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2019 (12) TMI 1249
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....judice to each other. "1. The learned CIT(A) erred in law and on facts in upholding rejection of appellant's books u/s 145(2) and in retaining addition of Rs. 16,19,419/- in respect of alleged sale of appellant's solvent products at a price higher than the one at which they are recorded in the books particularly when the same was only on the basis of the estimation and also as observed by the learned CIT(A) herself is subject to recall/rectification based on the availability of further evidences. 2. The learned CIT(A) erred in confirming and retaining addition of Rs. 16,19,419/- particularly when the order of District Magistrate implicating the appellant is challenged in further proceedings, whose outcome is yet not final and particularly when no petrol pump owner was ever examined by the A.O. to support his findings in particularly when the complaint with the District Magistrate did not cover financial year 1997-98 relevant to assessment year 1998-99. 3. The learned CIT(A) erred in confirming and retaining the addition of Rs. 16,19,419/- in respect of alleged sale of solvent products to petrol pump owners ignoring some vital facts and giving incorrect fi....
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....g out manufacturing process to various companies for the industrial purposes. The list of the products sold with the quantity and the details of the companies/parties as claimed by the assessee is available on pages 5 to 8 of the assessment order. 6. Before coming to the specific issue, it is pertinent to note the back ground of the dispute involved in the case on hand which goes as under: A. Brief history of the case There was a search conducted by the sale tax department dated 16th February 2000 and thereafter there was an inspection carried out by the district supply team at the factory premises of the assessee dated 18 February 2000 including the raids of the police. Accordingly, the various statements of the parties, transporter, driver and other associated persons were recorded by the Sales Tax/ DSO/ Police Officer etc. B. Search by the sales tax department dated 16 February 2000 The sale tax department in consequence to the search, vide order dated 31 August 2000 withdrew the benefit claimed by the assessee on the purchase of the goods and treated the entire amount of interstate sale as local sale and also increased the amount of sale o....
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.... there was no record for the transfer of the goods outside the Gujarat as shown by the assessee. It was also found that the tanker numbers mentioned in the bill book of the assessee were the registration number of other vehicles. (The details are available on page 238 of the paper book). There was also an inspection at the premises of the assessee by DSO on 24 June 1997 wherein it was found that the assessee is involved in the issuing of fake bills. Accordingly the DSO seized the solvent worth of Rs. 42,293.00. Similarly, there was one more inspection dated 18 November 1997 where the license of the assessee was cancelled after forfeiting the deposit of Rs. 25,000.00. However, the assessee obtained the stay against the cancellation of the license and continued his business activities. In view of the above the district supply team alleged that the assessee is engaged in the business of dispatching the goods in Gujarat by preparing fake sale bills. 7. Now, turning to the present facts of the case The AO based on investigating agencies such as district administration, district civil supply authorities, sales tax authorities and newspaper, reports found tha....
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.... entire sales have been diverted to non-industrial purpose and are for that matter sold to various petrol pumps situated within Gujarat with a view to gain more profit. During the year under consideration, assessee has shown total sales of 40,56,714/- ltrs. of Solvent and other products to various parties as stated hereinabove. The average rate of this per litre comes to Rs. 10.46. However, in view of the fact that the entire sales was made to various petrol pumps, the rate prevailed at the relevant accounting year is adopted to work out the exact sale price. The consumer price of petrol during the relevant previous year was Rs. 26.13 paise. However, taking into consideration of the profit margin of petrol pump owner and the commission for accommodation of sales made to some bogus companies being the main lender as has been confirmed by M/s. Prime Chemicals, the average net sale price is taken at Rs. 24/- per liter. Thus, the total sales effected during the previous year and the suppressed sale consideration is worked out as under:- Total quantity of the products sold 40,56,714 Ltrs. Sale Price adopted as discussed above - Rs. 24/- per Liter Thus, the total sales rea....
