2022 (9) TMI 508

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....3-14 ('AY') whereby the appeal of the Revenue has been dismissed and in light of the said dismissal, the cross objections of the Assessee have also been dismissed. The Assessee is an individual and proprietor of a firm named M/s Aroma Aromatics. 2. Learned counsel for the appellant states that the ITAT has erred in deleting the addition of Rs. 6,44,29,650/- made by the Assessing Officer ('AO') under Section 41(1) of the Income Tax Act, 1961 ('the Act'). He states that the AO had made the said addition after relying upon the order dated 29th July, 2010 passed by Commissioner, Central Excise & Customs, Meerut-II wherein the said Commissioner had held that purchases made by the Assessee's firm from a sister concern M/s Ruchi Infotek Syste....

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....its transactions with the Assessee duly produced before the AO and a perusal of the documents evidence that the Assessee had been transacting with M/s Ruchi Infotek Systems since AY 2006-07 and the parties were maintaining the running account. The summary of the yearly transactions is enlisted in the order. The CIT(A) noted that the amount payable by the Assessee's firm to M/s Ruchi Infotek Systems was converted as a loan and this loan was admittedly repaid in the subsequent Financial Years (FYs) in the following manner:- Financial Years (FYs) Amounts (Rs.) 2013-14 3,00,000/- 2014-15 15,00,000/- 2015-16 5,91,00,000/- Balance Amount in June 2016 35,29,650/- The CIT(A) noted that in this manner the amount payable to M/s Ruchi I....

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....ts were not rejected by the learned Assessing Officer nor any defect in such books was found and therefore, the details of purchase vis-à-vis sales produced by the assessee which were not doubted by the learned Assessing Officer, establish the case of the assessee. This finding of fact of the Ld. CIT(A) is not disputed by the Revenue. It, therefore, goes to establish that such liability as was existing as on 31/3/2013 and was repaid subsequently between 1/4/2013 and 31/3/2017, and such fact is well evidenced by the books of accounts." The ITAT held that the provisions of Section 41(1) of the Act are not applicable to the facts of the case and in this regard relied upon the judgment of this Court in CIT Vs Shri Vardhman Overseas repo....

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....of the fact that the entire basis of the AO for doubting the balance of Rs. 6,44,29,650/- was the order of the Commissioner, Central Excise & Customs, Meerut-II, and since the very said order has been set aside by the CESTAT and has become final, there can be no doubt that the finding of the AO that the purchases were bogus has no legs to stand on. The finding of the CIT(A) and ITAT that the said liability which was converted into an unsecured loan and subsequently stood repaid has not been challenged by the Revenue in the present appeal. Further, the reliance placed by the ITAT on the judgment of  this Court in Shri Vardhman Overseas (supra) is also apposite wherein the Court held as follows:- "20...If and when there is evidence in ....