ITAT deleted addition as books of account were audited and no defect was found

1. Assessee individual carried on the business of manufacturing bright bars under the sole proprietary concern M/s Prakash Steel Corpn. Return of income was filed declaring total income of Rs.25,91,230/-. Gross turnover of the assessee during the Asst. Year 2009-10 was shown at Rs.40.72 crores. Return of income was accompanied with Tax Audit Report u/s 44AB (of Income Tax Act, 1961). Its case was selected for scrutiny assessment and notice u/s 143(2) (of Income Tax Act, 1961) was issued and duly served upon the assessee followed by notice u/s 142(1) (of Income Tax Act, 1961) along with questionnaire. Assessment was framed at an income of Rs.2,32,96,110/- after making certain addition on account of sundry creditors at Rs.1,99,18,839/- and disallowance of majoori expenses at Rs.7,86,043/-.

2. CIT(A) deleted the addition of Rs. 1,99,18,839/- on account of sundry creditor and partly allowed the appeal of assessee restricting the disallowance on account of majoori expenses at Rs.2,50,000/- in place of Rs.7,86,073/-.

3. On appeal, the ITAT held as under:

4. "We do not find any reason that in such situation when books of accounts are audited, no specific defect has been pointed out by the assessing authority during the assessment proceeding, all necessary supporting are available on record in relation to the impugned expenses then making of disallowance of a certain expenses and then again making an estimated disallowance just for the reason that the impugned expenses has been incurred in cash, is not a valid Asst. Year 2009-10 ground for making disallowance. We, therefore, delete the sustained addition of Rs.2,50,000/- and allow the appeal of the assessee.”

Case Reference- Pankaj Babulal Shah, Vs. ACIT

IN THE INCOME TAX APPELLATE TRIBUNAL

AHMEDABAD '' D " BENCH - AHMEDABAD Before Shri Kul Bharat, JM, & Shri Manish Borad, AM.

ITA No.1767/Ahd/2012

Asst. Year:2009-10