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....the confirmation from the some parties for the sales made to them. The names of the parties stand as under: "SR. No. Party's Name Sales Made (Rs.) 1. Shidimo Interqux (P) Ltd., Surat 8,43,300/- 2. Mazda Chem, Daman 1,19,480/- 3. Arihant Petrochemicals Sachin 4,88,400/- 4. Mahavir Traders, Surat 1,50,000/-" 13. The assessee also furnished the affidavits from the parties, namely M/s Sarvanabava Chemical Industries, M/s Arihant Industries, M/s South Petrochemical Corporation, M/s Arihant Chemicals and M/s Galaxy Plasto Chem-industries Limited wherein it was stated that they have purchased solvent from it. Similarly, the assessee further claimed that there was no opportunity extended to it for the confrontation/cross-examination with the statements of the parties involved as elaborated above. Nevertheless, none of the petrol pump owner was examined by the AO to whom the assessee was alleged to have diverted its products at a higher price which was not recorded in the books in the guise of selling to the parties elaborated above/ recorded in its books. 14. The assessee further submitted that its sales policy was to deliver the goo....
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....erefore, the AO erred in presuming that the assessee is engaged in supplying the products to the petrol pump owners in the garb of supplying to the parties as elaborated in the order of the AO. Moreover, the complaint filed by the district authorities has been challenged before the competent court which is pending. Therefore, such complaints cannot be treated as conclusive evidence that the assessee was involved in the transactions as alleged by the AO. 21. The assessee further submitted that in the notice of the Magistrate it was alleged that; i. It (the assessee) was involved in diverting the products only in respect of few parties in whose name it (assessee) has shown sale as interstate sale amounting to Rs. 14,11,006/- only. ii. Similarly, there was the mismatch in the tanker nos. shown in the invoice viz a viz report from the RTO with respect to the 16 sales invoices. However, it (the assessee) furnished the 5 certificate of RTO out of 17 that the vehicle no. mention on the bill was the tanker registered with RTO. 22. The assessee further submitted that as per the notice issued by the Magistrate, the offence was committed by the assessee during the FY 1....
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....company on 30-06-2003 for cross examination of the various persons but he was not available in India at that time. 29. The AO in his remand report also submitted that there was no statement recorded of any petrol pump owner by any of the authority such as crime branch, civil supplies department etc. 30. The AO further admitted that Shri Jayes thakker, director of the company in his statement recorded on 21-03-2000 himself denied having involvement in any illegal sale of solvent. Therefore, no comment on the allegation that the statements were deposed under threat or pressure from the parties as discussed above. 31. The Ld.CIT (A) after considering the remand report and the submission of the assessee observed certain facts as enumerated below: A. The assessee was engaged in diverting the sales of its product either to the petrol pump owners or other parties for the use of non-industrial purposes in the garb of selling to the parties for the use of industrial activity. The observation of the learned CIT (A) was based on the following: i. There was no industrial activity carried out by M/s Parshwa Industries as evident from the statement of the owner as well....
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....accounted sale was not reasonable. As such he opined that it should be the average of sale price of Rs. 10/- and 24/- per litre. Accordingly the Ld.CIT (A) determined the reasonable price at Rs. 17/- per litre of solvent. Accordingly, the Ld.CIT (A) confirmed the addition in part made by the AO by observing as under: A.Y. 98-99 Name of the company Kilolitres Sale price shown (Rs.) 1. Prime Chemicals 165 1904012 2. Parshwa Inds. 121.60 1348769 Total 286.60 3252781 Sales Realisation calculated At Rs. 17 per litre 4872200 Sales Realisation as per books 3252781 The Difference to be taxed 1619419 A.Y. 99-2000 1. M/s. Aristo Adechem P. Ltd. 246 2395174 2. Parshwa Inds. 1492.66 14037494 Total 1738.66 16432668 Sales Realisation calculated At Rs. 17 per litre 29557220 Sales Realisation as per books 16432668 The Difference to be taxed 13124552 A.Y. 2000-01 1. M/s. Aristo Adechem P. Ltd. 874.5 10683517 2. D A Enterprises 1571.0 18008174 3. Excel Organics 274.0 3441377 4. Parshwa Inds. 2242.5 24525025 &....
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.... the products mentioned by the assessee show that they cannot be mixed with petrol as they do not have characteristics of motor spirit and hence also the theory of sale to petrol pump owners cannot be given credence to. There are sales returns made by the parties which are shown in the accounts of these parties. Similarly, sale confirmation from the parties also, copies of which are attached in the paper book. Then how could such sales be considered to be made to petrol pump owners and accordingly addition made in the hands of the assessee ? The actual sales price realized by the assessee by selling the goods is already recorded in the books. The learned AO's only allegation is that assessee has obtained more price by selling to petrol pump owners. There is no evidence for either the sale to petrol pump owners nor the price at which it is sold to petrol pump owners. The statement of driver at best tells that the goods were unloaded at petrol pump, but there is no mention of any evidence in any of the findings by the lower authorities as to whether there is any excess price realized over and above that recorded in the books. The sale ....
