AI Drafter 
TaxTMI 
TaxTMI 
2022 (3) TMI 1238
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing a blank. The said expenses are as under: (i)Bogus purchases (ii) Depreciation on plant and machinery purchased during the year and (iii) freight outward expenses. 3. The same were upheld by the Ld. CIT(A) for the same reason. Further disallowance of preoperative expenses to the extent of Rs. 2,09,634/- was also made by the A.O. and upheld by the ld. CIT(A) . 3.1 Since the disallowance of expenses on account of bogus purchases, depreciation and freight outward was made for the identical reason that enquiries by the A.O. revealed that the parties did not exist, we shall first be dealing with the grounds raised by the assessee with respect to the same in ground no. 1 to 3 as under: 1. That the Ld. CIT (A) erred in law and on the facts of the case in confirming the action of the AO in making an addition of Rs. 13,41,501/- as unaccounted purchases made from Gautam Stone Grinding Mills. 2. That the Ld. CIT (A) erred in law and on the facts of the case in confirming the action of the AO in disallowing Rs. 3,23,333/- being depreciation @15% and Rs. 4,31,111/- being additional depreciation @20% totaling to Rs. 7,54,444/- 3. Tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rtly inclined to accept the contention of the AR. Therefore, in view of the above, purchases made from Coating Specialties Ltd. of Rs. 25,04,225/- is considered to be genuine and is deleted. The furnished any reply. Further, the assessee also failed to furnish the copies of bills for the purchase of machinery on various dates as shown in ledger account. 8. Before us Ld. Counsel for the assessee drew our attention to the various documents filed by him before the lower authorities. (i) Confirmation leter of M/s. Gautam Stone Grinding Mills placed at paper book page no. 71. (ii) Copies of Bills issued by M/s Gautam Stone Grinding Mills filed at paper book page no. 1 to 16 of Paper Book-2 (iii) Bank statement of the assessee in Syndicate Bank and HDFC Bank depicting payment to M/s Gautam Stone Grinding Mills in the narration, at paper book page no. 17 to 24 of Paper Book-2 (iv) Acknowledgement of Return of Income of Gautam B Afna, Proprietor of M/s Gautam Stone Grinding Mills for impugned assessment year i.e. A.Y. 2012-13 filed at paper book page no. 26. 9. .Referring to the above, the contention of the Ld.Counsel for the assessee was that the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent to hold that the transaction was bogus. The return of income of the proprietor of Gautam Stone being part of the Revenue record only, the same should have been looked into and considered by the revenue, before arriving at any conclusion or finding regarding the genuineness of the transaction. In any case, since the transaction related to earlier period while the verification of the same was carried out subsequently during assessment/appellate proceedings, there could be any reason for the party not being found at the said premises. It is not the case of the revenue that even in the year in which the enquiry was conducted, the assessee was carrying on transactions with the said party, which could have raised doubts regarding the said transaction. Further considering the fact that the assessee made purchases of raw materials from two parties only ,as noted by the AO also in his order at para 4.1 , having purchased raw material worth Rs. 25.04 lakhs from Coating specialties and 13.41 lakhs from Gautam Stone ,treating the entire purchases from Gautam Stone bogus would tantamount to disallowing 1/3 of the total purchases approximately of raw material, and without doubting the factum....
