TaxTMI 
TaxTMI 
2025 (9) TMI 1560
X X X X Extracts X X X X
X X X X Extracts X X X X
.....2024 is erroneous, contrary to the facts & bad in the eyes of Law. 2. That the Id. CIT(A) has erred in confirming the ad-hoc addition of Rs. 20,00,000/- made by the AO merely to cover possible leakages in the accounts of the Appellant without any cogent reasons and pointing out specific irregularities therein. 3. That the Id. CIT(A) has failed to appreciate that ad-hoc addition could not be made on blanket basis without recording any adverse finding by the AO that such expenses had not been incurred for the purpose of business. 4. That the Id. ClT(A) has erred In confirming the ad-hoc addition in absence of any incriminating material unearthed for the relevant year during the search at the premises of the Appella....
X X X X Extracts X X X X
X X X X Extracts X X X X
....screpancies such as irregular maintenance of stock register, unverified stock, fluctuation in the selling price of some of the items, purchases from unregistered parties, unverified expenses claimed in P&L account, expenses of personal nature claimed in P&L account were confronted to the appellant and was given show cause by the AO as to why addition of Rs. 20,00,000/- was not made in order to prevent leakage of revenue emanating from these discrepancies. In response, the appellant offered disallowance of Rs. 5,00,000/-. In view of the above facts, it is evident that the appellant was itself aware of the discrepancies in the books of accounts maintained for the year under consideration since it offered disallowance of Rs. 5,00,000/- itself.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s. 5,00,000 against the proposed addition by the AO amounting to Rs. 20,00,000/- in order to buy peace of mind and avoid litigation. However, as the AO had proceeded to make the entire addition of Rs. 20,00,000/- just to cover possible leakages after having been provided all the documents and information sought in the questionnaire along with notice(s) issued u/s 142(1) from time to time, the same is illegal and unjust in the eyes of the law. It was submitted that there are catena of decisions which have settled the legal position that the adhoc addition/disallowance cannot be made without pointing out any specific irregularities and without rejecting the books of accounts and in support, reliance was placed on the Coordinate Chandigarh Ben....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cause highlighting various discrepancies and as to why addition of Rs 20,00,000/- should not be made and the contents of the show-cause read as under: "Perusal of your stock registers reveals that the same is not maintained in a systematic manner on day to day basis. It shows many cuttings and over writings. Further, it has been observed that the sales made by the assessee company on day to day basis has not been shown/ verifiable from the stock register in outward column. Thus, the quantitative details of stock is not fully open to verification. Further, perusal of sale bills issued by the assessee company reveals fluctuations in the selling price of same item during the similar period. Further, some of the purchases have been mad....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n may not be made and at the same time, it was submitted that where the AO still like to proceed with the addition, the same may be kept to minimal possible i.e, Rs 5,00,000/- in the interest of justice. The AO however, didn't agree with the submissions so made and made the addition of Rs 20,00,000/- which on appeal has been confirmed by the ld CIT(A). 11. It is therefore a case where the trading results have been held not fully verifiable and besides that, certain other discrepancies in terms of nonavailability of bills and vouchers, which the assessee also admitted being old record and couldn't be produced and self generated cash vouchers and personal usage of vehicles, etc. The discrepancies so highlighted by the AO could be rebutted ....