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....cer for further verification. Therefore the demand of the VAT was deleted on technical reasons. Thus, no reliance can be placed on the order of the VAT tribunal. 36. Both the ld. AR and the DR before us relied on the order of authorities below to the extent favourable to them. 37. We have heard the rival contentions of both the parties and perused the materials available on record. There was a search and seizure operation carried out by the sales tax department at the premises of the assessee dated 16 February 2000. The sales tax department seized the books of accounts of the assessee. Subsequently, there was an inspection by the district supplies team at the premises of the assessee dated 18 February 2000. But the district supply team did not find any records as the same was seized by the sale tax department. Accordingly, the district supply team collected the requisite information from the office of the sales tax department to carry out necessary inspection. The main thrust of the district supply team was to investigate whether the assessee is diverting its sales of the product namely solvent to the petrol pump owners. The solvent being a controlled item under the essential....
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....ary 2000 in the financial year 1999-2000 alleged that the assessee was involved in diverting the petroleum products purchased by it to the petrol pump owners instead of parties shown in the books of accounts. As per the AO, the assessee was selling the goods without recording the same in the books of accounts to the petrol pump owners at much higher price whereas it has shown sales in the books of accounts to certain industries as elaborated in the preceding paragraph. 42. The AO did not dispute the quantity of the product purchased and sold by the assessee. The allegation of the AO was that the assessee has sold the entire quantity of all the items purchased during the year by diverting the same to petrol pump owners in the manner as discussed above. Further, such petrol pump owners were mixing such petroleum products with the petrol and selling the same at a market price of petrol Rs. 26.13 per liter. Accordingly, the AO further reduced the margin of the petrol pump owners i.e. Rs. 2.13 per liter from the sale price of the petrol Rs. 26.13 per liter and computed the sale price charge by the assessee to the petrol pump owners at Rs. 24 per liter. Accordingly, the AO multiplied ....
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....he matter is still pending before the competent court even after the lapse of 20 years (approx) and the same has not been yet listed for the hearing. The ld. DR has not brought anything contrary to the argument advanced by the ld. AR for the assessee. 46. We also note that recently the Hon'ble Delhi High Court in the case of Nokia Solutions and Networks Italia Spa vs. The Deputy Director of Income Tax reported in W.P.(C) 2477/2019 has directed this tribunal to expedite to decide the old matters. The relevant extract of the judgment is reproduced as under: "The petitioner's grievance in this case is that the income tax appeals, pertaining to assessment years of about 20 years ago, filed by the petitioner, have been pending for 10 to 16 years (2003-2009). In the light of these averments, this court is of the opinion that the President or the Senior Vice President concerned of the Tribunal should take appropriate steps and expedite the hearing in these appeals, so as to ensure that final orders in all these appeals are announced at the earliest, preferably within four months from today. Although these directions dispose of the petitioner's grievance, however, this....
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....ments recorded by the police department and district supply department, sales tax search we are of the view that these evidences are reasonably sufficient enough to allege that the assessee was engaged in diverting the sale of its products for non-industrial use/to the patrol pump owners. But the fact that the matter is pending before the court of law cannot be ignored which will certainly have the crucial bearing on the issue on hand. Be that as it may be, we are not inclined to adjudicate the impugned question. Thus, we keep this question open as the same is pending before the Hon'ble Court. Whether such activity was carried on by the assessee for the assessment year's 1998-1999, 1999-2000 and 2000-01 50. There was an inspection of the district supply team dated 18th February 2000 wherein it was alleged that the assessee is diverting its sales to the patrol pump owners/ for non industrial use. There was no specific mentioned about the period in the proceedings of district supply department but the district magistrate in its detention order has given a clear finding that there were two more inspections dated 24-06-1997 and 18- 11-1997 where the assessee was alleged to ....
