Income Tax Appellate Tribunal - Indore
Eagle Fuel Pvt. Ltd., Indore vs Department Of Income Tax on 1 July, 2013
IN THE INCOME TAX APPELLATE TRIBUNAL,
INDORE BENCH, INDORE
BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARMA, A.M.
PAN NO. : AAACE3916A
I.T.A.No.221/Ind/2012
A.Y. : 2008-09
ACIT, M/s.Eagle Fuel Pvt.Ltd.,
5(1), vs. Agrawal House, 5, Y. N.
Indore. Road,
Indore.
Appellant Respondent
Appellant by : Shri R.A.Verma, Sr. DR
Respondent by : Shri Ajay Tulsiyan, C. A.
Date of Hearing : 01.07.2013
Date of : 15.07.2013
pronouncement
ORDER
PER R. C. SHARMA, A.M.
This is an appeal filed by the Revenue against the order of CIT(A) dated 27.2.2012, for the assessment year 2008-09 in the matter of order passed u/s 143(3) of the Income-tax Act, 1961.
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2. Following grounds have been taken by the Revenue :-
1. On the facts and in the circumstances of the case, the order of the ld. CIT(A) is contrary to the facts and the law.
2. On the facts and in the circumstances of the case, the ld. CIT(A) has erred in deleting the addition of Rs. 50 lacs made by the Assessing Officer u/s 68 of the Income-tax Act, 1961, on account of unsecured loans from M/s. Chamak Trexim Pvt.Ltd., as the assessee failed to discharge its onus to prove the creditworthiness of the company.
2.1 While holding so, the ld. CIT(A) failed to appreciate that there were huge rotation of fund in the accounts of the company establishing no business rationale and the company was being used as a conduit in floating unaccounted funds and was a mere paper company.
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3. On the facts and in the circumstances of the case, the ld. CIT(A) erred in deleting the disallowance of interest of Rs. 5,56,148/- as creditworthiness of the company was not established to whom the interest was paid.
4. On the facts and in the circumstances of the case, the ld. CIT(A) has erred in deleting the disallowances of Rs. 2,50,000/- out of colliery expenses & Rs. 1,00,000/- out of salary expenses as the vouchers regarding colliery & salary expenses as the vouchers regarding colliery & salary expenses were found not only self made but also unverifiable by the Assessing Officer.
3. Rival contentions have been heard and records perused. Facts in brief are that the assessee is engaged in the business of coal trading and investment. During the course of scrutiny assessment, the Assessing Officer found that the assessee has taken a loan of Rs. 50 lakhs from M/s. Chamak Trexim Private Limited. The Assessing Officer issued notice 3
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u/s 133(6) to Chamak Trexim on the address given by assessee company and further deputed two inspectors attached to his Range to make enquiries and got further enquiries made with the Investigation Wing at Kolkata and for which Commission u/s 131(d) were issued. The Assessing Officer has then incorporated the details of enquiry report submitted by the Inspectors in respect of Chamak Trexim as per para 2.4 of assessment order on page 2 to 3. Thereafter the Assessing Officer has reproduced contents of commission issued u/s 131(d) in the case of the assessee and also in other cases which were simultaneously being examined by him on page 3 of the assessment order.
4. The Assessing Officer has reproduced report furnished by DDIT, Kolkata, on page 4 & 5 of the assessment order. The Assessing Officer, thereafter has drawn conclusion from such enquiry report in para 2.11 to 2.12 hereunder:-
"Assessing Officer has reproduced report furnished by DDIT, Kolkata, on page 4 & 5 of the assessment order. The Assessing Officer, thereafter has drawn 4
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conclusion from such enquiry report in para 2.11 to 2.12 hereunder :
2.11 A perusal of huge inflow-outflow of fund without any business rational in the accounts of the companies (claimed share applicant) clearly lead to the conclusion that such company was being used as conduit for floating of unaccounted funds and mere existence on the paper and filing of return do not establish that a genuine company engaged in the business as claimed was in existence. Further still, in case of enough material on record to establish that it was not a genuine existing company.
