M/S A,K, EXPORTS,LUDHIANA vs. ITO, LUDHIANA

आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2008-09 arises out of an order of learned Commissioner of Income Tax (Appeals)-II, Ludhiana [CIT(A)] dated 24.12.2012 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s 143(3) of the Act on 30.12.2010. In this appeal, the assessee has challenged confirmation of additions of Rs.21,21,598/- u/s 41(1), disallowance of

expenses for Rs.64,94,537/- and disallowance u/s 40A(3) for Rs.47,040/-. Having heard rival submissions and upon perusal of case records, these issues are adjudicated as under. 2. Addition u/s 41(1) 2.1 The assessee derived income from manufacturing and export of readymade garments. During assessment proceedings, the assessee was directed to provide the details of brought forward sundry creditors and advances with their PAN and settlement dates. After due examination of details as furnished by the assessee as well as after conducting field enquiries, discrepancies were noted with respect to 8 parties which has elaborately been tabulated by Ld. AO at para 4.1.5 of the assessment order. In few cases it was found that the creditors were not existing at the given address while few parties were having outstanding since long time. Further, differences were also noted in the account balances. The Ld. AO, finding that the assessee had made purchases from these parties, invoked the provisions of Sec. 41(1) and added the amount of Rs.21,21,598/- to the income of the assessee. The Ld. CIT(A) confirmed the action of Ld. AO against which the assessee is in further appeal before us. 2.2 Upon perusal of assessment order, it could clearly be seen that the discrepancies have specifically been brought on record by Ld. AO for each of the sundry creditors. In many cases, the amounts are outstanding since long time and the assessee has failed to file the respective confirmation of these parties. Few of the suppliers are found to be non-existent. The Ld. AO has also noted discrepancies in

account balances. No new material has been placed before us to rebut the findings of lower authorities. Therefore, finding no reason to interfere in the orders of lower authorities, we reject this ground. 3. Disallowance of Wage Expenses 3.1 The assessee booked wages & bonus expenditure for Rs.64.94 Lacs which, after data analysis, was found to be not completely verifiable. The partner of the firm, in statement dated 24.12.2010, failed to provide the details of workers etc. The Ld. AO tabulated the number of works employed by the assessee who manufactured 131681 pieces only and the cost of labour was found to be unrealistically high. Accordingly, 1/3rd of the expenses was held to be excessive and disallowed. The Ld. CIT(A) confirmed the same against which the assessee is in further appeal before us. 3.2 We find that, except for oral contentions, the findings of Ld. AO remain uncontroverted before us. No new material has been placed before us to rebut the findings of lower authorities. From the orders of lower authorities, it is quite discernible that the assessee has not maintained proper records of impugned expenditure and the cost of labour has been found to be unrealistically high. This being so, we see no reason to interfere in the order of Ld. CIT(A). 4. Disallowance u/s 40A(3) 4.1 The assessee purchased dye yarn for Rs.47,040/- in cash from M/s Shree Budhigiri Hosiery Centre, Ludhiana. The same was disallowed by Ld. AO by invoking the provisions of Sec. 40A(3). During first appeal, the assessee merely stated that the supplier refused to

accept the cheque. The same stood rejected by Ld. CIT(A) against which the assessee is in further appeal before us. 4.2 We find that no commercial expediency has been shown for making the payment of purchases in cash. The reasoning adduced by the assessee before lower authorities is not a plausible one. Therefore, the action of lower authorities need not be interfered with. We order so. No other ground has been urged in the appeal. 5. The appeal stand dismissed. Order pronounced on 03rd August, 2026

-Sd- -Sd- (LALIET KUMAR) (MANOJ KUMAR AGGARWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER AS Dated: 03-08-2026 आदेश की �ितिलिप अ�ेिषत /Copy of the Order forwarded to : 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF

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