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....parties, in collusion with the said parties by offering financial incentives and economic gain to them and it is reasonably believed to have been sold the solvent in Gujarat or mixed in petrol at Petrol Pump. Thus, you have indulged in spreading Pollution by adding low cost solvent with high cost petrol, thereby earning high financial gain by indulging in black Marketing of solvent stock is clearly proved. Thus you have violated the clause 23 & 24 of Gujarat Essential Commodities (Licence, Control and declaration of stock) order, 1981 and made breach of condition 4,6 & 12 of the said order, thereby violating section 3 of the essential Commodities Act, 1955." 53. From the above, we note that the assessee is involved in only solvent product for diverting the same to the petrol pump owner/ non-industrial use. The Ld. DR at the time of hearing has not controverted the finding of the Ld.CIT (A). Therefore we are of the view that the dispute revolves to the extent of the sale of the product namely solvent. We concur with the finding of the Ld. CIT-A to this extent. 54. We also note that a specific question was raised by the CIT (A) to the AO at the time of appellate proceedings whe....
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....stries) located outside Gujarat to whom the solvent was sold except one namely AVI Enterprise to whom the non-solvent product was sold. Therefore, it appears from the detention order that the assessee has used the name of 4 parties only for generating the fake bills in the garb of sales to the petrol pump owners or in the black market for the use of Non-Industrial purposes. The list of such parties as mentioned in the detention order stands as under: i. Parshwa Industries ii. DA enterprises iii. Aristo Adichem iv. Excel organics v. Avi enterprises However, the AO issued notices to all the parties under section 133(6) of the Act to confirm the sale transaction as claimed by the assessee. But there was no response from any of the party except one, namely M/s Prime Chemical, which accepted to be involved in the bogus billing against the commission from the assessee. But the AO held that the assessee had used the name of all the parties for showing the sales of the petroleum products but in actuality the products were sold to the petrol pump owners without recording the same in the books of accounts. However, the Ld. CIT(A) held that t....
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....es as discussed above for the solvent product only. 63. We further note from the statement of facts submitted by the assessee before the Sale tax tribunal that the sale tax department carried out search at the premises of the assessee as it was enjoying exemption certificate on sale and also got the benefit of low tax paid on purchases. The department doubted that the assessee sold the goods in Gujarat and issued the bills in the name of parties situated outside Gujarat. Accordingly the sales tax department treated the interstate sale made by the assessee as local sale. Therefore it is clear that all the matter related to bill issued to the parties outside the Gujarat only for the diversion of the sales. 64. We also note that the main thrust of the AO was based on the inspection carried out by the district supply department wherein the name of 5 parties are recorded as discussed in the preceding paragraph. Thus in our considered view, the AO if the was to involve all the parties to whom the assessee has made sales, then he has to bring sufficient evidences justifying the diversion of the sale to the petrol pump owners. Indeed, the notices remained un-served but that cannot be....
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....low: Situation one: the assessee loses its case before the competent court of law. 68. In this situation, it will be established that the assessee was engaged in the diversion of its products to the petrol pump owners/for non-industrial use in the blackmarket in the garb of supplying the products to the parties as listed above. Thus, it can safely be inferred that the assessee to make higher amount of profit has done so. Accordingly, such higher amount of profit should certainly be subject to tax under the provisions of law. But again the dispute will remain unsettle to quantify the amount of profit/sale price charged by the assessee from the petrol pump owners and other industries. Situation two: the assessee succeeds in its case before the competent court of law. 69. In case, the assessee succeeds before the competent court of law, then there will not be any question of making any addition to the total income of the assessee on account of diversion of sales to the patrol pump owners/other industries. Then it shall be inferred that the assessee has sold the goods to the parties at the price shown by it in the books of accounts. 70. Now coming to the issu....
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....livered/ the tank was emptied at the tank of the petrol pump at Borsad Jakatnaka. On way to Baroda, Navinbhai tore out the bill for Bhavnagar. I do not remember the name of the petrol pump at Borsad Jakatnaka, but it is a Hindustan Petroleum Petrol Pump." But yet there was no inquiry by the Revenue from such petrol pump owners despite the having some information about the petrol pump owners. 72. We also note that there was no information available from the authorities below that the assessee or its directors have made some unaccounted investments or has incurred some expenditure outside the books of accounts. The income of the assessee can be determined based on assets or the expenditure. There is no information about any undisclosed investments or unexplained expenditure. Thus, even if the real income theory test is applied in the case on hand, we note that the revenue has not brought anything on record about the investment made by the assessee/its directors or there was incurred any expenses by the assessee/its directors. 73. The AO in the assessment order recorded that the assessee might have incurred substantial expenses to sale the product to the petrol pump in this m....
