TaxTMI 
TaxTMI 
2006 (5) TMI 145
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.... that the original assessment in this case was completed on 30th March, 1998 and the issue in question was restored to the file of the AO by the first appellate authority for a fresh decision after allowing the assessee a reasonable opportunity of hearing. The assessee-firm has head office at Nohra, and branch offices at Dabwali, Bhatinda and Mumbai. It had shown loss in cotton at Rs. 14,68,499 in the branch office at Dabwali. On being called upon to explain the reasons for incurring such heavy losses, it was stated that the assessee had entered into advance contract and on account of rise in cotton rates in subsequent period it sustained loss as cotton was supplied to the purchasers at the contracted rates with which advance contracts were....
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.... were not furnished although such original contracts notes for the parties at Sl. Nos. 5 and 6 were submitted. The AO noted the loss has been incurred in the transactions with the parties at Sl. Nos. 5 and 6. (2) The appellant has not been able to produce the correspondence regarding advance contracts at the time of original assessment and in the reassessment proceedings. (3) The AO has noted that normally contract confirmations by the purchasing parties are made on their letterheads as was found in the case of Sl. Nos. 5 and 6. The AO has noted that in the case of Sl. Nos. 1 to 4 the contracts are on the letterheads of the appellant and no independent confirmation from the parties has been submitted. The AO has also noted that the ph....
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....as been given in para 8(v) of the assessment order. (7) The AO has noted that the number of bales mentioned in the advance contract notes do not tally with the number of bales mentioned by the Ahmedabad Mills in their contracts. Details of the discrepancy have been given in Annex. 1 to the assessment order. The appellant had agreed that 110 bales contracted to be sold to Arvind International were diverted to Arvind Mills Ltd. It was also explained that it supplied 10073 bales against contracted number of 10398 bales, resulting in short supply of 325 bales. The AO, therefore, observed that the cotton bales were not supplied strictly in accordance with the terms and conditions of the alleged advance contracts made with M/s Arvind Mills and....
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....oing export business. The AO has rejected the contentions. In para 11 of the assessment order he has given details of purchases of J-34/SG quality of cotton, which has been purchased by the appellant at rates higher than the prevalent rate on the date of purchase. The AO has also observed that purchases were made from parties, which have either filed loss returns for asst. yr. 1994-95 or were not regular dealers but made only one deal i.e. with the appellant. The AO has given such details in para 12 of the assessment order. (11) The AO has noted that some of the purchases were made from M/s Dev Trading Co., Sriganganagar. The address in the contract notes had been given of Srikaranpur and Anoopgarh. The AO has stated that there is no suc....
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....Branch, Rs. 19,29,013 at Bhatinda Branch and Rs. 5,73,519 at Sriganganagar head office). Detailed submissions were filed before the first appellate authority, who on the appreciation of the entire facts came to the conclusion that the loss was genuine and no addition was called for. He, therefore, deleted the said addition against which the Revenue has come up in appeal. 4. We have heard both the sides and perused the relevant material on record. It is obvious that the instant addition relates to the loss incurred by the assessee in transactions with the Arvind Group of industries on account of advance contracts entered into by the assessee. Page Nos. 20 to 30 are the details of sales made by the assessee to these concerns of Arvind Mill....
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....ctions with the other concerns. There is nothing to establish that the transactions with Arvind Mills were camouflaged and deliberately intended to show losses. Moreover, we find that the AO, while making addition was supported by similar action taken by him in asst. yr. 1993-94. In this year also, the learned CIT(A) had reversed the AO's opinion on this point and second appeal filed before the Tribunal in ITA No. 282/Ju/1998 met with the fate of dismissal vide its order dt. 17th July, 2003. The copy of the said order is available at pp. 114 to 122 of the paper book. In view of the foregoing reasons, we are satisfied that the learned CIT(A) rightly appreciated the facts in deleting this addition. We, therefore, uphold his action. 5. Last....