THE ACIT., CIRCLE - 1, RAJAHMUNDRY., Rajahmundry V. M/s Sri Ramalingeswara Rice & Oil Mills,

ITA 448/VIZ/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0167 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 11-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources
• Section: 133A; 6

Judgement Text

ITA NO.448/VIZAG/2012 SRI RAMALINGESWARA RICE & OIL MILLS, VELPUR 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . . . . , . . . . , $ $ $ $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./ I.T.A.NO.448/VIZAG/2012 ( / ASSESSMENT YEAR : 2008-09 ) ACIT CIRCLE - 1 RAJAHMUNDRY VS. SRI RAMALINGESWARA RICE & OIL MILLS VELPUR [ PAN: AAIFS 3902M ] ( & & & & / APPELLANT) ( '(& '(& '(& '(& / RESPONDENT ) & ) / APPELLANT BY : SHRI M.N. MURTHY NAIK, DR '(& ) / RESPONDENT BY : SHRI G.V.N. HARI, AR ) - / DATE OF HEARING : 02.11.2015 ) - / DATE OF PRONOUNCEMENT : 04.12.2015 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: THIS APPEAL IS FILED BY THE REVENUE AGAINST THE OR DER OF THE CIT(A), GUNTUR DATED 3.10.2012 FOR THE ASSESSMENT YEAR 2008 -09. 2. FACTS ARE IN BRIEF THAT THE ASSESSEE FIRM CARRYI NG ON BUSINESS OF RICE MILL AND PROCESSING OF RICE, FILED ITS RETURN OF INCOME BY DECLARING TOTAL INCOME OF RS.35,09,581/- ON 29.9.2009. SUBSE QUENTLY, THERE IS A ITA NO.448/VIZAG/2012 SRI RAMALINGESWARA RICE & OIL MILLS, VELPUR 2 SURVEY OPERATION CARRIED IN THE CASE OF ASSESSEE U/ S 133A OF THE INCOME-TAX ACT, 1961 (HEREINAFTER CALLED AS THE AC T) ON 16.11.2010 AND SOME INCRIMINATING MATERIAL WAS FOUND AND IMPOUNDED . IN THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE A.O. HAS OBSERVED T HAT THE TOTAL PADDY PAYMENTS MADE BY WAY OF CASH AS RECORDED IN THE VOU CHERS FOR THE THREE MONTHS FROM 1.1.2008 TO 31.3.2008 WERE TO THE TUNE OF RS.9,37,28,305/-. THE ASSESSING OFFICER IS OF THE OPINION THAT THE ASSESSEE HAS PURCHASED PADDY WITH BLACK MONEY AND B LACK MONEY IS CIRCULATED BY WAY OF INVESTMENTS IN CREATION OF ASS ETS AND INVESTMENTS IN SISTER CONCERN AND SUBSTANTIAL AMOUNTS HAVE BEEN INVESTED IN THE NAME OF THE FAMILY MEMBERS OF THE ASSESSEE GROUP TO WARDS CAPITAL IN THEIR OWN PROJECT I.E. M/S. SIRIUS OVERSEAS (P) LTD . THE TOTAL PAID UP CAPITAL IN THE NEW COMPANY FOR THE ASSESSMENT YEAR 2009-10 IS RS.6.61 CRORES. THE SAME WAS INCREASED TO RS.20 CRORES FOR THE A.Y. 2010-11. HE FURTHER OBSERVED THAT THE PURCHASES ARE MADE WIT H UNACCOUNTED INCOMES BY MAKING PAYMENTS TO THE FARMERS AS ON THE DATE OF PURCHASE TREATING THEM AS CREDITORS AND LIQUEFYING SAID CRED ITORS AT A LATER STAGE AS AND WHEN SUFFICIENT POSITIVE