2.12 Further it was noted form the confirmation produced by assessee that one Shri 'Ramchandra Kedia' has signed the confirmation or M/s. Chamak Trexim P.Ltd., Kolkata. During the enquiry conducted by the inspectors they visited the address of the claimed lender of Kolkata where they found one Shri Ravin Umrethiya ( who was working as accountant since last three months only ) and whose statement 5
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was taken. The letter issued u/s 133(6) to M/s. Chamak Trexim P.Ltd., Kolkata. In reply confirmation was received which was signed by Shri Ravin Umrethiya ( who was working as accountant since last three months only ). Further during the enquiry conducted by inspectors, it was also noticed in other group cases that Shri Ramchandra Kedia ( who signed the confirmation produced by assessee on hearing dated 27.12.2010) M/s. Chamak Trexim P.Ltd., the claimed creditor in this case. 2.5 The Assessing Officer accordingly confronted the assessee with the facts collected to establish three ingredients as per requirement of Section 68 for the aforesaid Calcutta based company and has reproduced the detailed reply submitted by appellant in para 3.1 running from page 6 to 12 of assessment order.
2.6 Thereafter the Assessing Officer has discussed the legal aspects pertaining to discharge of onus u/s 68 under the heading "Department's side discussion 6
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of case laws" from page 12 to 20 and has finally summed up in para 3.18 as under :-
"3.18 Thus, the above discussion related to facts of the case and related case laws together as made above para no.2 to 3.19 unserved loan in the books of the assessee company amounting to Rs.
50,00,000/- and interest paid on these unsecured loan amounting to Rs.
5,56,148/- totaling Rs. 55,56,148/- is found unexplained u/s 68 of the 'Act' and is added to total income of the assessee." 2.7 Still further the Assessing Officer made disallowance u/s 14A as per discussion in para 4.1 to 4.8 from page 20 to 23 and the final working resulting into disallowance of Rs. 74,188/- has been done as per Rule 8D in para 4.9 of assessment order."
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5. The Assessing Officer has also disallowed colliery expenses and office & salary and allowances on account of disproportionate increase in these expenses at Rs. 2,50,000/-
and Rs. 1,00,000/- respectively aggregating at Rs. 3,50,000/- as per discussion in para 5 on page 23 and 24 of the assessment order.
6. By the impugned order, the ld. CIT(A) deleted the addition made in respect of loan taken from Chamak Trexim Private Limited, after having the following observations :-
"4. Facts on record, detailed findings recorded by Assessing Officer in assessment order on both factual and legal aspects and in particular the result of enquiries emerging from Its deputed by Assessing Officer for local enquiry at Kolkata and equally detailed and elaborate submissions filed by the assessee and voluminous documents included in compilation in support of grounds of appeal raised, are very carefully taken into consideration. 4.1 The first and foremost ground of appeal is directed against addition of Rs. 50 lacs for loans 8
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taken from Chamak Trexim Pvt.Ltd. a Kolkata based company treated as unexplained. The Assessing Officer ( Addl. CIT, Range-5) had deputed two Inspectors attached to his Range in making local enquiries at Calcutta in the month of Dec.,2010; first time for the period 6.12.2010 to 10.12.2010 and then again for the period 20.12.2010 to 25.12.2010. The Assessing Officer also took assistance of the Investigation Wing of the Department based at Calcutta to make verification about the existence of this Calcutta based company form whom the appellant borrowed funds during the year under consideration. The Assessing Officer has taken note of the enquiry report submitted by DDIT( Inv.Wing) and on page 4 of the assessment order. It will be worthwhile to reproduce the report submitted by DDIT (Inv.Wing)-13, Kolkata to appreciate the facts surrounding the transactions i.e. identity of such creditors and further genuineness and creditworthiness of such transactions. " 9
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The content of the letter is being reproduced for ready reference :-
"Summon u/s 131 were issued to all the companies as mentioned in Annexure "A" to "F" in the case of Keti Constructions (India) Limited, Agrawal Transport Corporations P.Ltd. Admanum Finance Ltd., Eagle Fuel P.Ltd., Agrawal Coal Corporation P.Ltd. Swastik Coal Corpn. P.Ltd. for financial year 2007-08 asking for.
1. Copy of Balance sheet.
2. Tax Audit Report
3. Bank Statement.
4. Personal Appearance.
And the case was fixed for hearing on 15.12.2010 in all of the cases.
Out of them following companies has made partly compliance of the summon issued u/s 131 of the Income-tax Act, 1961, namely.
1. Middleton Goods Private Limited.
2. Aereo Dealcom Private Limited 10
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3. Chamak Trexim Pvt.Ltd.
4. Paceman Traders Private Limited Further, following companies were merged with Middleton Goods P.Ltd., namely
1. Lambodar Barter P.Ltd.
2. Prathmesh Vajjay P.Ltd.
3. Khantu Vanziya P.Ltd.
4. Kamal Nayan Commercial P.Ltd.
5. Panchnan Vajjay P.Ltd.
6. Ranchhod Agencies P.Ltd.
Above companies (including merged companies) have submitted.
