Dy CIT, Kolhapur V. M/s Rathod Industries, Kolhapur

ITA 2383/PUN/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79967 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 30-11-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJIB JAIN
• Keywords: Opportunity of being heard; Additional evidence
• Section: 43B; 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO.2383/PN/2012 (A.Y: 2008-09) ADDL.CIT, RANGE-2, KOLHAPUR APPELLANT VS. M/S. RATHOD INDUSTRIES E-14, MIDC SHIROLI, KOLHAPUR. PAN: AADFR1065K RESPONDENT APPELLANT BY : SHRI RAJIB J AIN RESPONDENT BY : SHRI NIKH IL PATHAK DATE OF HEARING: 30.06.2014 DATE OF ORDER : 30.06.2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL), [IN SHORT C IT(A)] KOLHAPUR, DATED 11.09.2012 FOR A.Y. 2008-09 ON THE FOLLOWING GROUNDS. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LEARNED CIT (APPEALS), KOLHAPUR HAS ERRED IN DELETING THE A DDITION OF RS.4,04,242/- ON ACCOUNT OF SALES RETURNS BY ENTERT AINING ADDITIONAL EVIDENCE PRODUCED BEFORE HIM IN THE FORM OF STOCK LEDGER AND SALE REJECTION INVOICES WITHOUT GI VING ANY OPPORTUNITY TO THE ASSESSING OFFICER TO EXAMINE AS REQUIRED TO BE MANDATORILY GIVEN AS PER SUB-RULE(3) OF RULE 46A OF THE INCOME TAX RULES, 1962. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LEARNED CIT (APPEALS), KOLHAPUR HAS ERRED IN DELETING THE A DDITION ON ACCOUNT OF BONUS OF RS.7,93,605/- BY ENTERTAININ G ADDITIONAL EVIDENCE IN THE SHAPE OF AUDITOR'S CERTI FICATE AND WITHOUT INSISTING UPON THE ACTUAL EVIDENCE OF PAYME NT OF BONUS AND WITHOUT GIVING ANY OPPORTUNITY TO THE ASS ESSING 2 ITA NO.2383 OF 12 M/S. RATHOD INDUSTRIES OFFICER TO EXAMINE THE SAME AS MANDATORILY REQUIRED TO BE GIVEN AS PER SUB-RULE (3) OF RULE 46A OF THE INCOME TAX RULES, 1962. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LEARNED CIT (APPEALS), KOLHAPUR HAS ERRED IN DELETING THE DISALLOWANCES OF RS.3,43,319/- AND 3,28,357/- U/S. 40(A)(IA) ON THE BASIS OF ADDITIONAL EVIDENCE FURNI SHED BY THE ASSESSEE BEFORE HIM IN THE FORM OF REVISED DETAILS (AT VARIANCE WITH THE DETAILS PRODUCED BEFORE THE ASSES SING OFFICER) WITHOUT GIVING ANY OPPORTUNITY TO THE ASSE SSING OFFICER TO EXAMINE THE SAME AS MANDATORILY REQUIRED TO BE GIVEN AS PER SUB RULE(3) OF RULE 46A OF THE INCOME TAX RULES, 1962. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LEARNED CIT (APPEALS), KOLHAPUR HAS ERRED IN DELETING THE DISALLOWANCES OF RS.2,25,000/- MADE OUT OF WAGES BY ENTERTAINING ADDITIONAL EVIDENCE IN THE FORM OF PAY MENT VOUCHERS AND WAGE PAYMENT REGISTER PRODUCED BY THE ASSESSEE BEFORE HIM WITHOUT GIVING ANY OPPORTUNITY TO THE ASSESSING OFFICER TO EXAMINE AS REQUIRED TO BE MAND ATORILY GIVEN AS PER SUB-RULE(3) OF RULE 46A OF THE INCOME TAX RULES, 1962. