TaxTMI 
TaxTMI 
2018 (10) TMI 434
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....t made deserves to be cancelled. 2. On the facts and in the circumstances of the case the Commissioner of Income Tax (Appeals) has erred in law in confirming disallowance of manufacturing expenses of Rs. 35,34,616/- made by the Assessing Officer on the basis of original assessment. 3. On the facts and in the circumstances of the case the Commissioner of Income Tax (Appeals) has erred in law in confirming the disallowances made by the Assessing Officer in a hypothetical manner on the basis of original assessment order without calling for and examining the matter in detail as per the directions given by the CIT in his order u/s 263. The assessment made being Illegal deserves to be cancelled. 4. On the facts and in the circumstances of the case the Commissioner of Income Tax (Appeals) has erred in law in not allowing deduction u/s. 80HH and 80I claimed by the appellant in the return. This deduction being admissible under the law deserves to be fully allowed. 5. On the facts and in the circumstances of the case the Commissioner of Income Tax (Appeals) has erred in law in confirming various additions/disallowances made by the Assessing Officer as per ....
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....ging Ltd., were again remain unverifiable. The assessee-company did not produce books of account, sale/purchase registers or bills at the time of original assessment or in the proceeding under section 263. Inquiries revealed that no such concerns existed at the given address. The assessee-company failed to produce the said party for verification. It was revealed that M/s. V.T.R. Containers (P) Ltd., was not an income tax assessee. It was stated to be a paper company. No money is actually changed hands between the respective companies only adjustment entries were passed. The A.O. required the assessee-company to produce the documentary evidences and explanation to prove genuineness of the transaction effected with/through M/s. VTR Containers Pvt. Ltd. The case was also referred for special audit under section 142(2A) of the I.T. Act, which was completed by the auditor. The A.O. on perusal of the material on record noted that assessee-company during the course of proceedings has not been able to show convincing proof of existence of M/s. V.T.R. Containers (P) Ltd., as an independent unit, engaged in the sale/purchase, in normal course of business. Assessee-company was required to ....
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....s. 2.49 crores of tin plates. 99% of the purchases have been made from M/s. T.A.P Ltd., in which Directors are interested. The comparative quotations were not produced for verification. In its absence, it could not be verified whether prices paid for such items are reasonable as compared to the prices prevailing for similar items. The A.O. noted large variation in purchase and sales. M/s. V.T.R. Containers (P) Ltd., has shown sales to M/s. Asia Closures Ltd., @ Rs. 18,000/- to Rs. 19,000/- per metric ton. The latter, in turn, has shown the sales of the same goods on same dates to M/s. Trans-Asia Packaging Ltd., @ Rs. 21,000/- per metric ton. M/s. Trans-Asia Packaging Ltd., in turn, have shown sales of the same goods at same date at the enhanced rate of Rs. 22,000/- per metric ton to the assessee-company. The A.O, therefore, noted that there is inflation in the purchases to the extent of Rs. 42.83 lakhs which represents understated income of the assessee-company. The assessee11 company was required to explain the discrepancy. The A.O. noted that assessee-company did not explain the issue. Therefore, the amount of Rs. 42.83 lakhs was added back to the income of the assess....
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....sallowance have been made in the fresh assessment order. Therefore, no addition can be made on the basis of the original assessment order. It was also contended that A.O. has erred in not allowing deduction under section 80HH and 80I of the I.T. Act. It is an allowable deduction to the assessee-company. The A.O. has also not gone through the entire material on record. The Ld. CIT(A), however, did not accept the contention of assessee-company and noted that since the assessee-company did not produce the details during the proceedings under section 263 as well as before Special Auditor and appellate stage, therefore, this addition was maintained. 7. As regards the addition on account of unverifiable purchases of Rs. 42,83,000/-, assessee-company contended that the purchases are verifiable and party has genuinely exists. Since profit on sales have been taxed, therefore, there cannot be any sales without purchases. Therefore, addition is wholly unjustified. The Ld. CIT(A) also rejected this contention and confirmed the addition in the absence of the adequate evidence on record. 8. We have heard the Learned Representatives of both the parties and perused the material available ....
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....M.E.I. Dte), Udyog Bhawan, New Delhi. The said allotment given vide letter dated 27.03.1987 and copy of the letter of Haryana State Electricity Board sanctioning electricity load of 225 KW on 28.05.1986. Learned Counsel for the Assessee, therefore, submitted that it is abundantly clear that assessee-company had commenced its business activities prior to 01.04.1990 which has been appreciated by the Ld. CIT(A). Therefore, assessee-company is entitled for deduction under section 80HH and 80I of the I.T. Act. Learned Counsel for the Assessee-company also referred to original assessment order under section 143(3) dated 30.03.1994 to show various additions have been made in this assessment order, which have been set aside by the Ld. CIT under section 263 of the I.T. Act. Therefore, none of the additions remain in operative. He has further submitted that in return of income (PB-2) assessee-company has claimed setoff of brought forward losses and allowance of previous year amounting to Rs. 1,21,77,466/-. He has also filed details of all the additions made in the original assessment order to show that even all the additions on merit were unjustified. The contention of Learned Counsel for th....
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....dering the issue of bogus sales and purchases have taken the issue of original assessment order and merely adopted the income of Rs. 1,99,80,657/- in the impugned assessment order which is wholly illegal and unjustified. Therefore, such addition cannot be sustained in this case. However, the Learned Counsel for the Assessee while referring to the Order of the Ld. CIT(A) for A.Y. 1996-1997 dated 20.03.2017 has submitted that Ld. CIT(A) after elaborate discussion on the issue of deduction under section 80HH and 80I has allowed such claim of assessee-company. The assessee-company, therefore, rightly contended that it had commenced its business activities prior to 01.04.1990 and as such in assessment year under appeal on making above additions, assessee-company would be having positive income and as such assessee-company would be entitled for claiming deduction under section 80HH/80I on such addition even if it may be presumed that such addition could be made or adopted as per original assessment order in the present impugned order. Therefore, considering the totality of the facts and circumstances of the case and the reasons above, we are of the view that addition of Rs. 1,99,80,65....
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....because the addresses of purchasers in cash sales not maintained and supplied on demand by ITO." 16.1. In the present case, the A.O. examined the issue of sales and purchases and found that sales of Rs. 3.53 crores have been made to M/s. V.T.R Container (P) Ltd., which is unverifiable. Similarly, purchases to the extent of Rs. 2.29 crores have been booked in the name of sister concern M/s. Trans-Asia Packaging Ltd., which, according to A.O. remain unverifiable. The assessee-company filed several documentary evidences on record to show that sales and purchases are genuine. The Ld. CIT(A) in A.Y. 1992-1993 vide Order dated 09.11.2015 (supra) found existence of M/s. V.T.R. Container (P) Ltd., as genuine and addition have been deleted. In the present case, the A.O. even do not make any addition on account of bogus sales. The profit on the sales have been assessed to tax. The A.O. simply noted that purchases are made through various sister concerns, therefore, it was inflated purchases. However, the A.O. did not dispute the genuineness of the documentary evidences filed by assessee-company on record to prove genuineness of the purchases. The A.O. merely made part addition of Rs. 4....