TaxTMI 
TaxTMI 
2015 (7) TMI 777
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the relevant material and after appropriate reasoning hence there is no mistake apparent from record which can be rectified under section 154 of the Act therefore the notice U/s 154 and order passed are illegal, bad in law and without jurisdiction. 4. The addition/ disallowances made by the assessing officer are illegal, unjust, highly excessive and are not based on any material on record by the assessing officer. The total income of the appellant has been wrongly and illegally computed by the assessing officer at Rs. 35,75,080/- as against declared income of Rs. 1,47,920/-. 5. The Assessing Officer has, in view of the facts and circumstances of the case, erred on facts and in law, in making addition/disallowance of Rs. 33,70,800/- on account of the violation of the section 40A(3) of the Income Tax Act,1961 and the CIT(A) had also erred in upholding the same. 6. That the CIT(A)/AO failed to appreciate that the amount paid in cash is to run the business in smoothly and it is for business expediency and no disallowances is called for. In any case the Assessing Officer has failed to appreciate that the said payments were covered by rule 6DD and no disallowance should have be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ls of which have been reproduced by the AO in the assessment order as under:- (i) Cash Book Rs. 5,90,400/- (ii) Purchase of DAP Rs. 22,35,570/- (iii) Purchase of MOP Rs. 5,44,830/- Total Rs. 33,70,800/- 2.1 Thus as per the amended provisions of section 40A(3) of the Act 100% of such cash purchases at Rs. 33,70,800/- was liable to be added to the income of the assessee. Thus the AO issued notice u/s. 154 of the Act dated 17.1.2013 requiring the assessee to explain as to why addition of Rs. 33,70,800/- being cash purchases be not made to the income in violation of provisions of section 40A(3) of the Act. 2.2 In response the assessee explained that there was no contravention of provisions of section 40A(3) of the Act in respect of purchase of AP/MOP. As per the assessee during the course of assessment proceedings all the purchase vouchers were produced before the AO which were verifiable from the books of account. Besides the above, the persons from whom the goods were purchased were produced for examination and their statements on oath were recorded. The assessee further placed reliance on the decision of Hon'ble Allahabad High Court i....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 6. on the contrary, Ld. DR relied upon the orders of the revenue authorities and requested that the same may be upheld. 7. We have heard both the parties and perused the records especially the orders of the lower authorities and the submissions made by both the parties. We find that the assessment was completed u/s. 143(3) of the Act dated 23.12.2011 determining total income at Rs. 2,04,280/-. AO gathered that as per cash book, ledger account of purchase of DAP and ledger account of purchase of MOP, cash purchases were made in excess of Rs. 20,000/-, details of which have been reproduced by the AO in the assessment order as under:- (i) Cash Book Rs. 5,90,400/- (ii) Purchase of DAP Rs. 22,35,570/- (iii) Purchase of MOP Rs. 5,44,830/- Total Rs. 33,70,800/- 7.1 We further find that as per the AO the amended provisions of section 40A(3) of the Act 100% of such cash purchases at Rs. 33,70,800/- was liable to be added to the income of the assessee. Thus the AO issued notice u/s. 154 of the Act dated 17.1.2013 requiring the assessee to explain as to why addition of Rs. 33,70,800/- being cash purchases be not made to the income in violat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....TR 229 (All), we find that the Hon'ble High Court of Allahabad has observed that "when the gross profit rate is applied, that would take care of everything and there was no need for the AO to make scrutiny of the amount incurred on the purchases by the assessee." 7.4 In the case of CIT vs. Gayatri Glass Works (2009) 317 ITR 319 (All), we find that the Hon'ble High Court of Allahabad has observed that order passed on the basis of relevant facts - where a decision has been arrived at after considering the relevant material and after appropriate reasoning, although the reasoning and consequently the conclusion may be mistaken on facts or on law; and where to demonstrate the mistake of fact or of law it requires a process of detailed reasoning, it would not be a case of an error apparent on record capable of rectification under section 154, but would virtually amount to review of the order. By dealing this case, the Hon'ble High Court while deciding this case, has referred the judgment delivered in the case of CIT vs. Hero Cycles (P) Ltd. etc. (1997) 228 ITR 463 (SC) of the Hon'ble Supreme Court of India, wherein the Hon'ble Supreme Court of India has held as under:- "Rectificati....