1. Copy of Audited Annual Accounts.
2. Photocopy of bank statements.
3. Confirmation of account./ None of the Directors has made personal appearance; hence, identity as well as genuineness of all the above mentioned companies could not be ascertained.
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All of the above mentioned companies are investment company and they had not shown very much profit in the financial under review. Inspite of that they had issued share at a very high premium and shares were to different companies and all these companies were incorporated recently. As a result, creditworthiness of these companies could not be ascertained."
4.1.1 The Inspectors in their enquiry report have specifically noted that m/s. Chamak Trexim Pvt.ltd. was in existence on the given address and some other companies were also operating on the same addresses, but they have expressed doubt about their creditworthiness. The relevant findings are reproduced hereunder :
"As directed, both of us visited Kolkata during the period 06.12.2010 to 10.12.2010 and went around Kolkata locating the office of the same company.
1. M/s. Chamak Trexim Pvt.Ltd.
78, Bentick Street, 4th floor, Kolkata 700 001. 12
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" We have visited the place and found the chamber occupied by M/s. Rajshree Finsec Pvt.Ld. & Aereo Deal Comm. P.Ltd. However, the Chamber is identified/numbered as 'Room-2D'. The Directors were not present. Statement of Shri Ravin Umarethiya, Accountant, was recorded. He also furnished Directors Report for year ended 31st March, 2007, 31st March, 2008 & Memorandum & Articles of Association of the Company. All these are appended as Annexure.
It is pertinent to mention here that the company has two Directors. One of the Directors is Shri Dipak Kumar Kalani, also said to be a C.A., whose address is 102, Baldev Apartment, 13/1, Race Course Road, Indore - 03. The relevant portion from ROC website of Ministry of Corporate Affairs submitted by Shri Ravin Umarethiya is also appended with this report. Though the Office of the Company did exist there, workers of the Chamber, containing more than 2-3 C. 13
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As. Firms, and the three investment Companies appeared to be common ones for all the Firms/Concerns/Companies. The only, exclusive, regular employee of this company was Shri Ravin Umarethiya, Accountant, even he was serving with yet another Investment company, that too, at the same premise. He also was recruited only two-three months back. Looking to such a situation, the creditworthiness of the Co. itself appeared to be doubtful.
The above company was found to be functioning at the given address. Shri Ravin Umarethiya is the Accountant of this company and in his statement he has admitted that the company has not applied for any Share Application Money for any shares in M/s. Eagle Fuel P.Ltd., Indore, but has provided advances to the same."
4.1.2 The Assessing Officer based on inspectors and DDIT's reports and other material gathered concluded that there were huge rotation of funds in 14
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the accounts of such company for which there was no business rational and such company was being used as conduit in floating unaccounted funds and were mere paper companies. The Assessing Officer has further noted in para 2.12 that earlier account confirmation of the company M/s. Chamak was signed by one Shri Ramchandra Kedia but the latter confirmation was signed by the accountant Shri Ravin Umrethiya.
4.1.3 The assessee when confronted on 23.12.2010 submitted before Assessing Officer that the confirmations letter has been filed from the company alongwith its PAN and the appellant further also filed voluminous documents such as confirmation letter, Bank statement of the creditor alongwith Bank statement of appellant company, copy of audited final accounts of the said company, copy of ITR acknowledgements etc. to establish that such loan transaction was reflected in the Balance sheet of Chamak Trexim as loans and advances and copy of 15
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income-tax return filed by it and TDS certificate issued by appellant company for TDS from interest payment made were also filed.
4.1.4 The appellant thereafter made detailed submissions that in view of these facts the appellant had discharged the onus cast on it by provisions of Section 68 relying on judicial decisions cited in written submissions. The appellant coming to the enquiries conducted by Assessing Officer made detailed submissions in para 3.1 of its submissions explaining the position and advancing contentions that the existence of Chamak Trexim has been proved by service of notice u/s 133(6) issued by the Assessing Officer as well as by the DDIT (Investment) at Calcutta. The Assessing Officer after taking note of such factual and legal submissions made by the appellant had very elaborately discussed the provisions of Section 68 and discussed in detail about the dismissal of SLP Hon'ble Supreme Court in the case of Lovely Export as reported in 216 CTR 195 16
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(SC) and has concluded that the loan aggregating to Rs. 50 lacs was unexplained and as a consequential finding has also disallowed interest paid/payable on such loan aggregating at Rs. 5,56,148/-. It may be observed here that much of case laws and the discussions made by Assessing Officer on para 3.2 to 3.17 are more relevant and directly related to share capital contribution.
