SREE SAKTHI TIMBER DEPOT.,,MANNARGUDI vs. ACIT, CIRCLE - 1,, TANJAVUR

This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals) 1, Trichy, dated 30.05.2019 relevant to the assessment year 2013-14.

Facts are in brief that the assessee is in the business of timber trading and filed its return of income for the assessment year under consideration declaring total income of ₹.14,10,910/-. Subsequently, the case was selected for scrutiny under CASS and assessment was completed on 18.02.2016 under section 143(3) of the Income Tax Act, 1961 [“Act” in 2 short]. In the assessment order, the Assessing Officer has noted that the assessee has paid carpenter commission of ₹.64,38,731/- and wages of ₹.15,24,717/-. For the above expenses, the vouchers produced by the assessee’s representative were perused and the Assessing Officer has noticed that the vouchers were self-made and the payments were by cash only. The Assessing Officer further noticed that the commission paid of ₹.64,38,731/- comes to 5.39% of the turnover of ₹.11,93,44,833/- where the profit is only 1.18% of the turnover. Thereafter, after discussing the discrepancies with the assessee’s representative, the Assessing Officer has made an addition of ₹.7,00,000/-. Further, the Assessing Officer has also made an addition of ₹.1,00,000/- on account of car used by the assessee is according to the Assessing Officer for personal purposes. On appeal, the ld. CIT(A) confirmed the order of the Assessing Officer on both counts.

On being aggrieved, the assessee is in appeal before the Tribunal. The ld. Counsel for the assessee has submitted that all the vouchers submitted before the Assessing Officer are proper and not self-made and the Assessing Officer has simply made the addition without there being any reason.

On the other hand, the ld. DR strongly supported the order passed by the authorities below.

We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. The case of the Assessing Officer is that the vouchers and bills submitted by the assessee are self-made. The case of the assessee is that the vouchers and bills are genuine only and properly vouched. Therefore, taking into consideration of the facts of the case and nature of the business of the assessee, we are of the opinion that the addition made by the Assessing Officer should be restricted to ₹.3,50,000/- with regard to payment of carpenter commission. So far as another issue of personal usage of car is concerned, we are of the considered opinion that the entire addition is unwarranted and justified to restrict the addition to the extent of ₹.50,000/-is sufficient to meet the ends of justice. Accordingly, the addition towards use of car is restricted to only ₹.50,000/-. In view of the above, the Assessing Officer is directed to delete the addition as indicated above.

In the result, the appeal of the assessee is partly allowed.