TaxTMI 
TaxTMI 
2020 (11) TMI 807
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....bunal, Rules, 1963. 3. Ground No.1 raised by the Revenue reads as follows: "1.That Id. AO has grossly violated the CBDT Instructions while passing the impugned assessment by not limiting himself within the issues only to be verified as directed by CBDT while selecting the case under CASS but widening the scrutiny in other matters, as such, the order impugned is bad in law and liable to be quashed." This ground is general in nature therefore does not require adjudication. 4. Ground No.2 raised by the Revenue reads as follows: "2.That the Id.AO erred for disallowing excess purchase price amounting Rs. 1,75,07,965/- without considering the fact that the effect of such excess pricing had already been neutralized in the Profit & Loss A/c by way of enhancing the closing stock value of almost same value as observed in the assessment order also." 5. The facts qua the issue, which is stated in the assessment order are as follows: "Meanwhile creditors parties viz. M/s Olam Agro India Limited, M/s ljas Cashew company, M/s Ismail Enterprise and M/s Anchuvila Cashew has furnished ledger copies of assessee in their books which is found to be in wide varianc....
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....cial Taxes, Thiruvanathapuram - copy enclosed] that was different from the actual (vide High Seas Sale Agreement - enclosed) at which I purchased but more than that. In this matter I am also enclosing herewith copy of some declarations by the transporters before Kerala Commercial Department. In this situation to avoid litigation & complexities in the matter of valuation in the course of passing through various check posts in different states as well as entering in to the West Bengal I ought to declare the relevant purchase at such excess rate in way bills under WB VAT Rule, 2005 and also debited such overrated purchase in my books of accounts. By this process, during the year under consideration my purchase was overstated by around Rs. 175.08 lacs (sheet enclosed) altogether which ultimately neutralized by enhancing the closing stock value as on last day of relevant financial year by almost same amount [closing Stock Valuation Sheet - enclosed]." Relevant portion of the annexure to the above mentioned letter on overstated purchase is as under: Importer / Supplier Purchase as per books of accounts Purchases as per High Sea Purchase invoice Purchases ove....
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....and not on price and therefore it was explained that the difference in the purchases was due to enhanced value was 1,74,27,515/- (1,75,07,965/- (-) 80,450/-). 5.3. The appellant had explained before the AO and also before me that in order to smoothly facilitate trade, commerce and carry on business smoothly without any complexities in bringing the cashews from the Kerala Port to West Bengal and pass through customs and other Statutory Authorities the product was value at 70/- per kg. in accordance with the Kerala State rules and guidelines. As per books of accounts, the appellant had closing stock of 1,90,65,746/- which was enhanced to 3,64,95,009/- by way of addition of such overstated purchase value thereby there was no revenue impact. I agree with the contentions of the appellant that there was no revenue impact and the appellant has conclusively proved that the enhanced purchase value was adopted to ease business and in conformity with the Kerala State Rules. Similarly, the appellant has also valued his closing stock resulting in neutralizing the impact of both the debit and credit sides of the books of accounts. The appellant's Net Profit was 0.88% as dec....
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.... 3.That the Id. AO has erred by not allowing shortfall in claim of purchase of Rs. 12,65,464/- from M/s. ljas Cashew even after noticed the same as 'under shown' and therefore violated the spirit of the income tax law which states that all genuine expenses must be deducted to arrive into the taxable income. 4.That the learned AO has erred to add Rs. 1,09,336/- being the gross profit earned estimated @ 8% on a fictitious sales amounting Rs. 13,66,701/- but adduced no evidence as to the impugned sales transaction. 9. Brief facts qua the issue, as stated in the assessment order are reproduced below: "The assessee is found to have purchased goods worth Rs. 1265464/- from M/s ljas Cashew Company during the relevant year under consideration. On confrontation on this issue AR of the assessee submitted copies of form 50A in order to justify his claim. In this regard M/s ljas Cashew Company was reissued with copies of form 50A for verification. In reply, the said party through their letter dated 26.02.2016 clearly mentioned that "Form no 50A of WBVAT is their documents only and nothing concerned to me." Payment mentioned in the ledger is also fo....
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....e P&L A/c to the extent of 510 kgs. In the quantity of the goods purchased and goods reflected in the P&L A/c the quantity actually purchased was 1,07,950 kgs. and the quantity debited in the P&L account was 1,08,460 kgs. and, therefore, there is a difference of 510 kgs. of overstatement in the P&L and considering the actual purchase price at 751.80 per kg., an amount of 26,418/- shall be added back and the appellant gets relief of 82,918/- (109336 - 26418/-). In view of the foregoing, these grounds are partly allowed." 11. Aggrieved by the order of ld CIT(A), the Revenue is in appeal before us.We heard ld. D.R. for the Revenue and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. We have heard and gone through the above noted findings of ld CIT(A). We did not find any infirmity in the order of ld CIT(A). That being so, we decline to interfere with the order of Id. C.I T.(A) in deleting the aforesaid addition partly. His order on this addition is, therefore, upheld and th....
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....ifference between the appellant and the creditor party who has shown Nil closing balance. It is seen that M/s Olam Agro India Ltd has passed a journal entry as on 18-09-2012 nullifying the closing balance of 2,76,010/. In view of the fact that the purchases is not disturbed and tallying and the amount of 2,76,010/- is receivable by the appellant from the party which the party has passed a journal entry and nullified the same in their books would not justify additions in the books of the appellant and therefore, the AO is directed to delete the additions of Rs. 2,76,010/- on account of difference of sundry creditor balance with M/s. Olam Agro India Ltd." Likewise, the ld CIT(A) also deleted that addition in respect of other creditor namely, M/s Anchuvilla Cashew" 15. Aggrieved by the order of ld CIT(A), the Revenue is in appeal before us. We heard ld. D.R. for the Revenue and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. We have heard and gone through the above noted f....