BALANCES ARE AVAILA BLE IN THE BOOKS, INFLATED THE PURCHASE RATE AND NO DETAILS OF PADDY I.E. VARIETY, QUANTITY CORRELATED WITH VOUCHERS TO THAT OF B-REGISTERS AND OTHER RECORDS. THE A.O. HAS TAKEN AVERAGE 5% OF THE TOTAL AMOUNT OF RS .30,53,84,982/- ITA NO.448/VIZAG/2012 SRI RAMALINGESWARA RICE & OIL MILLS, VELPUR 3 TOWARDS PURCHASE VALUE OF THE PADDY RECORDED IN THE BOOKS AND DISALLOWED TO THE TUNE OF RS.1,52,69,249/- AND THE SAME WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 3. ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A) A ND HE HAS FILED ALL THE BOOKS OF ACCOUNTS AND OTHER DETAILS & STOCK REG ISTERS. THE LD. CIT(A) BY CONSIDERING ALL THE DETAILS, HE HAS DISCU SSED THE ORDER IN DETAIL FROM PAGE NOS.5 TO 10 AND DELETED THE ADDITION MADE BY THE A.O. BY OBSERVING AS UNDER: 5.4. I HAVE GONE THROUGH THE SUBMISSIONS MADE BY TH E APPELLANT AND DOCUMENTARY EVIDENCE PRODUCED IN SUPPORT OF ITS CON TENTIONS. PREVIOUSLY THE CASE WAS HEARD BY THE COMMISSIONER OF INCOME-TAX (A PPEALS), VISAKHAPATNAM AND NOW THE FILE WAS TRANSFERRED TO T HE UNDERSIGNED AS PER NOTIFICATION ISSUED BY THE CCS IT & THE DGIT, HYDERABAD. ON PERUSAL OF PROCEEDINGS BY THE CIT(A), VISAKHAPATNAM, IT WAS FOUND THAT A REMAND REPORT WAS CALLED FOR VIDE OFFICE LETTER DATED 24.1 1.2011 FROM THE ACIT, CIRCLE-1, RAJAHMUNDRY REQUIRING HIM TO OBTAIN AND E XAMINE THE LETTER OF CONFIRMATIONS OF FARMERS. IN RESPONSE TO THE SAID LETTER, THE ACIT, RAJAHMUNDRY SUBMITTED A REPORT DT.07.03.2012 STATIN G THAT ENQUIRY OF THE FARMERS WAS MADE ON SELECTIVE BASIS DUE TO HUGE NUMBER AND ALSO OBTAINED DOCUMENTS REGARDING THE IDENTITY OF THE FA RMERS AND THEIR LAND HOLDINGS AND STATED IN HIS REPORT THAT FARMERS HAVE CONFIRMED THE SALE OF PADDY TO THE APPELLANT FIRM DURING THE FINANCIAL YE AR 2007-08 AND ALSO CONFIRMED THE PRICE PAID PER QUINTAL AND RECEIPT OF SALE CONSIDERATION OF PADDY. FINALLY HE WAS OF OPINION THAT SALE OF PADDY BY THE FARMERS TO THE APPELLANT FIRM HAS TAKEN PLACE AND THE FARMERS RECE IVED THE SALE CONSIDERATION AS STATED IN THEIR CONFIRMATIONS, THE PRICE OF WHICH IS DISCLOSED IN THE FINANCIAL STATEMENTS OF THE APPELL ANT FIRM. 5.5. THE REMAND REPORT SUBMITTED BY THE ACIT, RAJAH MUNDRY WAS EXAMINED CAREFULLY WHEREIN HE CONFIRMED THE GENUINE NESS OF PURCHASES AND THE PAYMENT OF PADDY PRICE. FROM THE PERUSAL OF THE ORDER OF THE AO, IT IS OBSERVED THAT NO DEFECTS IN BOOKS OF ACCOUNT WERE FOUND BY THE AO AND NO REJECTION OF SUCH BOOKS OF ACCOUNT WAS MADE. FURTHER NO DEFECTS IN THE VOUCHERS WERE POINTED OUT FOR THE REMAINING PERIOD OF NINE MONTHS. THE