ARVIND KUMAR,DELHI vs. ITO, WARD-1, REWARI

The Assessee has filed the Appeal against the Order dated 05.06.2018 of the Ld. CIT(A), Rohtak pertaining to assessment year 2014-15 on the following grounds:- i) That addition amounting to Rs. 14,62,636/- made on account of alleged suppression of closing stock by AO as sustained by Ld. CIT(A) without citing any statutory provision and without proving any clandestine transaction, just relying on stray and isolated figures which stood reconciled, addition is made which is ex facie incorrect and made mechanically. ii) That assessee’s alternate claim to allow automatic deduction u/s. 80JJA on aforesaid addition of Rs.

14,62,636/- has been denied on invalid reasons and against the binding and cited CBDT Circular

No. 37/2016. iii) That addition sustained by Ld. CIT(A) to the extent of Rs. 470,000 is incorrect and alternatively enhanced deduction benefit u/s. 80JJA must be given to the assessee as claimed.

Humble prayer:-

(i) To delete the addition of Rs. 14,62,636/- on account of alleged non disclosure of closing stock; alternatively deduction and benefit u/s. 80JJA;

(ii) To delete the addition of Rs. 470,000 and alternatively allow benefit u/s. 80JJA. To restore returned income.

(iii) Any other appropriate relief.

AO observed that it is only an afterthought which came in to the story only when it is noticed by the AO and trading account of Hindustan Sanitary Plaza was called for. The assessee has not declared assets of RS. 14,62,636/-. Excess of assets of Rs. 14,62,636/- over the liabilities in the shape of closing stock is the profit of the assessee which he has not declared in his return of income was added to the income of the assessee by AO. Further, the AO has disallowed 25% of expenses claimed under the heads consumables, power/ fuel, packing, freight, miscellaneous, telephone, conveyance, travelling etc. as no vouchers were produced for expenditure claimed as Rs. 47 lacs (as per the table given at page no. 5 of the assessment order) and added the expenses are not considered as genuine and addition of Rs. 11,75,190/- was made to the income of the assessee. Accordingly, the income of the assessee was assessed at Rs. 27,77,280/- u/s. 143(3) of the Act vide order dated 22.08.2016. Against the assessment order, assessee appealed before the Ld. CIT(A), who vide his impugned order dated 05.6.2017 has partly allowed the appeal of the assessee. Aggrieved with the impugned order, assessee is in appeal before the Tribunal.

5.1 As regards sustaining of addition of Rs. 470,000/- is concerned, I note that AO has disallowed 25% of expenses claimed under the heads consumables, power/ fuel, packing, freight, miscellaneous, telephone, conveyance, travelling etc. as no vouchers were produced for expenditure claimed as Rs. 47 lacs (as per the table given at page no. 5 of the assessment order). I further note that the AO has not made disallowance on adhoc basis but after giving full opportunity to the assessee who could 5 only submit evidence of expenditure of about Rs. 8 lacs out of his claim of Rs. 54.92 lacs. In view of the facts of the case, the disallowance made by the AO was upheld. However, it was restricted to 1/10th of the expenditure not substantiated by the assessee i.e. Rs. 4,70,000/- which was disallowed and therefore, the AO was directed to compute the income accordingly, which does not need any interference on my part, therefore, I uphold the order of the Ld. CIT(A) on this issue and reject the ground raised by the Assessee.