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LEARNED CIT (APPEALS), KOLHAPUR HAS ERRED IN DELETING THE DISALLOWANCES OF RS.2,00,000/- MADE OUT OF CONSUMAB LE STORES WHEN THE DISALLOWANCE OF RS.2,00,000/- OUT O F THE TOTAL EXPENDITURE OF RS.37,85,987/- WAS QUITE REASO NABLE KEEPING IN VIEW THE FACT THAT ADMITTEDLY THAT THE A SSESSEE HAD NOT MAINTAINED ANY STOCK RECORDS REGARDING THE CONSUMPTION OF CONSUMABLE STORES. 6. THE APPELLANT PRAYS THAT THE ORDER OF THE COMMISSIO NER OF INCOME TAX (APPEALS), KOLHAPUR BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 7. THE APPELLANT CRAVES RIGHT TO ADD, ALTER, AMEND ANY OR ALL GROUNDS DURING HEARING OF APPEAL. 2. THE FIRST ISSUE IS WITH REGARD TO ADDITION OF 4,04,242/-. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD SHOWN SALES RETURN OF 4,04,242/- AND REDUCED IT FROM SALES ACCOUNT. THE ASSESSEE WAS ASKED TO FILE DETAILS OF ACCOUNTING TR EATMENT GIVEN TO SALES RETURN AND TO EXPLAIN AS TO HOW THESE WERE ACCOUNTED FOR 3 ITA NO.2383 OF 12 M/S. RATHOD INDUSTRIES IN ITS BOOKS. IN RESPONSE TO THE SAME, THE ASSESSE E FURNISHED BEFORE THE ASSESSING OFFICER COPIES OF FEW BILLS/CR EDIT NOTES FOR SALES REJECTION RECEIVED FROM DIFFERENT PARTIES AND COPIES OF LEDGER ACCOUNT OF SALES REJECTION. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE SALES RETURN OF GOODS WAS EITHER REQUIRED TO BE ADDED TO VALUE OF CLOSING STOCK OF GOODS AVAILABLE OR SHOWN AS SCRAP SALE. HE, THEREFORE, HELD THAT THE FAULTY TREATMENT GIVEN BY THE ASSESSEE BY SIMPLY REDUCING SALES WITHOUT TAKING CO RRESPONDING ENTRY IN STOCK OF MATERIAL AT HAND AT THE YEAR END, RESULTED IN REDUCTION IN PROFITS TO THE TUNE OF SALES RETURN. ACCORDINGLY, AN AMOUNT OF 4,04,242/- WAS ADDED TO ASSESSEE'S TOTAL INCOME. 2.1 THE MATTER WAS CARRIED BEFORE FIRST APPELLATE A UTHORITY, WHEREIN THE VARIOUS CONTENTIONS WERE RAISED ON BEHA LF OF ASSESSEE AND THE CIT(A) HAVING CONSIDERED THE SAME, HAS GRAN TED RELIED TO THE ASSESSEE. THE SAME HAS BEEN OPPOSED BEFORE US ON BEHALF OF REVENUE, INTER ALIA, STATED THAT THE CIT(A) HAS ERR ED IN DELETING THE ADDITION OF 4,04,242/- ON ACCOUNT OF SALES RETURNS BY ENTERTAINING ADDITIONAL EVIDENCE PRODUCED BEFORE HI M IN THE FORM OF STOCK LEDGER AND SALE REJECTION INVOICES WITHOUT GIVING ANY OPPORTUNITY TO THE ASSESSING OFFICER TO EXAMINE AS REQUIRED TO BE MANDATORILY GIVEN AS PER SUB-RULE(3) OF RULE 46A OF THE INCOME TAX RULES, 1962 AND REQUESTED TO SET ASIDE THE ORDE R OF CIT(A) AND THAT OF ASSESSING OFFICER BE RESTORED. ON