in profits declared. Thus, the action of the AO requires to be cancelled and set aside on this score alone being devoid of any legitimacy. 13. Adverting further, we find force in the other line of argument that gross profit rate/net profit rate cannot be estimated cursorily and in a routine manner without showing as to how the book results are superfluous. The AO has not brought any material which has any reasonable nexus to the estimation. As rightly stated on behalf of the assessee, even the best judgment assessment cannot be done in a vindictive manner and should be based on reasonable and fair estimations. Needless to say, l....
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....ubjected to scrutiny assessment u/s 147 r.w.s 143(3) vide order dated 15.05.23 copy whereof is placed on Page No. 286 to 289 of the PB. 3.3 The proportion of expenses incurred under the aforesaid heads with reference to the turnover in the year under consideration and in the immediately preceding assessment year is as under:- HARIOM INDUSTRIES Particulars 1-Apr-2014 to 31-Mar-2015 1-Apr-2015 to 31-Mar-2016 Sales 179,583,610 100% 419,869,639 100% Purchase 138,220,913 76.97% 337,396,020 80.36% Direct Expense Hamali Exp. 10,127,960 5.64% 10,559,855 2.52% Mandi & Others Hamali 4,570,903 2.55% 6,744,742 1.61% Transporting Exp 9,457,842 5.27% 9,058,540 2.16% Wages 8,450,220 4.71% 12,097,670 2.88% Total Expenses 32,606,925 18.16% 38,460,807 9.16% Grand Total 170,827,839 95.12% 375,856,827 89.52% 3.4 On bare perusal of the aforesaid details, it clearly transpires that the relative percentage of expenses inc....
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....he provisions of section 145(3). It shows that the books results of the assessee were disturbed by the Ld. AO without rejecting the books which are the foundation of such books results. The order of the Ld. AO is silent about the defects in the books of the assessee, thus, the additions made on estimated basis under the best judgment assessment are arbitrary in absence of any plausible reason to justify such estimation. It is also worth to note that similar expenses incurred by the assessee even it a higher proportion to the sale in the immediately preceding assessment year i.e. AY 2015-16 were accepted by the department which are also subjected to scrutiny assessment u/s 147 r.w.s. 143(3) of the Act. 13. Under such facts and circumstances, respectfully following the decision of ITAT, Raipur in the case of M/s Sanjay Agrawal (supra), we are of the considered opinion that the additions made based on estimation by the Ld. AO on account of possible leakage of revenue, unexplained expenditure u/s 69C, unexplained investment u/s 69 and high / improper / illogical expenditure of salary are without any proper basis, arbitrary, presumptive, such action of the Ld. AO is not permissible u....
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....,55,604/- (ii) Estimated Addition of 10% of sundry creditors u/s 69C as unexplained expenditure- Rs. 45,62,243/- (iii) Estimated Addition of 10% of loans and advances to suppliers u/s 69 as unexplained investment- Rs. 70,39,496/- (iv) Estimated disallowance of 50% of Truck Employees- Rs. 33,35,270/- 17. In result, the additional ground raised by the assessee regarding estimated additions / disallowances without rejection of books of accounts is held as allowed in favour of the assessee. 18. Since the disallowance / additions made by the Ld. AO on estimated basis are already vacated by us in terms of our aforesaid observations, the distinctive contentions assailed on merits by the assessee in ground no. 2, 4, 5, 6, 7 & 8 of the present appeal pertaining to the aforesaid disallowance / additions are not separately adjudicated. 19. Apropos, ground no. 3 of the present appeal regarding disallowance u/s 40(a)(ia) for non-deduction of TDS on payment of interest to M/s Cholamandalam Investment and Finance Company Ltd, since the assessee was unable to furnish certificate from accountant in the prescribed form before the Ld. AO or Ld. CIT (....