4.2 In the aforesaid factual background, it has to be now decided whether the appellant has been able to discharge the onus cast u/s 68 and whether the addition made u/s 68 was justified on the facts of the case. It should be appreciated that degree of onus to explain the cash credit transaction cannot be uniform and rigid in all the situations. Degree of onus regarding genuineness of transaction in respect of receipt of share capital at huge premium in unlisted companies otherwise through public issue cannot be viewed but with suspicion and the appellant may be required to justify such receipt of money on huge 17
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premium as such transaction would defy normal financial prudence and logic. But the same degree of onus cannot be cast on the appellant to explain the loan transaction which have been repaid in a span of 1-1/2 years or so when the appellant is able to discharge his onus to establish the identity of the creditors, receipt of money through banking channel and existence and apparent financial worth of creditors as reflected from the audited accounts and income tax returns. It may be also observed that onus to establish all the three ingredients would vary from case to case identity is first ingredients, which can be established by giving complete address, physical existence of the person and income tax particulars i.e. PAN and details of filing of return etc. In a given case, where the transaction of say a smaller amount of Rs. 50000/- or 1 lakh is involved the creditworthiness of person involving nominal income in the same range may be acceptable, but can become suspicious and doubtful if the amount advanced runs in millions and 18
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crores, without there being other verifiable derails and evidences of sources of such funds advanced. 4.2.1 Proceedings to the loan of Rs. 50 lacs from Chamak Trexim Pvt.Ltd. which is also a registered NBFC with RBI, an amount of Rs. 5 lacs was repaid and interest of Rs. 5.56 lacs was paid after deducting the TDS. As per the copy of account submitted pages 130 - 131 paper book the loan stood fully repaid in Feb. 2008. The inspectors in their report as noted on page 3 of assessment order has confirmed about existence of such company y at the given address. The inspectors have confirmed, as noted on page 6 of the assessment order that the accountant of this company, in the statement recorded by the inspectors, has confirmed having advanced unsecured loans to the appellant. Further, also in response to the Assessing Officer 's notices u/s 133(6) the said lender company replied vide letter dated 07.12.2010 included at page 124 of compilation stating that it has advanced loans to the 19
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appellant and also filed copy of its ledger for the impugned year, copies of ITR acknowledgement along with computation for assessment years 2006-07 to 2008-09 as was required by the Assessing Officer. 4.2.2 Before DDIT(Inv.)., Kolkata, also against issue of summons u/s 131 compliances were made by filing of copies of audited annual accounts, photocopy of Bank statement and confirmation letters. Thus, it cannot be said that Inspectors and DDIT( Inv.) have expressed any doubt about the existence of such company. The doubt expressed by Inspectors and DDIT(Inv.) both of them are apparently subjective and in case of DDIT's report is merely based upon non appearance by the Directors of the said company, along with copy of bank statement, confirmation, ITR acknowledgement etc. are included in compilation by the appellant from page 80 to 122. The main source of the said company is from gross interest income of Rs. 85.30 lacs. The net profit of the company is reflected at a healthy figure of Rs. 14.03 lacs. The 20
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loan in the name of the appellant company including outstanding loan from earlier year is reflected in the head as 'Schedule E' to Balance sheet under 'Loans and Advances'. Thus it could not be said that the financial position of the company was dubious and nominal returned income was disclosed. The Assessing Officer in the case of this lender company for assessment year 2004-05 in assessment order passed u/s 143(3) on 31.05.2006 (included in Compilation at pages 121-122) has verified the source of owners fund being share capital, share premium received which were invested by way of loans and advances.
4.2.3 It will be appropriate to refer to the decision of Hon'ble Kolkata High Court as relied and referred by appellant in the written submission decided in the case of CIT vs. Data Ware Pvt.Ltd. on 21st Sept., 2009, wherein Hon'ble Calcutta High Court, has categorically held-
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"After getting the PAN number and getting the information that the creditor is assessed under the Act, the Assessing Officer should enquire from the Assessing Officer of the creditor as to the genuineness of the transaction and whether such transaction has been accepted by the Assessing Officer of the creditor but instead of adopting such course, the Assessing Officer himself could not enter into the return of the creditor and brand the same as unworthy of credence. So long, it is not established that the return submitted by the creditor has been rejected by its Assessing Officer, the Assessing Officer of the assessee is bound to accept the same as genuine when the identity of the creditor and the genuineness of transaction through account payee cheque has been established."