THE OTHER HAND, THE LEARNED AUTHORIZED REPRESENTATIVE HAS CONTENDED THA T THE AMOUNT OF SALES RETURN WAS DEBITED TO SALES AND CRE DITED TO PARTYS ACCOUNT. FURTHER, THE STOCK OF RAW MATERIA L WAS INCREASED BY WEIGHT OF QUANTITY OF CASTINGS RECEIVE D BACK ON ACCOUNT OF RETURNS. IN THIS CONNECTION, THE ASSESS EE PLACED ON RECORD THE COPIES OF STOCK AS PRODUCED BEFORE THE A SSESSING OFFICER AND THE SALE REJECTION INVOICES AND TREATME NT OF THE SAME AND THE CIT(A) HAS RIGHTLY DELETED THE SAME. 4 ITA NO.2383 OF 12 M/S. RATHOD INDUSTRIES 2.2 AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND M ATERIAL ON RECORD, WE FIND THAT AS PER RECORDS SALES RETURNS H AVE BEEN SHOWN AS RECEIPTS AND THE QUANTITY RETURNED WAS ADD ED IN THE STOCK REGISTER OF FINISHED GOODS. A CREDIT NOTE WA S SIMULTANEOUSLY GIVEN TO THE PARTY AND SALES ACCOUNT WAS DEBITED ON THE BASIS OF BILLS FOR GOODS RETURNED AND AT THE YEAR END BALANCE WAS TAKEN TO THE PROFIT AND LOSS ACCOUNT BY THE ASSESSE E. IT WAS EXPLAINED ON BEHALF OF ASSESSEE THAT SOMETIM ES THE SALES RETURN IS REWORKED AND SENT BACK TO THE CLIENTS AND IN SUCH CASES FRESH SALES BILLS ARE RAISED. BY FOLLOWING THIS PR OCESS EVERY EFFECT IS GIVEN TO SALES RETURN. IN THIS BACKGROUND, THE CIT(A) HAS RIGHTLY OBSERVED THAT THERE WAS NO IRREGULARITY IN THE METHOD ADOPTED BY THE ASSESSEE IN ACCOUNTING OF SALES RETU RNS. BOTH, FINANCIAL AND QUANTITATIVE DETAILS WERE RECORDED. IT WAS OBSERVED THAT THE ASSESSING OFFICER HAS DISALLOWED THE SALES RETURN OF 4,04,242/- ON AN ASSUMPTION THAT IT HAS NOT BEEN AC COUNTED FOR IN STOCK REGISTER, BECAUSE OF THE ADOPTED PROCESS O F ACCOUNTING FOR SALES RETURN. THE CIT(A) FOUND NO FORCE IN THE ASSUMPTION OF THE ASSESSING OFFICER THAT THE VALUE OF SALES RETUR NS SHOULD HAVE BEEN RECOVERED AND SHOWN SCRAP SALES. THIS WAS FOR THE REASON THAT THE QUANTITY OF SALES RETURN WAS SIMULTANEOUSL Y ACCOUNTED FOR QUANTITATIVELY IN THE STOCK REGISTER AS WELL. IN THIS BACKGROUND, THE CIT(A) WAS JUSTIFIED IN DELETING TH E ADDITION BY WAY OF FACTUAL FINDING, WHICH NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 3. THE NEXT ISSUE IS WITH REGARD TO ADDITION ON ACC OUNT OF BONUS OF 7,93,605/-. THE ASSESSING OFFICER OBSERVED FROM T HE AUDIT REPORT THAT THE AUDITOR HAD REMARKED THAT BON US OF 7,93,605/- WAS NOT PAID TILL THE DATE OF AUDIT. SI NCE THE ASSESSEE COULD NOT FURNISH DETAILS OF ACTUAL PAYMENT OF BONU S, THE CLAIM OF THE ASSESSEE WAS REJECTED ON THE GROUND THAT AS PER SECTION 43B THE AMOUNT OF PROVISION OF WORKERS BONUS WAS TO BE ALLOWED AS 5 ITA NO.2383 OF 12 M/S. RATHOD INDUSTRIES EXPENSES ONLY IF PAYMENT IS EITHER