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....ndia) and, therefore, unable to attend personally". It is a fact that Shri Jayesh Thakkar was the , original accused in the Solvent Scam and he is not available in India. Though, it will be crucial to examine him to exactly find out the veracity of statements to ascertain the exact price at which he sold the solvent to petrol pumps. It is also a fact that though the Police Authorities r.ave recorded statements of persons residing as far as Chennai, Bangalore and Goa, to get the denial of solvent buyers, but not a single statement of petrol pump owners was recorded though indications were available to them. In the circumstances, the Assessing Officer was justified in adopting a reasonable price to estimate suppressed income. No comments can be made as to the allegation that the statements were deposed under threat or pressure. In fact, Shri Jayeoh Thakkar himself has denied of having involved himself in any illegal sale of solvent vide statement dated 21.3.2000 recorded by the District Civil Supplies Officer. The statements of various persons recorded by the Police/Civil Supplies Authorities are available and will be produced as and when desired by your ki....
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.... Tax Commissioner, Vadodara, who had decided the matters against M/s Kavit. 3. Against the said order of Assistant Sales Tax Commissioner, Vadodara, M/s Kavit had filed appeals before Gujarat Sales Tax Tribunal bearing No.36 to 41 of 2003, which were disposed off by the order of Gujarat Sales Tax Tribunal dated 11/2/2003 whereby the appeals were remanded to the file of Assistant Commissioner of Sales Tax with a direction to decide the same on merits. 4. The Assistant Commissioner of Sales Tax (Vadodara) then remanded case to Sales Tax Officer for further inquiry vide his orders dated 31.05.2003. 5. Thereafter, the Sales Tax Officer (Vadodara) satisfied with the case of M/s. Kavit did not pass any order and at present there are no demands outstanding for the above years from Sales Tax Department against M/s. Kavit. 6. Whatever is mentioned above is true and nothing but the truth and there are no salesjax liabilities outstanding against M/s Kavit for the above years out of the assessment orders and the consequential demands raised by the sales tax authorities. 7. The above Affidavit is field to put in proper perspective the status of the d....
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.... assessment year despite the turnover of the assessee has increased by hundred percent. Such information certainly creates suspicion to investigate the matter but the same cannot be the basis of making the addition until and unless other crucial evidences for diverting the sales are brought on record. 82. After considering the facts involved in the present case in totality, we are of the view that it was the question of fact before the revenue to find out that the assessee has diverted the sales to the petrol pump owners/other industries which is possible to decide on the basis of documentary evidence. But the revenue has not brought necessary tangible materials in support of his claim. Thus in our considered view, the addition made by the authorities below is not sustainable in the absence of sufficient documentary evidence. In this regard we find support and guidance from the judgment of Hon'ble Gujarat High Court in the case of CIT versus MK brothers reported in 163 ITR 249 wherein it was held as under: "8. On a perusal of the order of the Tribunal it clearly appears that whether the said transactions were bogus or not was a question of fact. The Tribunal has also po....
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.... further details such as delivery order, transporters authority letter, delivery challans, detailed account statement, indent letter, invoice copies, payment details, copy of the journal voucher etc. 86. Similarly, the assessee agrees with the transaction shown by it with the reliance industries but requested to furnish the copy of journal voucher. However the AO disagreed with the contention of the assessee by observing that it failed to reconcile the difference of the purchases with the confirmation received from the parties. The AO also observed that the assessee is already engaged in making/diverting it sales to the patrol pump owners/for non-industrial use at a higher price without recording the same in its books. Accordingly, the AO made the addition of Rs. 1,56,67,920/- after rejecting the books of accounts in the manner as detailed under: "Net sale at the rate of Rs. 24/- per ltr. for unaccounted sales of 652.830 ltrs. Rs. 1,56,67,920/- Less: Purchase consideration as discussed above Rs. 64,74,065/- Rs. 91,93,835/- Add: Unaccounted investment as discussed above Rs. 64,74,065/- Rs. 1,56,67,920/- ==========" 87....