CERTIFICATE GIVEN BY THE AGRICULTURAL MARKET COMMIT TEE CONFIRMING THE QUANTITIES PURCHASED WAS EXAMINED AND NO ADVERSE CO MMENTS WERE ITA NO.448/VIZAG/2012 SRI RAMALINGESWARA RICE & OIL MILLS, VELPUR 4 MADE. THE COPY OF THE ORDER OF THE GOVERNMENT ANNOUNCING THE MSP OF PADDY WAS ALSO TAKEN INTO CONSIDERATION. THE ONLY P OINT RAISED BY THE AO IS REGARDING NON AVAILABILITY OF SIGNATURES FOR THE PE RIOD 01.01.2008 TO 31.03.2008 ON THE VOUCHERS FROM WHICH THE ALLEGED C ONCLUSIONS WERE DRAWN BY THE AO. THE FARMERS WHO SUPPLIED THE PADDY HAVE CONFIRMED THE ALSO THE RECEIPT OF SALE CONSIDERATION AS STATED BY THE ACIT, RAJAHMUNDRY IN HIS REMAND REPORT. IT IS IMPORTANT TO NOTE HERE THA T THE PURCHASE OF PADDY FROM FARMERS BY THE AO DURING REMAND PROCEEDI NGS UNEQUIVOCALLY PROVED THE ESSENTIAL INGREDIENTS OF IDENTITY OF THE FARMERS, THEIR CREDITWORTHINESS AND GENUINENESS OF TRANSACTIONS IN VOLVED. UNDER SUCH CIRCUMSTANCES, I AM OF THE VIEW THAT THE AO WAS NOT JUSTIFIED IN MAKING ADDITION TOWARDS INFLATED PURCHASES ON AN ADHOC BAS IS WITHOUT BRINGING ANY COGENT MATERIAL ON RECORD AND ACCORDINGLY, HE I S DIRECTED TO DELETE THE SAME. 4. ON APPEAL BY THE DEPARTMENT ON THIS ISSUE, THE L D. D.R. HAS SUBMITTED THAT DISALLOWANCE MADE BY THE A.O. IS REA SONABLE AND JUSTIFIED AND STRONGLY SUPPORTED THE ORDER PASSED BY THE A.O. 5. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE HAS SUBMITTED THAT THE LD. CIT(A), AFTER CALLING THE REMAND REPOR T FROM THE A.O., DELETED THE ADDITION AND SUPPORTED THE ORDER PASSED BY CIT(A). 6. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE RECOR DS AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE A .O. HAS DISALLOWED 5% OF THE TOTAL AMOUNT OF PADDY PURCHASES RECORDED IN THE BOOKS ON THE GROUND THAT THERE ARE NO VOUCHERS FOR THE PERIO D FROM 1.1.2008 TO 31.3.2008 AND HE IS ALSO OF THE OPINION THAT PURCHA SES WERE MADE WITH UNACCOUNTED INCOME AND ASSESSEE HAS INVESTED THE IN COME INTO SISTER CONCERN AND OTHER INVESTMENTS. THE LD. CIT(A) BY C ONSIDERING THE REMAND REPORT DATED 7.3.2012 HAS OBSERVED THAT THE REMAND REPORT ITA NO.448/VIZAG/2012 SRI RAMALINGESWARA RICE & OIL MILLS, VELPUR 5 SUBMITTED BY THE ACIT, RAJAHMUNDRY WAS EXAMINED CAR EFULLY, WHEREIN HE HAS CONFIRMED THE GENUINENESS OF PURCHASES AND P AYMENT OF PADDY PRICE. NO DEFECTS IN BOOKS OF ACCOUNTS WERE FOUND BY THE A.O. AND NO REJECTION OF SUCH BOOKS OF ACCOUNTS WAS MADE. FURT HER, NO DEFECTS IN THE VOUCHERS WERE POINTED OUT FOR REMAINING PERIOD OF 9 MONTHS. THE AGRICULTURE MARKET COMMITTEE ALSO CONFIRMED THE QUA NTITY OF PURCHASES. THE