X X X X Extracts X X X X
X X X X Extracts X X X X
....taking into account all the facts before concluding that the purchases of Rs. 1.33 crores was not bogus. No fault can be found with the order dated 30.04.2010 of the Tribunal." 12. The disallowance of purchase made from M/s Gautam Stone Grinding Mill therefore of Rs. 13,41, 501/- is directed to be deleted. Ground no. 1 is allowed. 13. As for the disallowance of depreciation and additional depreciation amounting to Rs. 3,23,333/- and 4,31,111/- respectively on account of purchases made of plant and machinery from one M/s. Pneucon Process Technologies amounting in all to Rs. 21,55,554/-,we have noted that the Ld. CIT(A) upheld the disallowance holding as under: 3.5. I have gone through the facts and the submission of the appellant carefully. During the course of assessment proceedings the A.O. has asked appellant to furnish the copies of bills for fixed assets purchased during the year. The assesses has furnished ledger account of Pneucon Process Technologies from whom it has shown purchases of machinery during the year amounting to Rs. 27,55,5547-. On verification of copies of bills furnished by the assesses, bills for purchases of machinery made on various dates, fro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he remand proceedings, we have already submitted the confirmation of accounts duly received from the said company along with the return of income. We have already submitted the copy of the invoices on which due Central Sales Tax has been paid by the appellant. It is also submitted with due respect that the said invoices has also been produced during the assessment proceedings of the A. Y. 2013-14 and it has been already accepted by the A.O. and no otherwise view has been taken by him. 3.9. In view of the above facts, it is seen that the notice u/s 133(6) of the act was issued during the remand proceedings. However, the same is not responded. Therefore, the assessee was requested to produce the person for verification. Trie assessee was not able to produce the person but filed confirmation of accounts and copy of return of income. The confirmation is not signed and therefore not considered to be of any evidentiary value. Therefore, the veracity of the additional evidences produced by the assessee is not verifiable. The appellant has contested that it has already submitted the confirmation of accounts duly received from the said company along with the return of income. On ca....
X X X X Extracts X X X X
X X X X Extracts X X X X
....produce him that the evidences were discarded by the revenue as not sufficient to prove the claim of the assessee. As in the case of Bogus purchases, dealt with us above at para 11-12 we hold that in the light of evidences filed by the assessee, nothing adverse having been pointed out against which by the revenue, the onus of proving the genuineness of the claim stood duly discharged and the purchases of plant and machinery could not have been held to be bogus merely for the reason that the party was not found at the stated address. In view of the above, disallowance of depreciation and additional depreciation on the impugned assets purchased from Pneucon Process Technologies amounting in all to 7,54,444/- (3,23,333 + 4,31,111) is deleted. Ground no. 2 is allowed. 18. As for the disallowance of claim of freight outward expenses amounting in all to Rs. 5,76,999/- all pertaining to Jai Baba Roadways, the same were confirmed by the Ld. CIT(A) at para 5.5 to 5.8 are as under: 5.5. I have gone through the facts and the submission of the appellant carefully. It is seen from the ledger account of Jai Baba Roadways that appellant has credited freight outward expenses amounting ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Report and stated that all the expenditure incurred by the appellant are genuine. It is also submitted all the bills /invoices issued by Jai Baba Roadways are genuine which has been substantiated by the goods receipt by the respective parties on the lorry receipt. During the course of the remand proceedings also we could not trace out the party, however, the said payments has already been supported by goods receipt by respective parties on lorry receipt. 5.8. In view of the above facts, it is seen that during the course of remand proceedings, also notice u/s 133(6) of the act issued on 06/01/2017 has not been responded. Moreover, the assessee could not produce the above persons though the opportunity was provided vide letter dated 16/01/2017. The assessee has also not produced any evidence in this regard. The appellant has vehemently objected to this and stated that during the course of the remand proceedings also they could not trace out the party, however, the said payments has already been supported by goods receipt by respective parties on lorry receipt. The assessee has also failed to discharge it burden of proof by not producing the above party. In view of the above....
X X X X Extracts X X X X
X X X X Extracts X X X X
....xpenses. On careful perusal of the ledger account by the A.O. preoperative expenses written off comes to Rs. 29,90,042/-.Thus, appellant has claimed excess amount of Rs. 2,09,634/- (Rs. 31,99,676- Rs. 29,90,042) as preoperative expenses. Therefore, the same is disallowed and added to the total income by the A.O. On the other hand appellant has contended that R&D in the year under consideration and the relevant expenditure has been capitalized and only 1/5th of such expenses have been written off as preliminary & preoperative expenditure. The appellant has further submitted the detailed copy of ledger, journal entries etc. in support of his claim. 6.4, After going through the facts of the case, it is seen that appellant has claimed written off Rs. 31,99,676/- as preoperative expenses whereas preoperative expenses written off comes to Rs. 29,90,042/-. The appellant has not given any cogent reason for the above discrepancies. I hold that the Assessing Officer is right in making the disallowance in respect of excess preoperative expenses written off. The disallowance made by the AO for a sum of Rs. 2,09,634/- is therefore confirmed. Accordingly, this ground of appeal is dismis....