ACTUALLY MADE DU RING THE YEAR OR TILL SUCH TIME AS IS PRESCRIBED BY THE ACT. 3.1 THE MATTER WAS CARRIED BEFORE FIRST APPELLATE A UTHORITY, WHEREIN THE VARIOUS CONTENTIONS WERE RAISED ON BEHA LF OF ASSESSEE AND THE CIT(A) HAVING CONSIDERED THE SAME, HAS GRAN TED RELIEF TO THE ASSESSEE. WHILE GRANTING RELIED, THE CIT(A) OB SERVED THAT THE AUDITOR'S CERTIFICATE HAS BEEN PROVIDED BEFORE HIM, INTER ALIA, CERTIFYING THAT THE AFORESAID SUM WAS PAID ON 30.09 .2008. THIS AMOUNT WAS OUTSTANDING AS ON 31.03.2008. THE SAID AUDITORS CERTIFICATE WAS ADMITTED AS ADDITIONAL EVIDENCE WIT HOUT PROVIDING OPPORTUNITY TO THE ASSESSING OFFICER WHICH IS VIOLA TION OF PROVISIONS OF SUB-RULE (3) OF RULE 46A OF THE INCOM E TAX RULES, 1962. IN VIEW OF THIS, WE SET ASIDE THE ORDER OF C IT(A) ON THE ISSUE AND RESTORE THE MATTER TO THE ASSESSING OFFIC ER WITH A DIRECTION TO DECIDE THE ISSUE AS PER FACT AND LAW A FTER PROVIDING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. SI NCE WE ARE RESTORING THE ISSUE ON THE POINT OF PROVISIONS OF R ULE 46A OF IT RULES, 1962, WE ARE REFRAINING FROM COMMENTING ON T HE MERIT OF THE ISSUE AT HAND. 4. THE NEXT ISSUE IS WITH REGARD TO DISALLOWANCE OF 3,43,319/- AND 3,28,257/- TOWARDS LABOUR CHARGES AND TRANSPORT CHARGES RESPECTIVELY U/S.40(A)(IA) OF THE ACT. THE ASSESSING OFFICER HAS NOTICED THAT OUT OF MACHINING CHARGES CLAIMED OF 44,03,394/-, TDS WAS MADE ONLY ON 40,60,075/-. SIMILARLY, WITH REGARD TO TRANSPORT PAYMENTS OF 13,48,429/- TDS WAS MADE ONLY ON 10,20,072/-. THE BALANCE AMOUNTS ON WHICH TDS WAS NOT MADE I.E. 3,43,319/- AND 3,28,257/- ON LABOUR CHARGES AND TRANSPORT, RESPECTIVELY, WERE THEREFORE BROUGHT TO TAX U/S.40(A)(IA) OF THE ACT IN THE ABSE NCE OF ANY DETAILS OF TDS DEDUCTED. 6 ITA NO.2383 OF 12 M/S. RATHOD INDUSTRIES 4.1 THE MATTER WAS CARRIED BEFORE FIRST APPELLATE A UTHORITY, WHEREIN THE VARIOUS CONTENTIONS WERE RAISED ON BEHA LF OF ASSESSEE AND THE CIT(A) HAVING CONSIDERED THE SAME, HAS GRAN TED RELIEF TO THE ASSESSEE ON BOTH ACCOUNTS. THE CIT(A) HAS OBSE RVED THAT THE TDS ACCOUNT WAS NOT VERIFIED BY THE ASSESSING OFFIC ER BEFORE MAKING DISALLOWANCE. THE ASSESSEE PLACED BEFORE TH E CIT(A) THE LEDGER ACCOUNT OF TDS ON LABOUR CHARGES. FROM THIS ACCOUNT, IT WAS FOUND THAT TDS WAS NOT MADE ON THOSE PAYMENT WH ICH WERE BELOW 50,000/-. THE CIT(A) HAD OBSERVED THAT TDS ON LAB OUR CHARGES HAS BEEN WRONGLY STATED TO BE AN AMOUNT OF 3,43,319/- THE ACTUAL FIGURE ON WHICH TDS WAS NOT DEDUCTED IS 1,59,171/- SINCE TDS WAS NOT DEDUCTIBLE ON PAYMENTS LESS THAN 50,000/- IN A YEAR TO EACH PARTY AS PER THE PROVISIONS OF SE CTION 194C(5) OF THE ACT, THE DISALLOWANCE