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Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’, NEW DELHI
Before: SH. R. K. PANDA
This appeal filed by the assessee is directed against the order dated 29.09.2017 of the CIT (Appeals), Ghaziabad relating to A. Y. 2014-15.
The only effective ground raised by the assessee is as under :-
“Because, the learned lower authority erred in not appreciating the fact on the record that the addition of Rs.2 Lacs on a/c of ad hoc expenses is without rejecting any specific payment, without identifying any specific head or amount, recording any basis or finding that expenses are not related to business etc. and further after accepting account, hence disallowance is arbitrary.”
Facts, of the case, in brief are that the assessee is a partnership firm engaged in the business of trading in all kinds of iron and steel and other allied products. It filed its return of income on 22.09.2014 declaring total income of Rs.11,73,080/-. During the course of assessment proceedings the Assessing Officer asked the assessee to produce bills and vouchers alongwith books of account for his verification. From the verification of the books of account alongwith bills and vouchers, the Assessing Officer noted that certain expenses made under various heads were not properly vouched and hence, remained unverified. On account of un-verifiability of these expenses and to cover up possible leakage of revenue an amount of Rs. 2,00,000/- was disallowed and was added back to the total income of the assessee.
Before CIT (A) the assessee submitted that the books of account were examined and accepted by the Assessing Officer and he has not rejected any specific payment and even without identifying any head. The Assessing Officer has not recorded any basis or finding that expenses are not related to business. The Assessing Officer made the addition only on the ground of self made vouchers. It was argued that the gross profit and net profit of the assessee was also better and in fact higher than the income shown in the preceding years. Relying on various decisions it was argued that no addition is called for.
However, the Ld. CIT (A) was not satisfied with the arguments advanced by the Ld. Counsel for the assessee and upheld the addition made by the Assessing Officer. While doing so he observed that during the course of assessment proceedings the AR of the assessee produced books of account alongwith bills and vouchers and agreed for an addition of Rs. 2 lacs on account of un-verifiability of certain expenses. Since, the AR was having power of attorney who had agreed before the Assessing Officer for such addition, therefore, such agreement is binding on the assessee. For the above proposition he relied on the decision of Hon’ble Allahabad High Court in the case of Sterling Machine Tools Vs CIT reported 123 ITR 181 and the decision of Hon’ble Supreme Court in the case of Turner Morrison and Co. Ltd vs Hungerford Investment Trust Ltd. (SC) 85 ITR 607. He further noted that the assessee did not bring up the fact that the assessee had not agreed for the said addition during the course of appellate proceedings or in Form 35. He examined the assessment records and relevant extract of order sheet wherein the Assessing Officer had mentioned about the addition which was signed by the AR of the assessee. He accordingly held that the ground raised before him regarding the addition is not maintainable.
Aggrieved with such order of CIT (Appeals), assessee is in appeal before the Tribunal.
I have considered the rival arguments made by both the sides and perused the material available on record. A perusal of the order sheet entry dated 20.12.2016 which has been reproduced by the CIT (A) in the body of the assessment order reads as under :-
“20.12.2016 AR Sh. Pushkar Pandey appears and produces books of accounts and bills/ vouchers for verification. Books of accounts and bills vouchers verified on test check basis. On account of un-verifiability of certain expenses of Rs.2,00,000/- (Two lakhs) is being added to income of assessee. Case discussed.”
Since during the course of assessment proceedings the AR of the assessee had accepted the disallowance of Rs. 2,00,000/- out of various expenses by signing in the order sheet entries, therefore, the argument of the Ld. Counsel for the assessee that the Assessing Officer had not mentioned anything about the such agreed disallowance in the body of the assessment order does not find any force. Since admittedly certain bills and vouchers remained unverified during the course of assessment proceedings for which Assessing Officer made ad-hoc disallowance of Rs. 2,00,000/- on account of un-verifiability of expenses which was duly signed by the AR for the assessee, therefore, I do not find any infirmity in the order of the CIT (A) sustaining the addition of Rs. 2,00,000/-. The ground raised by the assessee is accordingly dismissed.
In the result, the appeal filed by the assessee is dismissed.
Order pronounced in the open court on 24.07.2018