ORDER OF THE GOVERNMENT ANNOUNCING MINIMUM SALE PRICE OF PADDY WAS ALSO TAKEN INTO CONSIDERATION. THE FARMERS WHO SUPPLIED THE PADDY CONFIRMED THE SALE AND ALSO THE RECEIPT OF SALE CON SIDERATION AS CONSIDERED BY ACIT RAJAHMUNDRY IN HIS REMAND REPORT . WITH THE ABOVE OBSERVATION, HE HAS DELETED THE ADDITION MADE BY TH E A.O. WE FIND THAT WHEN THE LD. CIT(A) CALLED FOR THE REMAND REPORT AN D ON THE BASIS OF DIRECTION GIVEN BY THE LD. CIT(A), THE A.O. I.E. AC IT RAJAHMUNDRY EXAMINED/ENQUIRED INTO THE ISSUE IN DETAIL AND FOUN D THAT THE PURCHASE OF PADDY IS GENUINE AND ACCORDINGLY SUBMITTED A REM AND REPORT TO THE LD. CIT(A). THE LD. CIT(A) BASED ON THE REMAND REP ORT DELETED THE ADDITION MADE BY THE A.O. WE FIND NO INFIRMITY IN T HE ORDER PASSED BY THE LD. CIT(A). HENCE, THE APPEAL FILED BY THE REV ENUE ON THIS GROUND IS DISMISSED. ITA NO.448/VIZAG/2012 SRI RAMALINGESWARA RICE & OIL MILLS, VELPUR 6 7. SO FAR AS DISALLOWANCE OF FREIGHT CHARGES, THE A .O. HAS OBSERVED IN THE ASSESSMENT ORDER THAT THERE IS NO SERIAL NUMBER ON VOUCHERS, NO SIGNATURE OF THE MANAGING PARTNER/AUTHORIZED PERSON ON VOUCHER, ON MANY VOUCHERS MORE THAN ONE PAYMENT HAS BEEN MADE, NO REVENUE STAMP HAVE BEEN AFFIXED, IN SOME OF THE CASES, THE SIGNATURE OF THE RECIPIENTS ARE NOT PRESENT, SOME OF THE PAYMENTS HA VE NOT BEEN SUPPORTED BY VOUCHERS, THE DATA NOT AVAILABLE WITH THE RTO FOR SOME OF THE VEHICLES, THE DATA FOR SOME OF THE VEHICLE NOS. SHOWS OTHER VEHICLES OTHER THAN GOODS TRANSPORT VEHICLES. WITH THE ABOVE OBSERVATION, HE HAS ADDED 10% OF THE FREIGHT CHARGES CLAIMED BY THE ASSESSEE. 8. AGGRIEVED, ASSESSEE FILED AN APPEAL MAKING DETAI LED SUBMISSIONS BEFORE THE CIT(A). THE LD. CIT(A) AFTER CONSIDERIN G THE SUBMISSIONS OF THE ASSESSEE RESTRICTED THE DISALLOWANCE TO THE EXT ENT OF RS.10 LAKHS INSTEAD OF RS.34,05,685/-. THE RELEVANT PORTION OF THE ORDER IS EXTRACTED AS UNDER: I HAVE GONE THROUGH THE FINDINGS MADE BY THE AO IN H IS ORDER AND SUBMISSIONS MADE BY THE APPELLANT AND DOCUMENTS SUB MITTED IN SUPPORT OF HIS CONTENTIONS AND PERUSED THE MATERIAL AVAILAB LE ON RECORD. THE OBSERVATIONS OF THE AO, WHILE DISALLOWING 10% OF TH E CLAIM WAS, AMONG OTHER THINGS, THE VOUCHERS WERE NOT NUMBERED SERIAL WISE, THOUGH EXPENSES MENTIONED IN BOOKS WERE ON DAY TO DAY BASIS; ON SOME OF THE VOUCHERS MG PARTNER'S SIGNATURES WERE NOT FOUND; ACCOUNTANT HAS TAKEN SIGNATURE OF THE PARTIES ON A SINGLE DAY ON MANY OC CASIONS FOR THE WORKS RENDERED OVER A PERIOD OF TIME; ON MANY VOUCHERS REVENUE STAMPS WERE NOT AFFIXED; ON SOME OF THE VOUCHERS NAMES WERE NOT LEGIBLE ETC AND