MODINAGAR ROLLS PVT. LTD.,GHAZIABAD vs. DCIT, CIRCLE- 1, GHAZIABAD

ORDER

PER KUL BHARAT, JM :

3. Facts giving rise to the present appeal are that the assessee filed its return of income through electronic mode on 12.09.2014, declaring total income of Rs.20,58,653/- and claimed set off of Rs.20,58,653/- resulting into NIL income. The case of the assessee was selected for scrutiny assessment through CASS. In response to the statutory notices, Ld. Counsel for the assessee attended the proceedings. The assessee is a company engaged in an engineering unit specializing of manufacturing rolls for various industries. During the course of year under consideration, the assessee company declared gross profit of Rs.6,20,70,808/- @ 23.70% and net profit of Rs.37,00,090/- @ 1.41% against total turnover of Rs.26,19,48,595/-. The AO issued show cause notices to the assessee. It is recorded by the Assessing Officer [“AO”] that the Ld. Addl. CIT, Range-1, Ghaziabad directed that the books of accounts should not be rejected. The AO therefore, made an adhoc addition of Rs.10,00,000/-. It is recorded by the AO that the Ld.AR of the assessee aggrieved to this addition.

4. Aggrieved against this, the assessee preferred appeal before Ld.CIT(A). Before Ld.CIT(A), it was stated that the assessee had never agreed for such. However, Ld.CIT(A) rejected this explanation of the assessee and dismissed the appeal, without giving any finding on merit of addition.

5. Aggrieved against the order of Ld.CIT(A), the assessee is in appeal before this Tribunal.

6. Ld. Counsel for the assessee argued that the Ld.CIT(A) failed to appreciate the facts that the assessee has never agreed for such adhoc disallowance. He further contended that impugned addition deserves to be deleted, being arbitrary, unjustified and against the settled principles of law.

5.2. “Ground no. 1: The appellant has challenged the addition of Rs. 10,00,000/- made by the AO estimated on account of non verifiability of certain expenses. Examination of fact reveals that appellant vide order sheet entry dt 09.12.2016 before the AO agreed for the said addition. The copy of acceptance by AR of appellant before AO is scanned as under:

5.2.1. No appeal lies against the agreed addition unless appellant proves coercion and mala fide. In the present case no evidence of coercion or mala fide has been brought on record. Reliance is placed on the decision of Sterling Machine Tools (1980) 123 ITR 181 (All) in this regard. The AR has valid power of attorney agreed before AO admitting and accepting the addition proposed by the AO. Thus the same is binding on appellant. Reliance is placed on the decision of Turner Morrison & Co.Ltd. vs Hungerford Investment Trust Ltd. (SC) 85 ITR 607. Keeping in the above facts this ground of appeal is not maintainable, hence dismissed.”

10. From the above finding of Ld.CIT(A), it is clear that the appeal is dismissed on the ground that appellant vide order sheet entry dated 09.12.2016 which is reproduced by Ld.CIT(A), agreed for the impugned addition. However, a bare perusal of the same, there is no such offer of acceptance by the assessee. Moreover, there is no specific finding by the AO regarding any expenditure that was not vouched by the assessee. Merely a sweeping statement is not sufficient for making addition. Therefore, the action of the Assessing Authority cannot be sustained under the facts and circumstances of the present case, the impugned addition is therefore, deleted. Thus, ground raised by the assessee is allowed.