4.2.4 In view of above factual and legal position wherein even the sources of the funds of the creditor company have been examined and verified by the concerned Assessing Officer and the transactions 22
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duly getting reflected in the audited final accounts of the creditor company y, the Assessing Officer's action in doubting such loan transaction is absolutely without any merit and substance and accordingly the Assessing Officer's action in treating such loan of Rs. 50 lacs as unexplained is apparently unjustified. 4.2.5 Before concluding it has to be observed, as also pointed out by the AR, that there is no specific adverse comment in the assessment order on the documents filed as discussed above substantiating all the three ingredients of Section 68 and detailed sub missions made by the appellant during the assessment proceedings remained uncontroverted and Assessing Officer has mainly banked on it is and DDIT's report, which were in no way conclusive. 4.2.6 On consideration of overall facts on record, there appears to be sufficient force and merit in the contention of the appellant as the appellant has established the onus cast on it by giving necessary documents on record to establish the identity and 23
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creditworthiness of the creditor company and the amount having repaid in the next financial year after due deduction of TDS, the genuineness of the transaction cannot be doubted and accordingly the said loan of Rs. 50 lacs is directed to be treated as explained and accordingly directed to be deleted."
7. Disallowance of interest in respect of the above loan was also deleted by the ld.CIT(A) after having the following observations :-
"4.3 Ground no.2 raised is directed against disallowance of interest at Rs.5,56,148/- on aforesaid loans held to be unexplained. In view of the findings arrived above in respect of ground no.1 whereby the loans have been held to be explained, the disallowance of interest paid after due deduction of tax thereon is directed to be deleted being consequential to the findings arrived in respect of ground no. 1 above. "
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8. Disallowance made on account of colliery expenses was also deleted by the ld.CIT(A) after having the following observations :-
"Ground No. 5 and 6 are directed against disallowance of Rs. 2,50,000/-out of Colliery expenses claimed at Rs. 5.24 lacs and Rs. 1 lacs out Official General expenses claimed at Rs. 4.35 lacs. The Assessing Officer has made such disallowance based on increase of such expenses vis-à-vis increase in turn over. He has noted that the increase in claim of expenses were disproportionate to the increase in turn over. He has also made observations that part of such expenses were not fully supported by vouchers and thus were not fully verifiable. The appellant AR filed in detailed submissions and in course of discussion it was emphasized that the Assessing Officer had considered only turn over for making such disallowance and conveniently ignored nearly five fold increase in net taxable income from Rs. 57.10 lacs to Rs. 183.22 lacs. He also pointed out 25
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that some of expenses were decreased compared to last year and there was over all increase of nearly two fold in gross profit rate from 2.72 % to 3.36 % and thus the Assessing Officer should not have resorted to such unwarranted ad hoc disallowance of Rs. 3.5 lacs when the appellant has over nearly three fold increase in taxable income which was now running in crores. It was also emphasized that such disallowance made broadly on similar reasoning for assessment year 2007-08 in the case of Agrawal Coal Corporation Pvt.Ltd. as associate concern in IT 364/09-10/428 were deleted in appeal order passed on 15.3.2010.
4.5.1 The contentions of the appellant are found to carry sufficient force and merits such disallowance made was deleted fully in appeal order as aforesaid, where a larger amount of disallowance of Rs. 14 lacs was made out of Colliery expenses out of Rs. 36.30 lacs claimed with broadly similar reasoning of disproportionate increase in expenses viz. increase in 26
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turn over. Thus in view of detailed findings recorded this issue in the associate concern's case in para 4.2 of appeal order, such disallowances are not found to be justified and proper in the facts and circumstances of the case and are directed to be deleted."
