M/S. SHINGHAL ENTERPRISES,UTTRAKHAND vs. ITO, UTTRAKHAND

The present appeals have been filed by the assessee against the orders of the ld. CIT(A)-II, Dehradun dated 18.07.2011.

Since, the issues involved in both the appeals are identical, they were heard together.

Vide order dated 14.09.2019 in & 344/Del/2009 for the A.Y. 2004-05, the Tribunal vide para 5 has directed the AO to make inquiry by the way of “spot visit” for verification of the presence of DG sets which could established ITA Nos. 4299 & 4300/Del/2011 2 Singhal Enterprises the facts purchases. On going through the assessment order dated 28.12.2010 and order of the ld. CIT (A) order dated 18.07.2011, we find that the said directions of the Tribunal have not been adhered to and the Assessing Officer has repeated the same line of enquiry and gave a finding that the Gen Sets were bogus.

While the premises of the assessee as well as the Assessing Officer are situated at Rudrapur, the non-compliance to the directions given by the Tribunal for spot verification so as to arrive at the real fact of the presence of the GenSet has not been complied. Now that period of 17 years has elapsed, the verification of ‘the fact’ would be a castle in the sky. Hence, we feel that the revenue has missed the bus in opportune time. Nothing can be done at this juncture. The appeal of the assessee on this ground is allowed. The same goes to the claim of diesel expenses too. With regard to the additional depreciation, the AO is hereby directed to apply the provisions of the Income Tax Act after giving due opportunity to the assessee.

The Assessing Officer has made addition of Rs.4,50,000/- on account of the husk produced out of the hulling of paddy. The amount has been calculated @ Rs.60/- per quintal of the husk, the recovery being 26% of the paddy of 1,17,750 quintals. The ld. CIT (A) reduced the amount from Rs.4,50,000 to Rs.2,25,000/-. The recovery rate of husk is in general 10- 12% of the paddy hulled and in the instant case, the assessee has explained that the husk was used as a fuel for boiling tanks & 4300/Del/2011 3 Singhal Enterprises and driers, the facts of which could not be disputed by the revenue by bringing any cogent material on record to prove that the husk is not used for the fuel purpose.

The AO disallowed an amount of Rs.3,22,900/- paid to bank holding that the assessee has not received any interest on advances given to the sister concerns. From the records, we find that the assessee has own funds in the form of capital and advances which is much more than the amount of advances given of Rs.25.9 lacs. Since, the assessee has got sufficient own funds to lend the amount to the related parties, no disallowances u/s 36(1)(iii) is called for in this case.

The AO disallowed 5% of the freight inward expenses on the total amount of Rs.45.31 lacs claimed by the assessee, out of which the ld. CIT (A) has given relief of Rs.1,26,500/- and confirmed ad-hoc amount of Rs.1,00,000/-. The assessee submitted that all the vouchers have been submitted before the Assessing Officer and some of which are self-made owing to pretty expenses paid to the transporter. Since, it is a business contingency and the disallowance has been made on ad-hoc basis. We hereby allow the expenses disallowed by the revenue authorities on ad-hoc basis. The same ratio is applicable with regard to the discount paid of Rs.25,000/- in A.Y. 2008-09. The appeal of the assessee is allowed on all the grounds raised