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....e purchases from the reliance industries Ltd submitted that the assessee failed to reconcile the purchases amounting to Rs. 2,85,748/- only. 99. The Ld. CIT (A) after considering the remand report and the submission of the assessee deleted the addition made by the AO in part by observing as under: "6.9 After going through the entire details submitted from both sides, I find that the appellant have been able to reconcile most of the differences except as per the figures mentioned by the Assessing Officer in his remand report. There is also some substance in the appellant's claim that there may be some cause for mistake entries or other mal practices in the concerned oil companies which were also highlighted in the press at the same time as the allegations against the appellant company. Taking into account all the factors discussed into consideration, I hold that firstly, this is no case for making an addition of Rs. 1,56,57,920/- when in fact the unaccounted purchases should be deducted as expenditure. The case law cited on this point is very relevant. Secondly, most of the figures have been tallied then only the difference remaining should be the subject of taxation whi....
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.... 20,82,836 ii) Reliance Industries 2,85,748 Total Rs. 23,68,584 3. Even above addition of Rs. 23,68,584/- cannot be sustained as upto Asst. Year 1998-99 (before amendment in section 69C w.e.f. A.Y. 1999-00 by insertion of proviso) whatever addition is made u/s 69C will be allowed as deduction u/s 37 and net addition will be NIL. Assessee relies on following decisions which are also mentioned in CIT(A) order. a) S. F. Wadia v/s ITO 19 ITD 306 (Ahmedabad) b) Nishant Housing Dev. 52 ITD 103 (Patna) c) M.K. Mithi Vanthan v/s ITO 31 ITD 114 (Madras) 103. On the other hand, the learned DR vehemently supported the order of the authorities below. 104. Both the parties the ld. AR and the DR before us vehemently supported the order of the authorities below as favourable to them. 105. We have heard the rival contentions of both the parties and perused the materials available on record. The issue in the instant case relates to the difference in the amount of purchases shown by the assessee viz a viz the sales shown by the parties namely HPCL and the reliance industries Ltd. The difference was determined by the AO at Rs. 64....
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....ntire sum of undisclosed sales proceeds can be treated as income, answers by itself in the negative." In view of the above, we are of the view that the addition of the gross profit to the total income of the assessee on account of such purchases will meet the end of justice. However, in the case on hand, we note that the assessee has already been alleged by the district supply department to have made sales at a higher price by diverting to the petrol pump owners/for non-industrial use as discussed in the ground No. 1. The matter is still pending before the competent court of law. Therefore we are of the view that, it will be difficult to find out the exact amount/date of gross profit embedded in such transaction of unaccounted purchase. However, to put a full stop on the ongoing dispute, we feel that an addition to the extent of 25% of such unaccounted purchases will meet the end of justice. In view of the above, we direct the AO to make the addition of the amount being 25% of such unaccounted purchases of Rs. 23,68,584/- to the total income of the assessee. Hence, the ground of appeal of the assessee is partly allowed and Ground of appeal of the Revenue dismissed. 109. The n....
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....e authorities below. 116. We have heard the rival contentions of both the parties and perused the materials available on record. At the outset we note that the assessee has claimed preoperative expenses amounting to Rs. 36,49,179/-in the 1st year being 1996-97 in which the commercial production was commenced. The AO in that assessment was pleased to grant the deduction by amortizing such preoperative expenses over a period of 10 years. The relevant extract of the finding of the AO is tense as under: "3. Further, during the course of assessment proceedings it is noted that it has claimed pre-operative/preliminary expenses amounting to Rs. 97,78,171/- till the date of commercial production of the business. Out of preliminary expenses of Rs. 97,78,171/- a sum of Rs. 60,28,992/- is considered as part of public issue expenses vide para-8 of the letter dated 22nd February, 1999, submitted by the assessee. Therefore, considering the same and further invoking the provisions of section 35D of the I. T. Act out of the total public issue expenses amounting to Rs. 61,28,992/- net allowable deduction during the previous year relevant to current asstt. year works out to only Rs. 1,10....
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....sment proceedings failed to furnish the supporting evidences with respect to the aforesaid expenses. Accordingly, the AO in the absence of documentary evidence and considering the fact that such expenditures were incurred in cash, has disallowed 1/10th of such expenses, holding them as personal. 123. Aggrieved assessee preferred an appeal to the Ld.CIT(A) who has also upheld the order of the AO in the absence of documentary evidence. 124. Being aggrieved by the order of the Ld. CIT (A) the assessee is in appeal before us. 125. The Ld. AR before us submitted that the assessee being our body corporate cannot incur any expense which is personal in nature. 126. On the other hand, the Ld. DR vehemently supported the order of the authorities below. 127. We have heard the rival contentions of both the parties and perused the materials available on record. There is ambiguity to the fact that the onus lies on the assessee for claiming the deduction of any expense under section 37(1) of the Act. However, the assessee failed to furnish the supporting evidence for the expenses incurred by it. Therefore we decline to interfere in the finding of the authorities below. Hence the gr....
