TaxTMI 
TaxTMI 
2005 (3) TMI 95
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....g the fact that complete quantitative account was available before the Tribunal?" 2. The reference relates to the assessment year 1984-85. 3. Briefly stated, the facts giving rise to the present reference are as follows: 4. The applicant has been assessed to income-tax in the status of a firm. It is engaged in the manufacture of gram, pulses, rice, chuni-bhusi, etc. While examining the account of the applicant, the Assessing Officer has noticed that the applicant has made purchases of chuni-bhusi from the following parties: Name of party Bill No. and Date Quantity of chuni-bhusi Amount Rate (1) (2) (3) (4) (5) 1. M/s. Ayodhya Pd. Gupta, Banda 17A 1-5-1983 280.50 qtls 28,330.50 at 101 ....
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....ntire amount of such purchases in the income of the applicant. Feeling aggrieved, the applicant preferred an appeal before the Commissioner of Income-tax (Appeals) who has upheld the addition. The second appeal before the Tribunal has failed. 6. We have heard Sri Satish Mandhyan, learned counsel for the applicant, and Sri Shambhoo Chopra, learned standing counsel appearing for the Revenue. 7. Learned counsel for the applicant submitted that the applicant has made the purchases of chuni-bhusi from the four persons and even if two of them were not in existence, the addition could not have been made. He further submitted that in respect of the purchases made from M/s. Ayodhya Prasad Gupta and M/s. Ram Prasad Gupta, the applicant is not r....
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..... On enquiry by the income-tax inspector, the firm M/s. Pashu Aahar Kendra, Shiva Pashu Aahar Kendra and Chaudhary Brothers were found to be non-existent. In the enquiry it has also come to light that such firms never existed in the past. It is also worthy of note here that in the statement Shri Ayodhya Prasad Gupta has stated that there was no fixed shop of Pashu Aahar Kendra and Shiva Pashu Aahar Kendra, while in the bills purporting to have been issued by the said firms, a definite address has been mentioned including the number of the building. The statement that the said firms had no fixed place of business, is contrary to the stand taken by the assessee and that fact also lends strength to the belief that the said firms were non-exist....
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....en issued on the date of sale to the assessee. This fact was admitted by him in his statement, a copy of which appears at page 119 of the assessee's paper book. Moreover, Shri Ayodhya Prasad has admitted in his statement, a copy of which appears at pages 113-114 of the assessee's paper book, the purchases of chuni-bhusi have been entered by him in his books at the end of the year. It is thus obvious that the entry about the purchase of chuni-bhusi was not made by him on the date when he claims that the purchases were made by him. That fact also makes the transactions very doubtful. Learned counsel for the assessee has filed copies of the accounts with M/s. Ayodhya Prasad Gupta and M/s. Ram Prasad Gupta. He has pointed out t....
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....nclusion that can be drawn is that the purchases made by the assessee are unvouched. In the circumstances, the entire amount of the purchases should not be added to the total income of the assessee. He has also submitted a statement of total sales and purchases of chuni-bhusi in the year which appears at pages 95-96 of the assessee's paper book He has also pointed out that the gross profits shown by the assessee, out of the dealings in chuni-bhusi, compares favourably with the result in the earlier years and for that reason also no addition should have been made by the authorities below. He has also submitted that in case it is held that the assessee did not purchase the chuni-bhusi from the firms as alleged by it, it must have purchase....
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....rocess, chuni-bhusi also gets manufactured as a by-product. It is not the case of the applicant that it had made the purchases of chuni-bhusi from other persons also. The Assessing Officer had recorded a finding that in order to lower down the profits, the bogus purchases have been introduced. Taking into consideration the entire facts and circumstances of the case, we are of the considered opinion that the findings recorded by the Tribunal cannot be said to be based on irrelevant material and consideration. The applicant being a manufacturer of chuni-bhusi has not been able to establish the purchases in question which have been made from the non-existent firms. Further, the two firms owned by the brothers of the partners of the applicant-f....