TaxTMI 
TaxTMI 
2015 (6) TMI 71
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....It was noted that the goods purchased from Pirth Trade Link was at Rs. 33,69,600/- and purchases from Sydney Sales Corporation was Rs. 32,44,800/-. Those purchases were made in the month of September, 2004. It was informed that a fire took place at the factory premises on 13.10.2004. The assessee has claimed loss of the said material purchased, due to fire. The AO has conducted an inquiry to confirm the genuineness of the purchases. On inquiry, according to AO, it was informed by those parties that the assessee had never purchased the goods from those parties either before September or after September, 2004. The AO has also noted that the Assessee was not able to co-relate transportation charges in respect of purchases. The AO has noted some discrepancy in respect of bills submitted by those transporters. He has noted that no amount was paid in respect of those purchases upto 31st March, 2005. According to AO, the payment was made only in the month of March, 2006. The cheque issued towards payment of purchases to M/s. Sydney Sales Corporation was also doubted by the AO. In respect of purchases shown from Pirth Trade Link, it was commented by the AO that there were frequent withdraw....
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....ort Company, Chinch Bunder, Opp. Kesar Baug, Mumbai - 400009 in the name of M/s. Pith Link and M/s. Sydney Sales Corporation of Bhivandi. On a closure look to the copies of the transport bills placed on record, it was noticed that, the consignor was Pith Link and not the Pith Trade Link from whom the material was purchased by the Appellant. Panchmahal Transport Company appears to be reasonably a big transporter by virtue of offices / branches in many places in Maharashra and Gujarat. However, the transport bill submitted shows that, between 7.09.2004 to 26.09.2004, the transporter had transported goods only for the appellant which is apparent from the bill no. issued serially from 151502 to 151511. The trip made in between this two bill dates varies from 2 to 4 days. The Ld. A.R. had not furnished any other details to support the case of the Appellant more particularly the issues raised by the Assessing officer in the Assessment Order. The Assessing Officer has made necessary enquiry and come to the conclusion that the purchases from theses two parties namely M/s. Pith Link and M/s. Sydney Sales Corporation are bogus. I am inclined to agree with the finding of the A.O. in the absen....
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....ould not be the reason for proving the genuineness of the purchases but loss due to fire could lead to one possible conclusion that the assessee was not having sufficient evidence to support its claim of purchases. Undisputedly, he was going through hardship and therefore the correct factual position could not be demonstrated. In the compilation, the assessee has placed before us the purchase bills of Pirth Trade Link along with delivery challans. The compilation also consist the purchase bills of Sydney Sales Corporation along with the delivery challans. The Assessee has also placed on record the evidence of transportation of goods from Panch Mahal Transport Company. All these documents were stated to be filed before the AO as well. In addition to these evidences, the Assessee has also placed on record the audited financial statement for the year under consideration to demonstrate that without these purchases there was no possibility to execute the sales. There was no allegation of the Revenue Department that the sales have also not tallied with the corresponding purchases as shown by the Assessee. However contrary to this; payments have been seriously doubted, although it was mad....
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....d to the Income of the Appellant. The Ld. A.R. has not submitted any explanation with regard to the addition made by the A.O. in this ground of appeal during the appellate proceedings. In the absence of any reasons and explanations, I am constrained to uphold the decision of A.O. Accordingly this ground of Appeal is dismissed." 11. Having heard the submission of both the sides, we are of the view that both the lower authorities have merely adopted an estimated figure of value of the stock. The AO was expected to arrive at the justified conclusion of valuing the cost of closing stock. Merely by applying a gross profit rate, the AO has adopted an estimated figure of cost of closing stock which cannot be approved in the eyes of law. We, therefore, hold that in the absence of any corroborative evidence placed from the side of the Revenue to justify the change in the valuation of the closing stock we hereby dismiss such estimation. In the result the addition made merely on suspicion is hereby reversed. This ground of the Assessee is allowed. 12. In the result, the Assessee's Appeal is partly allowed. B. ITA No.1743/Ahd/2010, A.Y. 2005-06 13. The Assessee has challenged t....