ETC. IN ITS COUNTER THE AR HAS PROTESTED THE ACTION OF T HE AO ON THE MAIN ITA NO.448/VIZAG/2012 SRI RAMALINGESWARA RICE & OIL MILLS, VELPUR 7 GROUND THAT GIVEN THE VOLUME OF THE BUSINESS TRANSA CTIONS, THAT TOO, WITH FARMERS FROM RURAL AREAS, SMALL LAPSES IN MAINTAINI NG VOUCHERS WOULD OCCUR FOR WHICH A PERCENTAGE OF DISALLOWANCE WAS UNHEARD OF. IN A WAY, THE AR HAS TACITLY NOT UNHAPPY WITH THE DECISION OF THE AO, BU T UNCOMFORTABLE, WHEN DISALLOWANCE WAS MADE AS A PERCENTAGE OF WHOLE EXPENDITURE. THUS, THE DECISION OF THE AO, IN PRINCIPLE IS APPRO VED, BUT SUBJECT TO LIMITATIONS; WHICH ARE LIKE CASH TRANSACTIONS WITH FARMERS, OBTAINING VOUCHERS FOR EVERY EXPENSE IS NOT POSSIBLE, LIKE EN GAGING AUTO TO REACH MARKET YARD FOR PURCHASE OF PADDY ETC. THUS, ONE OF THE LIMITATIONS IS THAT SELF MADE VOUCHERS LACK AUTHENTICITY AND SUSCEPTIBL E FOR MANIPULATIONS AND AS SUCH PRONE FOR UNTRUE NATURE OF EXPENSES. TH US, HAVING REGARD TO FACTS, CIRCUMSTANCES, NATURE OF BUSINESS WHERE MAIN PLAYERS ARE FARMERS GROWING PADDY, EXPLANATIONS OFFERED BY THE AR, IN C OURSE OF THE APPELLATE PROCEEDINGS, I AM OF THE CONSIDERED OPINION THAT END S OF JUSTICE ARE MET IF THE DISALLOWANCE IS RESTRICTED TO RS.10,00,000/-, I NSTEAD OF THE ONE MADE BY THE AO AT RS.34,95,658/- AND THE AO IS DIRECTED ACCORDINGLY. 9. WE FIND THAT THE A.O. MADE A DISALLOWANCE IN THIS CASE ON FLIMSY GROUNDS AND SOME TECHNICAL ERRORS. IN OUR OPINION, THE LD. CIT(A) AFTER CONSIDERING THE DETAILED EXPLANATION GIVEN BY THE A SSESSEE, DELETED ADDITION MADE BY THE A.O. WE FIND NO INFIRMITY IN T HE ORDER PASSED BY THE LD. CIT(A). 10. IN SO FAR AS DISALLOWANCE OF EXPENSES ARE CONCE RNED, THE A.O. HAS DISALLOWED CERTAIN EXPENSES RELATING TO TRAVELLING AND CONVEYANCE AND ADMINISTRATIVE EXPENSES ON THE GROUND THAT VOUCHERS ARE NOT VERIFIABLE. BEFORE CIT(A), THE ASSESSEE HAS SUBMITTED THAT THE A.O. WITHOUT CALLING ANY DETAILS AND WITHOUT ISSUING A SHOW CAUSE NOTICE , HE HAS MADE 10% DISALLOWANCE, WHICH IS NOT JUSTIFIED. THE LD. CIT( A) AFTER CONSIDERING THE EXPLANATIONS OF THE ASSESSEE, RESTRICTED DISALLOWAN CE TO THE TUNE OF RS.5 ITA NO.448/VIZAG/2012 SRI RAMALINGESWARA RICE & OIL MILLS, VELPUR 8 LAKHS INSTEAD OF RS.8,36,727/-. THE RELEVANT PORTI ON OF THE ORDER IS EXTRACTED AS UNDER: 7.2. I HAVE CAREFULLY EXAMINED THE FINDINGS MADE B Y THE AO IN HIS ORDER AND THE SUBMISSIONS MADE BY THE APPELLANT AND PERUS ED THE MATERIAL AVAILABLE ON RECORD. A CAREFUL PERUSAL OF THE STATE OF AFFAIRS REVEALED THAT THE REASONS STATED BY THE AO AND THE SUBMISSIONS MA DE BY THE AR TO PUT HIS POINT OF VIEW