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TaxTMI 
TaxTMI 
2010 (9) TMI 1187
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.... 25% on Tractor and Trolley against 40% claim. 5 In view of the above and others that may be argued at the time of hearing the appellant case that (a) That the deductions claimed by the appellant may please be allowed and addition confirmed by learned CIT(A) may please be deleted. (b) That such other relief and reduction as the facts and the circumstances so require be granted. 6 The appellant craves leave to add, alter, modify the grounds of appeal on or before the time of hearing." ITA No.1295/Ahd/2008[ Revenue] 1 "The Ld. CIT(A) erred in law and on the facts of the case in deleting the addition of Rs. 78,40,000/- made u/s 68 of the I.T. Act. 2 On the facts and in the circumstances of the case, the Ld. CIT(A) ought to have upheld the order of the AO. 3 It is, therefore, prayed that the order of the Ld. CIT(A) may be cancelled and that of the AO may be restored to the above extent." ITA No.1112/Ahd/2008 2. Adverting first to ground nos. 1 & 2 in the appeal of the assessee, facts, in brief, as per relevant orders are that return declaring income of Rs. 17,04,258/- under the normal provisions and book profits of....
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.... assets and allowed depreciation @ 25%. According to the rectification application filed by the appellant before the AO, the capital asset value of moulds is Rs. 39,88,788/- and the appellant is eligible for depreciation of Rs. 7,38,075/- as against amount allowed by the AO of Rs. 2.73,800/- The appellant has contended that the moulds are like additional spares and these have life of 9 to 12 months and that the same is revenue expenditure. This contention is not acceptable as the moulds are capital assets and are eligible for depreciation @ 25 % and not @ 40 % as depreciation of 40% is only for moulds used in plastic and rubber goods factories, which is not the case of the appellant. Hence the disallowance of depreciation is held to be justified. However the A.O. is directed to allow depreciation on the total value of moulds excluding the cost of moulds which have been claimed as revenue expenditure in earlier years." 4 The assessee is now in appeal before us against the aforesaid findings of the ld. CIT(A). The learned AR on behalf of the assessee while reiterating their submissions before the ld. CIT(A) contended that the assessee had been consistently following the practice o....
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....with law after allowing sufficient opportunity to the assessee. With these observations, ground nos.1 & 2 in the appeal of the assessee are disposed of. 6. Coming to ground no.1 in the appeal of the Revenue relating to an addition of Rs. 78,40,000/- u/s 68 of the Act, the AO noticed that the assessee had shown cash sales of Rs. 98,71,790/-, as extracted in the assessment order & detailed hereunder : Date Nature of sale shown Mode Amount (Rs.) 23.04.03 Trading Sales Cash 2,42,700 01.05.03 Trading Sales Cash 1,75,800 03.05.03 Trading Sales Cash 2,10,500 05.05.03 Trading Sales Cash 2,10,300 09.05.03 Trading Sales Cash 2,12,500 12.05.03 Trading Sales Cash 2,85,800 16.05.03 Trading Sales Cash 1,28,800 19.05.03 Trading Sales Cash 2,78,600 20.05.03 Trading Sales Cash 2,54,800 22.05.03 Trading Sales Cash 1,20,750 24.05.03 Trading Sales Cash 3,53,800 24.05.03 Trading Sales....
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....o. through which goods were transported. To a query by the AO, the assessee did not produce any transport receipt/ LR for sale of the said goods. On examining the corresponding purchases , the AO noticed that most of the purchases were made from M/s Palakchand Ispat Pvt. Ltd, and the bills issued by said company were serially numbered while the assessee or the said company did not produce LRs for the said purchases. The AO on further enquiries from RTO Bhavnagar found that the following two vehicles through which the transportation of goods was claimed were not trucks but 'Chhakda' a prototype of autorikshaw. The AO observed that though the above vehicles were not trucks, following bills were claimed to have been prepared for goods supplied through the said vehicles. Bill No Date Vehicle No Weight Amount (Rs.) 2 20.6.03 GJ4 U9153 8.450 435,000 7 16.7.03 GJ4 U 6175 9.500 500,000 6.11 The AO further noticed that even though vehicle number GJ4T 6318 was a light commercial vehicle, 9.4 MT of old nuts & bolts were claimed to have been supplied through....
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....r three parties viz. M/s Ashish Ship Breakers Pvt. Ltd., Anupama Steel Ltd and Zaid Impex Pvt. Ltd. did not respond to notices issued by the AO. 6.5 Since none of the parties produced copy of their bank account, the AO after considering the reply of the assessee in response to a showcause notice, concluded that the genuineness of the transactions had not been established by the assessee since neither the assessee could prove that goods had actually been received nor the sellers of the goods to assessee could prove that goods were actually delivered while the sales bills did not contain name of the buyer, truck no. through which goods were transferred or even the weight of goods supplied. Accordingly, the AO treated the entire sales consideration of Rs. 98,71,790/- in cash as unexplained cash credit u/s.68 of the Act and added an amount of Rs. 78,40,000 (Rs.98,71,790 - Rs. 20.31,790). 7. On appeal, the assessee reiterated their submissions before the AO. Accordingly, the learned CIT(A) deleted the addition in the following terms:- 3.2 I have considered the submissions of the A.R. carefully. It is noticed that the appellant has carried on trading business in scrap as s....
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.... cash sales in the books as receipts. 3.3 It is the contention of the A.R. that the A.O. has made presumption that the materials claimed to have been purchased were not received by the appellant. The appellant has purchased scrap from different parties namely, Akhil Ship Breakers Pvt. Ltd., M/s. P.C.Steels and Palak Chand Ispat Pvt. Ltd. The sales made by Akhil Ship Breakers Pvt. Ltd. (ASBPL) cannot be disbelieved as the AO has accepted in his own order that they were dealers in scrap and they had been supplying to various merchants locally and also out of Bhavnagar, further it is a limited company registered under the Companies Act, 1956 and its accounts are audited and tax audited. This company has supplied excisable goods which can be seen from the account of ASBPL filed at page §9 of the paper book wherein purchase of Rs. 1,93,192/- was made of excisable goods and excise set off was also taken in RG-2 by it. ASBPL is assessed to tax. The total sales made by Palak Chand Ispat Pvt. Ltd. are of. Rs. 60,90,000/-, it is a private limited company liable to audit and tax audit and it is assessed to tax. The other supplier P.C. Steels had supplied old and used bearings wh....
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....rom whom the trading purchases have been made, have never financed the appellant, but these parties have traded for the goods on regular business like terms. Therefore, the order passed by the AO is found to be purely on presumption and conjecture without any substance and there is no justification in making the addition once the appellant has included the sale proceeds received as income. Further addition on account of cash sales amounts to double taxation and inclusion of the same amount as income twice to the appellant company. In view of the above facts and circumstances, the addition of Rs. 98,71,790/- made by the AO corresponding to cash sales as unexplained cash credit is held to be not justified and the same is therefore deleted." 8. The Revenue is now in appeal before us against the aforesaid findings of the ld. CIT(A). The ld. DR while supporting the order of the AO contended that the assessee did not establish the genuineness of sales or corresponding purchases. On the other hand, the ld. AR while relying upon the findings of the ld. CIT(A) contended that once the amount had been reflected as cash sales, the AO was not justified in treating the amount as unexplained c....