TaxTMI 
TaxTMI 
2004 (3) TMI 356
X X X X Extracts X X X X
X X X X Extracts X X X X
....l premises of its directors. A survey under s. 133A of the Act was also carried out at the business place and the office premises at Jaipur. During the course of survey/search, certain discrepancies in cash and stock were noticed, for which the directors of the company could not offer any satisfactory explanation. The assessee-company by now became a public limited company under s. 43A of the Companies Act, 1956. It continued manufacturing of refined oil and by-products and trading for the same. The assessee-company had maintained quantitative details of raw material, consumption of raw material and the quantitative details of the finished goods. Quantitative details on monthly basis of different types of oil and oil seeds were filed during....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... on record but we are unable to find out from the assessment order the basis or the reasons where the AO came to the conclusion that the purchases were made at a higher price as compared to the prevailing market price. We feel that the AO was persuaded for the simple fact that these purchases were made from the concerns belonging to the relatives of the directors. The CIT(A) has confirmed this addition on the basis that the facts of purchases had been mentioned in the tax audit report but it seems he has not considered the main audit report as a whole. The addition could have been made in case the Department would have come to the conclusion that the transactions in question were sham or if it could be shown that the value of the goods purc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s regard is well settled and there is no need to repeat all the decisions, time and again, that there must be established nexus between the interest-free advances and interest bearing loans by the Department and then and only then the interest can be disallowed. As we have already mentioned above, the Department has failed to establish such a nexus. Consequently, we allow this ground and delete the impugned disallowance. 5. The next issue pertains to the addition in various accounts on account of discrepancies in stocks amounting to Rs. 2,38,000. This issue is dealt with by the AO at pp. 5-7 of his order and by the CIT(A) at pp. 5-8 of the impugned order. The brief relevant facts are that the assessee maintained regular books of account an....