9. Rival contentions have been heard and records perused. We had also deliberated on the judicial pronouncement cited by the ld. Authorized Representative and ld. Senior DR and also during the course of hearing before us as well as decisions cited by the lower authorities in their respective orders, with reference to the factual matrix of the case. We found that after discussing various documents filed before the Assessing Officer and also report by Investigation Wing, the ld. CIT(A) concluded that the assessee has discharged its onus cast u/s 68 with reference to identity, genuineness and creditworthiness of loan creditor. From the record, we found that place of business was enquired and found at room no.2-D. The statement of Shri Ravin Umrethiya, Accountant, was recorded who furnished Directors' report for 27
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the year ending on 31st March, 2007, 31st March, 2008 as well as Memorandum and Articles of Association of the Company. It was found that creditor company has two Directors, Shri Dipak Kumar Kalani, C. A., whose address was 102, Baldev Apartment, 13/1, Race Course Road, Indore. In the statement so recorded, Shri Ravin Umrethiya clearly stated that its company has given advances to the assessee company. The assessee when confronted on 23.12.2010 submitted before the Assessing Officer that the confirmation letter has been filed from the company alongwith its PAN, Bank statement of creditor, copy of audited final accounts, copy of I.T.R. acknowledgement etc. of creditor company to establish that the said loan transaction was reflected in the audited balance sheet of M/s. Chamak Trexing under the head "Loans and advances" loans and advances. The ld. CIT(A) also recorded a finding to the effect that the assessee has also deducted TDS at source out of the interest paid to M/s. Chamak Trexing in respect of loan taken. The TDS so deducted was also deposited in Government Treasury. Existence of Chamak Trexing has been proved by service of notice u/s 133(6) issued by the 28
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Assessing Officer as well as by DDIT (Investigation) ( at Kolkata ). The ld. CIT(A) has also found that not only identity and genuineness of transaction was established, however, an amount of Rs. 5 lakhs was also repaid alongwith interest of Rs. 5.56 lakhs after deducting TDS thereon. It was also observed that entire loan was repaid in February, 2008, i.e. before end of the financial year. The ld. CIT(A) also recorded a finding to the effect that inspectors in their report has noted at page 3 of the assessment order, has confirmed the existence of such company at the given address. The ld. CIT(A) also found that main source of creditor company was from interest income, which was Rs. 85.30 lakhs. The creditor company has shown net profit of Rs. 14.03 lakhs. The loan in the name of assessee company in the year, outstanding loan from earlier years was duly reflected in the schedule of the balance sheet of creditor company under the head "Loans and Advances". By referring to assessment order framed u/s 143(3) on 31.5.2006 for assessment year 2004-05, the ld. CIT(A) has also observed that in the said assessment order, the Assessing Officer has verified the sources of fund of creditor company, which was 29
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invested in the loans and advances given to various companies including the assessee company. Thereafter, discussing various judicial pronouncements with reference to the factual finding of the instant case, the ld. CIT(A) found that all the ingredients of Section 68 has been fulfilled, namely, identity, genuineness and creditworthiness of loan creditor M/s. Chamak Trexing Private Limited.
10. The detailed finding recorded by the ld. CIT(A) as narrated above are as per material on record. These findings have not been controverted by the Department by bringing any positive material on record, accordingly, we do not find any reason to interfere in the findings recorded by the ld.CIT(A) with regard to the cash credit taken from M/s. Chamak Trexing Private Limited. Accordingly, we do not find any infirmity in the order of CIT(A) for deleting the addition and also deleting disallowance of interest on the loan taken from M/s. Chamak Trexing Private Limited.
11. With regard to disallowance of colliery expenses of Rs. 2.50 lakhs out of total claim of Rs. 5.24 lakhs, we found that disallowance is basically made by the Assessing Officer on the 30
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plea that expenses during the year have increased, however, by pointing out that it was disproportionate to the increase in turnover, a disallowance of Rs. 2.50 lakhs was made. The ld. CIT(A) has deleted the disallowance by observing that net taxable income of the assessee has increased from Rs. 57.10 lakhs to 183.22 lakhs. Similarly, ad hoc disallowance of Rs. 1 lakh out of general expenses claimed at Rs. 4.35 lakhs were deleted by the ld.CIT(A) after having the similar observations.
12. On perusal of various documents placed on record, we found that the net profit of the assessee company during the year have increased to five fold as compared to the net income of the immediately preceding year. The Assessing Officer has also not pin-pointed any particular expenses not supported by bills/vouchers. The disallowance was basically made on the plea of self prepared vouchers, some of which was not verifiable. Some of the expenditure was also paid in cash.
Keeping in view the totality of facts and circumstances of the case, we direct the Assessing Officer to restrict the disallowance to the extent of 20% cash expenditure incurred 31
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by the assessee on account of colliery expenses and official general expenses. We direct accordingly.
13. In the result, the appeal of the Revenue is allowed in part.
This order has been pronounced in the open court on 15th July, 2013.
Sd/- sd/-
(JOGINDER SINGH) (R. C. SHARMA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated : 15th July, 2013.
CPU*
1-2-11.7
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