WERE ALMOST SAME AS PER SECOND GR OUND OF APPEAL, BUT WITH A RIDER. THE RIDER HERE IS THAT IN THIS AREA OF EXPENDITURE, BANK CHARGES OF RS.8,50,176/- AND BROKERAGE PAID AT RS.8 ,28,594/- WERE FULLY VERIFIABLE AND AUTHENTIC, FOR THE REASON THAT THE B ANK CHARGES ARE THE CHARGES AND FEES LEVIED BY THE BANK FOR THEIR CUSTO MERS, INCLUDES INTER ALIA, MONTHLY CHARGES FOR ACCOUNT MAINTENANCE, CHEQUE COL LECTION CHARGES, LOAN RENEWAL AND PROCESSING CHARGES ETC., WHICH ARE VERI FIABLE AND INCLUDED IN THE BANK STATEMENT, WHEREAS REGARDING BROKERAGE, TH E APPELLANT SUBMITTED THE DETAILS OF BROKERAGE PAID, INCLUDING TDS DEDUCTED, WHEREVER APPLICABLE. IN LIGHT OF THIS POSITION, NO I NTERFERENCE IS CALLED FOR IN AS MUCH AS THESE ITEMS OF EXPENDITURE, IN ALL AM OUNTING TO RS.16,78,770/-. THUS, IN THE REMAINING PART OF EXPE NDITURE OF RS.66,84,507/- (RS.83,67,277/- MINUS RS.16,78,770/- ), IN PRINCIPLE, DISALLOWANCE IS POSSIBLE. WHEREAS, IF AT ALL 10% HA S TO BE APPLIED, IT SHOULD BE ON THE EXPENDITURE OF RS.66,84,507/-, BUT NOT ON THE EXPENDITURE CLAIMED BY THE APPELLANT AT RS.83,67,277/-. AGAIN F OR THE SIMILAR REASONS SPELT OUT BY THE UNDERSIGNED AT GROUND NO. 2 ABOVE, I AM OF THE CONSIDERED OPINION THAT ENDS OF JUSTICE ARE MET IF THE DISALLOWANCE IS RESTRICTED TO RS.5,00,000/-, INSTEAD OF THE ONE ADO PTED BY THE AO AT RS.8,36,727/- AND THE AO IS DIRECTED ACCORDINGLY. 11. WE FIND THAT THE A.O. HAS DISALLOWED THE EXPENSE S ON THE GROUND THAT VOUCHERS ARE NOT VERIFIABLE. HOWEVER, HE HAS NOT DOUBTED THE GENUINENESS OF THE EXPENDITURE. WE FIND THAT THE C IT(A) RESTRICTED THE DISALLOWANCE OF RS.8,36,727/- TO RS.5 LAKHS. WE FI ND NO INFIRMITY IN HIS ORDER AND HENCE THIS GROUND RAISED BY THE REVENUE I S DISMISSED. 12. SO FAR AS REPAIRS AND MAINTENANCE, PROCESSING E XPENSES AND PRINTING & STATIONERY, THE A.O. WAS OF THE OPINION THAT VOUCHERS ARE NOT ITA NO.448/VIZAG/2012 SRI RAMALINGESWARA RICE & OIL MILLS, VELPUR 9 VERIFIABLE AND ACCORDINGLY DISALLOWANCE WAS MADE UP TO 10%. THE ASSESSEE HAS SUBMITTED A DETAILED EXPLANATION BEFOR E THE CIT(A) THAT WITHOUT ASKING DETAILS THE A.O. HAS SIMPLY MADE THE ADDITION. 13. THE LD. CIT(A) AFTER CONSIDERING THE EXPLANATIO N OF THE ASSESSEE HAS RESTRICTED THE ADDITION MADE BY THE A.O. RELEV ANT PORTION OF THE ORDER IS EXTRACTED AS UNDER: I HAVE CAREFULLY EXAMINED THE FINDINGS MADE BY THE AO IN HIS ORDER AND THE SUBMISSIONS MADE BY THE APPELLANT AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS THE CONTENTION OF THE APPELLANT THAT MAJOR ITEM OF EXPENDITURE OF RS.25,00,076/- IS CONN ECTED WITH EXPORT OF