WAS NOT WARRANTED. SIMIL ARLY, THE ASSESSEE HAS PROVIDED THE DETAILS OF PAYMENTS MADE TOWARDS TRANSPORT CHARGES AND WHEREBY, THE CIT(A) OBSERVED THAT TRANSPORT CHARGES HAS NOT BEEN MADE ONLY IN RESPECT OF PAYMENTS WHICH WERE BELOW 50,000/- TO EACH PERSON IN A YEAR. SINCE THE ASSESSEE WAS NOT REQUIRED TO DEDUCT TAX AT SOURCE I N RESPECT OF SUCH PAYMENTS, BOTH THE DISALLOWANCES WERE DELETED BY THE CIT(A). 4.2 THE SAME HAS BEEN OPPOSED BEFORE US ON BEHALF O F REVENUE, INTER ALIA, THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS SUBMITTED THAT THE CIT(A) HAS ERRED IN DELETING THE DISALLOWANCES OF 3,43,319/- AND 3,28,357/- U/S. 40(A)(IA) OF THE ACT ON THE BASIS OF ADDITIONAL EVIDENCE FURNISHED BY THE ASSES SEE BEFORE THE CIT(A) IN THE FORM OF REVISED DETAILS WITHOUT GIVIN G ANY OPPORTUNITY TO THE ASSESSING OFFICER TO EXAMINE THE SAME AS MANDATORILY REQUIRED TO BE GIVEN AS PER SUB RULE(3) OF RULE 46A OF THE INCOME TAX RULES, 1962. 7 ITA NO.2383 OF 12 M/S. RATHOD INDUSTRIES 4.3 WE FIND THE FORCE IN THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT THE LEDGER ACCOUNTS OF TDS ON L ABOUR CHARGES AND THE DETAILS OF PAYMENT MADE TOWARDS TRANSPORT C HARGES WERE FILED BEFORE THE CIT(A) AS ADDITIONAL EVIDENCE. AS ADDITIONAL EVIDENCE HAS TO BE CONFRONTED TO THE CONCERNED ASSE SSING OFFICER AS PER SUB RULE (3) OF RULE 46A OF IT RULES, 1962, THE CIT(A) WAS NOT JUSTIFIED ON THIS ISSUE. SO, IN THE INTEREST O F JUSTICE, WE SET ASIDE THE ORDER OF CIT(A) ON THE ISSUES OF BOTH ACC OUNTS AND RESTORE THE MATTER TO THE ASSESSING OFFICER WITH A DIRECTION TO DECIDE THE ISSUE AS PER FACT AND LAW AFTER PROVIDIN G DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. SINCE WE ARE RESTORING THE ISSUE OF ADMISSION OF ADDITIONAL EVID ENCE AS STATED ABOVE, WE ARE REFRAINING FROM COMMENTING ON THE MER IT OF THE ISSUE AT HAND. 5. THE NEXT ISSUE IS WITH REGARD TO DISALLOWANCE MA DE OF 2,25,000/- OUT OF WAGES. ON VERIFICATION OF THE PR OFIT AND LOSS ACCOUNT AND THE DETAILS FURNISHED IN RESPECT OF WAG ES, THE ASSESSING OFFICER NOTICED THAT (I) PAYMENT OF WAGES IN THE MONTH OF MARCH 2008 WAS SHOWN AT 10,96,154/- WHEREAS IN EARLIER MONTHS SUCH PAYMENTS RANGED FROM 3 LAKHS TO 3.5 LAKHS PER MONTH (II) PART OF THESE EXPENSES WERE NOT VERIFIABLE AS SOME OF THESE WERE MADE ON SELF MADE VOUCHERS WITHOUT THIRD PARTY BILLS (III) A PART OF THESE EXPENSES WERE INCURRED IN CASH. SIN CE THE ASSESSEE FAILED TO JUSTIFY THE SUDDEN INCREASE IN PAYMENT OF WAGES IN THE MONTH OF MARCH 2008 AND ALSO FAILED TO ESTABLISH THAT THE ENTIRE EXPENDITUR E WAS INCURRED FOR BUSINESS PURPOSES, AN AMOUNT OF 2,25,000/- WAS DISALLOWED AND ADDED TO TOTAL INCOME . 