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....ng stock of finished goods. 132. The assessee in the year under consideration has valued the closing stock of finished goods as on 31 March 1998 amounting to Rs. 8,11,984/- without including the excise duty element of Rs. 91,416/-. The assessee claimed during the assessment proceedings that it has collected the amount of excise duty and paid in the subsequent assessment Year 1999-2000. However, the AO rejected the contention of the assessee by observing that the liability of the excise duty has accrued on the finished goods shown as on 31 March 1998. Therefore the same is liable to be added to the value of the closing stock. Accordingly the AO added the same to the total income of the assessee. 133. Aggrieved assessee preferred an appeal to the Ld. CIT(A). 134. The assessee before the Ld. CIT (A) submitted that it has paid the amount of excise duty before filing the return of income. Therefore the same should be allowed as deduction under section 43B of the Act. 135. The assessee also submitted that the similar addition was made by the AO in the assessment year 1997-98. Accordingly, he claimed for the deduction of such amount of excise duty embedded in the opening st....
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....price higher than the one at which they are recorded in the books particularly when the same was only on the basis of the estimation and also as observed by the Learned CIT(A) herself is subject to recall/rectification based on the availability of further evidence. 2. The Learned CIT(A) erred in confirming and retaining addition of Rs. 1,31,24,552/- particularly when the order of District Magistrate implicating the appellant is challenged in further proceedings, whose outcome is yet not final and particularly when no petrol pump owner was ever examined by the AO to support his findings in particularly when the complaint with the District Magistrate did not cover financial year 1998-99 relevant to assessment year 1999-00. 3. The learned CIT(A) erred in confirming and retaining addition of Rs. 1,31,24,552/- in respect of alleged sale of solvent product to petrol pump owners ignoring some vital facts and giving incorrect findings contrary to the evidences and facts. 4. The learned CIT(A) erred in law and on facts in upholding the disallowance of Rs. 73,447/- as prior year expenses. It is submitted that since the liability to pay this amount crystallized duri....
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.... the Ld. CIT (A), rejected the contention of the assessee by observing that there is no submission from the side of the assessee justifying that such expenses were crystallized in the year under consideration. Similarly there was no detail furnished by the assessee suggesting that the expenses covered under section 43B of the Act were paid before filing the return of income. 146. Being aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before us. 147. The Ld. AR before us reiterated the submission made before the authorities below. 148. On the other hand the Ld. DR vehemently supported the order of the authorities below. 149. We have heard the rival contentions of both the parties and perused the materials available on record. At the outset we note that the impugned issue is covered in favour of the assessee by the order of Bombay High Court in the case of CIT v. Nagri Mills Co. Ltd.[1958] 33 ITR 681 wherein it was held as under: "3. We have often wondered why the Income-tax authorities, in a matter such as this where the deduction is obviously a permissible deduction under the Income-tax Act, raise disputes as to the year in which the deductio....
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....e have decided in favour of the assessee. Respectfully following the same, we dismiss the ground of appeal of the Revenue. In the result, the appeal filed by the revenue is dismissed. Coming to the Assessee's appeal bearing ITA N. 1005/Ahd/2004 for the assessment 2000-01 154. The assessee has raised the following ground of appeal: "Your appellant being aggrieved by the order passed by the Learned CIT(A)-I, Baroda (hereinafter referred to as learned CIT(A)) u/s 250 of the Act, presents this appeal on the following amongst other grounds of appeal. The grounds set out hereunder are independent of and without prejudice to each other. 1. The Learned CIT(A) erred in law and on facts in upholding rejection of appellant's books u/s 145(2) and in retaining addition of Rs. 2,76,95,907/- in respect of alleged sale of appellant's solvent products at the price higher than the one at which they are recorded in the books particularly when the same was only on the basis of the estimation and also as observed by the Learned CIT(A) herself is subject to recall/rectification based on the availability of further evidences. 2. The Learned CIT(A) erred in ....