RICE, COMPRISING OF RS.19,54,786/- TOWARDS C&F CHAR GES ON EXPORT OF RICE ON WHICH TDS WAS DEDUCTED, RS.3,41,218/- TOWARDS CO ST OF PACKING MATERIAL AND BALANCE TOWARDS LABOUR CHARGES FOR PAC KING THE GOODS. THE OTHER EXPENSES INCURRED WERE ON REPAIRS OF RS.13,26 ,105/- INCLUDES PURCHASE OF SPARE PARTS OF MACHINES AND MAINTENANCE CHARGES AND RS.1,89,023/- ON PRINTING AND STATIONERY WHICH INCL UDES COST OF STATIONERY ITEMS. APART FROM THESE DETAILS, IN MAKING A DISAL LOWANCE OF RS.4,01,520/-, THE AO JUSTIFIED THE DISALLOWANCE AN D THE AR REFUTED THE SAME FOR THE SIMILAR REASONS STATED WHILE ADJUDICAT ING THE GROUND NO.3 ABOVE. THE POINT SOUGHT TO BE HIGHLIGHTED BY THE A PPELLANT IS THAT IN AS MUCH AS THE EXPENDITURE INCURRED AT RS.25,01,076/- IS CONCERNED, IT IS PARTLY COVERED BY THE PROVISIONS OF TDS AND THE OTH ER PART IS VERIFIABLE AND AS SUCH, THE AO WAS NOT JUSTIFIED IN MAKING DIS ALLOWANCE ON SUCH EXPENDITURE. IT LEAVES OTHER PORTION OF RS.15,14,1 28/- INCURRED TOWARDS REPAIRS AND PURCHASE OF SPARE PARTS. THUS, IT TRAN SPIRES THAT PERHAPS, THE AO COULD HAVE DISALLOWED RS.1,51,413/- INSTEAD OF R S.4,01,520/-. BUT HOWEVER, HAVING REGARD TO FACTS, CIRCUMSTANCES, EXP LANATIONS OFFERED BY THE AR DURING THE COURSE OF THE APPELLATE PROCEEDIN GS, I AM OF THE CONSIDERED OPINION THAT ENDS OF JUSTICE ARE MET IF THE DISALLOWANCE IS RESTRICTED TO RS.1,50,000/- INSTEAD OF THE ONE ADOP TED BY THE AO AT RS.4,01,520/- AND THE AO IS DIRECTED ACCORDINGLY. 14. WE FIND THAT THE LD. CIT(A) HAS CONSIDERED THE D ETAILS OF THE EXPENDITURE INCURRED BY THE ASSESSEE AND DISALLOWAN CE IS RESTRICTED TO RS.1,50,000/- INSTEAD OF RS.4,01,520/-. WE FIND THAT THE ORDER ITA NO.448/VIZAG/2012 SRI RAMALINGESWARA RICE & OIL MILLS, VELPUR 10 PASSED BY LD. CIT(A) IS JUST, FAIR AND REASONABLE A ND NO INTERFERENCE IS CALLED FOR. THIS GROUND OF APPEAL RAISED BY THE REVENUE IS DISMISSED. 15. IN THE RESULT, APPEAL FILED BY THE REVENUE IS D ISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 4 TH DEC15. SD/- SD/- ( . . . . ) ( . ) ( G. MANJUNATHA) ( (( ( V. DURGA RAO ) )) ) / // / ACCOUNTANT MEMBER / // / JUDICIAL MEMBER /VISAKHAPATNAM: 3 / DATED : 4.12.2015 VG/SPS ) ' 4 / COPY OF THE ORDER FORWARDED TO :- 1. & / THE APPELLANT THE ACIT, CIRCLE-1, RAJAHMUNDRY 2. '(& / THE RESPONDENT M/S. SRI RAMALINGESWARA RICE & OIL MILLS, DR.NO.2-1 53, RICE MILL STREET, VELPUR, W.G. DIST. 3. 5 / THE CIT, GUNTUR 4. 5 () / THE CIT(A), GUNTUR 5. ' , , / // / DR, ITAT, VISAKHAPATNAM 6 . . . . / GUARD FILE / BY ORDER // TRUE COPY // 9: ( SR.PRIVATE SECRETARY ) , / // / ITAT, VISAKHAPATNAM