5.1 THE MATTER WAS CARRIED BEFORE FIRST APPELLATE A UTHORITY, WHEREIN THE VARIOUS CONTENTIONS WERE RAISED ON BEHA LF OF ASSESSEE AND THE CIT(A) HAVING CONSIDERED THE SAME, HAS GRAN TED RELIEF TO 8 ITA NO.2383 OF 12 M/S. RATHOD INDUSTRIES THE ASSESSEE. THE SAME HAS BEEN OPPOSED BEFORE US ON BEHALF OF REVENUE, INTER ALIA, THE LEARNED DEPARTMENTAL REPRE SENTATIVE HAS SUBMITTED THAT THE CIT(A) HAS ERRED IN DELETING THE DISALLOWANCES OF 2,25,000/- MADE OUT OF WAGES BY ENTERTAINING ADDITI ONAL EVIDENCE IN THE FORM OF PAYMENT VOUCHERS AND WAGE P AYMENT REGISTER PRODUCED BY THE ASSESSEE BEFORE HIM WITHOU T GIVING ANY OPPORTUNITY TO THE ASSESSING OFFICER TO EXAMINE AS REQUIRED TO BE MANDATORILY GIVEN AS PER SUB-RULE(3) OF RULE 46A OF THE INCOME TAX RULES, 1962. ACCORDINGLY, THE ORDER OF CIT(A) BE SET ASIDE AND THAT OF ASSESSING OFFICER BE RESTORED. ON THE OTHER HAND, THE LEARNED AUTHORIZED REPRESENTATIVE HAS SUBMITTED THA T THE CIT(A) HAS RIGHTLY DELETED THE ADHOC ADDITION MADE BY THE ASSESSING OFFICER. 5.2 AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND M ATERIAL ON RECORD, WE FIND THAT THE ASSESSING OFFICER HAD MADE ADHOC DISALLOWANCE OF 2,25,000/- OUT OF WAGES. THE MAIN REASON FOR MAKING THIS DISALLOWANCE WAS THAT THERE IS NO JUSTI FICATION IN INCREASE IN PAYMENT OF WAGES IN THE MONTH OF MARCH, 2008. IT WAS EXPLAINED ON BEHALF OF ASSESSEE THAT DURING THE MONTH OF MARCH, AN AMOUNT OF 10,96,154/- WAS DEBITED TOWARDS PAYMENT OF WAGES. OUT OF THIS AMOUNT, A SUM OF 3,46,955/- PERTAINED TO WAGE OF THE MONTH OF FEBRUARY, 2008. IT WAS EXPLAINED THAT AS PER THEIR ACCOUNTING SYSTEM, WAGE S ARE ACCOUNTED FOR ON ACTUAL PAYMENT BASIS EXCEPT FOR TH E MONTH OF MARCH WHEN NOT ONLY THE ACTUAL PAYMENTS ARE DEBITED BUT ANY AMOUNT WHICH IS PAYABLE FOR THE MONTH OF MARCH WAS ALSO DEBITED TO THE PROFIT AND LOSS ACCOUNT. ACCORDINGL Y, THE ASSESSEE HAD DEBITED 4,12,608/- BEING THE AMOUNT OF PROVISION FOR WAGES PAYABLE FOR THE MONTH OF MARCH AND 12,669/- BEING THE AMOUNT OF WAGES PAID FOR AND DURING THE MONTH OF MARCH. TH E BALANCE AMOUNT OF 3,23,922/- REFLECTED THE PAYMENTS MADE TO VARIOUS WORKERS ON ACCOUNT OF WAGE DIFFERENCE ACCRUING AND INCURRED 9 ITA NO.2383 OF 12 M/S. RATHOD INDUSTRIES DURING THE YEAR. THE ASSESSEE SUBMITTED THESE CONT ENTIONS BEFORE THE CIT(A), WHO HAVING CONSIDERED THE SAME, HAS OBSERVED THAT THE DISALLOWANCE OF 2,25,000/- OUT OF WAGES PAID DURING THE MONTH OF MARCH HAS BEEN MADE ON SURMISES AND PRESUMPTION, WITHOUT VERIFYING THE DETAILS. THIS S HOWS THAT THE DETAILS WERE AVAILABLE BEFORE THE ASSESSING OFFICER AT THE RELEVANT POINT