TaxTMI 
TaxTMI 
2017 (9) TMI 1970
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....by the AO on account of inflation of purchases for Rs. 79,82,382/-. 2. That the ld. CIT (A) has erred on the facts & circumstances of the case in deleting the disallowance made by the AO on account of suppression of scrap sales for Rs. 60,70,056/-. 3. That the ld. CIT (A) has erred on the facts & circumstances of the case in deleting the disallowance made by the AO on account of bogus payment of commission for Rs. 1,23,879/-. That the appellant craves leave to add, amend or alter the grounds of appeal on or before the date the appeal is finally heard for disposal. 2. Briefly stated the facts of the case are that the case of the assessee was reopened after recording reasons and taking necessary approval from the competent authority by issuing notice under section 148 of the Income Tax Act, 1961 (hereinafter referred to as the Act) and assessment was completed under section 143(3) read with section 147/148 of the Act, 1961 vide order dated 29.05.2014. Originally the assessment was completed on 29.06.2000 under section 143(3) of the Act by determining the income at Rs. 2,16,15,282/- against the income returned by the assessee in the revised return at Rs. 2,14,8....
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....e, cannot lead to a conclusion that the said transaction is sham. The knowledge and working capacity of staff is limited and mistakes are bound to happen. It is not the case that some unscrupulous activity has been done by the assessee. The assessee is manufacturing a highly regulated product which is monitored by various government entities. Its method of production and out is fixed. The yield of production in the year under consideration is similar to that in earlier and later years, and thus by no means it can be concluded that the assessee has inflated purchases. In respect of the AO's making enquiries that the said concern has been found to be bogus, the assessee requested the AO to provide copy of the report received. But the AO failed to provide any details in this regard. It is once again important to mention that the purchases from the said party have been duly accepted by the ITAT in its order, which is the last fact finding authority. ITAT having accepted the same it cannot be alleged that the said party is bogus. The ld. Counsel submitted that similar submission as stated above have been made in the case of R.K. Steel Trading Corp. and Saurabh Steel Syndicate. ....
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....pellant has stated that issue of inflation of purchases from these parties alongwith certain other parties has already been considered in case of the appellant by the CIT (A) & Hon'ble ITAT for various years between 1999-2000 to 2005-06. It is submitted that Hon'ble ITAT has already accepted the purchases made from two parties as genuine purchases, while passing the order in the case of the appellant for AY 1999-2000 & 2001-02. A copy of the orders has been filed on record. It is submitted that in the case of M/s. Saurabh Steel Syndicate, purchases have been made in FY 1997-98 only and all the payments have been made through account payee cheques. 6.8. It is submitted that the employees of the assessee have categorically stated that they do not remember exactly and can confirm only after seeing the records whether purchases have been made from these parties or not. Further copy of ledger accounts of these parties will clearly reveal that payments have been made to these parties against purchases. In this respect, it is further submitted that during the course of proceedings for AY 2001-02 to 2004-05 representatives of these parties appeared before the AO and have confirmed....
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....1. The appellant has stated that since purchases from all these parties have been considered as genuine by Hon'ble ITAT it is requested that addition made by the AO may be deleted. It is further stated that appellant is manufacturing a highly regulated product which is monitored by various government entities. The yield of production in the year under consideration is similar to that in earlier and later years, and thus by no means it can be concluded that the assessee has inflated purchases. 6.12. Having considered the detailed submissions made in this regard, I find that AO has in the remand report reiterated the reasons given in the assessment order and has not been able to bring on record any evidence to hold that purchases made from these parties are inflated & bogus. The fact that all the payments for the material purchased have been made through the banking channel against the receipt of bills, the yield in the production process, no. of cylinders manufactured, etc. have not been disputed by the AO. Further, I find that purchases made by the appellant from two parties namely - M/s. Agarwal Brothers and M/s. R.K. Steel Trading Corp. in the preceding year and succeedi....
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....ers of the authorities below. We find that the ld. CIT (A) had deleted the additions by observing in para 7.5 to 7.12 of his order as under :- 7.5. I have perused the assessment order as well as remand report of the AO, submissions made including judicial citations given therein and cross reply of the appellant and find that an addition of Rs. 60,70,056/- has been made by the AO on account of suppression of sale of scrap. During the course of survey conducted on 22.11.2004 at the premises of the appellant, loose papers were found which revealed that scrap was being sold by the appellant @ Rs. 5800 per MT as per the bills raised as against the market rate of Rs. 10,700 per MT and excess cash was received out of the books. Following the same logic, AO has worked out 45% of concealment over the billed amount declared by the Appellant. AO has accordingly worked out the gross amount of scrap sales generated out of the books by extrapolating the figure shown in the books of accounts on account of scrap sale. AO has on the same basis worked out the excess cash received out of the books would be Rs. 60,70,056 on account of scrap sales of 1238.787 MT during the year under considera....
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....he AO under this head. 7.11. However, as regards the claim of commission paid on scrap sales @Rs. 100 PMT is concerned, the appellant has in the course of appellate proceedings stated that allegation of bogus payment is based on presumptions. The complete details of payment made by cheques were filed before the AO. It is further stated that similar addition has been deleted by the Hon'ble ITAT in the other years. 7.12. Having considered the submissions made on this issue, I find that this issue has been considered by the Hon'ble ITAT in the case of the appellant for AY 1999-2000, wherein the disallowance made by the AO on this account was deleted by order dated 26.10.2007 in ITA No.560/JP/2007. Respectfully following the same, as there is no change in the facts in this year and AO has not brought on record any other adverse material on this issue, I delete the addition of Rs. 1,23,879/- made by the AO on this account." We find that the ld. CIT (A) after taking into consideration various aspects of the matter and also following the decision of the Tribunal in the assessee's own case for the assessment year 1999-2000, deleted the addition. We find no reason to in....
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....eclared by the appellant. The AO has given reasonable opportunity of being heard to the appellant before initiating the reassessment proceedings. Hon'ble Supreme Court has laid down in the case of Kelvinator India 320 ITR 561 that AO has power to re-assess, only if there is a tangible material and the procedure laid down in the case of G.K.N. Driveshaft has been followed by the AO. The AO has discharged the duty which lay upon him before initiating the reassessment proceedings. 4.6. However, the case laws relied upon by the appellant does not have applicability to the facts of the present case. The function of the Assessing Officer is to administer the statute with solicitude for the public exchequer with an in-built idea of fairness to taxpayer (Asst. CIT v. Rajesh Jhaveri Stock Brokers (P) Ltd. (2007) 291 ITR 500 (SC). In determining whether commencement of reassessment proceedings is valid, the court has only to see whether there is prima facie some material on the basis of which the Department opened the case. The sufficiency or correctness of the material is not a thing to be considered at this stage as held by the Supreme Court in the case of Raymond Woollen Mil....