OF TIME AND IT WAS NOT JUSTIFIED TO MAKE ADHO C DISALLOWANCE WITHOUT GIVING COGENT REASONING FOR THE SAME. MORE OVER, THE ADHOC DISALLOWANCE MADE BY THE ASSESSING OFFICER WA S NOT JUSTIFIED IN ITS FACTS AND CIRCUMSTANCES. THIS REA SONED FINDING OF CIT(A) NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPH OLD THE SAME. 6. THE NEXT ISSUE IS WITH REGARD TO AD HOC DISALLOW ANCES MADE OUT OF CONSUMABLE PURCHASES. THE ASSESSING OF FICER HAS MADE U/S. 37(1) OF THE ACT OF 2,00,000/- IN THE ABSENCE OF DAY TO DAY STOCK REGISTER FOR PURCHASE, ISSUE AND CONSU MPTION OF ITEMS IN RESPECT OF CONSUMABLE PURCHASES OF 37,85,987/- DEBITED TO THE PROFIT AND LOSS ACCOUNT. 6.1 THE MATTER WAS CARRIED BEFORE FIRST APPELLATE A UTHORITY, WHEREIN THE VARIOUS CONTENTIONS WERE RAISED ON BEHA LF OF ASSESSEE AND THE CIT(A) HAVING CONSIDERED THE SAME, HAS OBSERVED THAT THE ADDITION OF 2,00,000/- HAS BEEN MADE ON ADHOC BASIS ON ACCOUNT OF PURCHASE OF CONSUMABLE ST ORES. IT WAS POINTED OUT BY THE ASSESSEE THAT THIS AD HOC DI SALLOWANCE IS MADE ON THE ASSUMPTION THAT THE DAY TO DAY RECORDS ARE NOT KEPT. THE ASSESSEE HAS SHOWN THAT CONSUMABLE STORE S IS MADE ON ACCOUNT OF PURCHASE OF VARIOUS ITEMS LIKE CLOTH, WATER PAPER, DIFFERENT TYPES OF OIL, CUTTERS, BORING BARS, DRILL S, REAMERS ETC. THE ASSESSEE EXPLAINED THAT THE METHOD OF ACCOUNTIN G FOR CONSUMABLE PURCHASES IS BY MAKING AN INDENT FOR THE REQUIRED ITEM AND PURCHASING THE SAME FOR WHICH ALL BILLS WE RE AVAILABLE. THE CIT(A) HAS RIGHTLY OBSERVED THAT THE ASSESSING OFFICER HAS NOT 10 ITA NO.2383 OF 12 M/S. RATHOD INDUSTRIES VERIFIED WHETHER BILLS OF THESE CONSUMABLE STORES W ERE AVAILABLE OR NOT. HE HAS MADE THE DISALLOWANCE ON THE APPREH ENSION THAT DAY TO DAY REGISTER FOR PURCHASE, ISSUE AND CONSUMP TION HAS NOT BEEN MAINTAINED. EVEN IF THE SAME WAS NOT MAINTAIN ED THEN, THE ACTUAL REASON FOR MAKING A DISALLOWANCE WOULD HAVE BEEN AN ABSENCE OF BILLS IN SUPPORT OF PURCHASES. HOWEVER, NO SUCH DISCREPANCY HAS BEEN POINTED OUT BY THE ASSESSING O FFICER. ACCORDINGLY, THE CIT(A) HAS RIGHTLY DELETED THE ADD ITION MADE BY THE ASSESSING OFFICER. THIS REASONED FINDING OF CI T(A) NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 7. IN THE RESULT, APPEAL FILED BY THE REVENUE IS PA RTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS THE DAY 30 TH OF JUNE, 2014. SD/- SD/- (G.S. PANNU) (SHAILENDRA KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 30 TH JUNE, 2014 GCVSR COPY TO:- 1) DEPARTMENT 2) ASSESSEE 3) THE CIT(A), KOLHAPUR 4) THE CIT, KOLHAPUR 5) THE DR, A BENCH, I.T.A.T., PUNE. 6) GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE