TaxTMI 
TaxTMI 
2025 (2) TMI 1547
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....farmers directly, on behalf of the assessee without discussing expenses related to rearing of chicks and its accounting treatment in the books of accounts." 2. The brief facts of the case are that the assessee is engaged in the business of production and sale of poultry feed. It is also involved in the integration of broiler birds and the sale of birds. The assessee company has filed its return of income for A.Y. 2022-23 on 31.10.2022, declaring loss of Rs. 40,64,646/- under normal provisions of the Income Tax Act, 1961 (hereinafter referred to as the "Act") and declared book profit of Rs. 1,93,00,725/- under Section 115JB of the Act, 1961. The case was selected for scrutiny, and during the course of assessment proceedings, the assessee has furnished the details as called for by the Assessing Officer, including relevant financial statements and books of accounts. The Assessing Officer on the basis of details submitted by the assessee, observed that the assessee has reported total purchases of Rs. 315,77,33,096/-, which includes purchase of integration of birds from Sri Rajeshwara Hatcheries Pvt. Ltd. (hereinafter referred to as "SRHPL") for Rs. 28,54,59,071/-. The Assessing Offi....
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....ed appeal before the LD.CIT(A). Before the LD.CIT(A), the assessee has filed written submissions on the issue of addition of purchases, which were reproduced at para 3 on pages 5 to 8 of LD.CIT(A)'s order. The sum and substance of the submissions before the LD.CIT(A) are that purchase of day-old broiler chicks from SRHPL are genuine and are supported by necessary bills and vouchers and further, the assessee is into two different segments of business, which is evident from the revenue records, where the assessee has reported revenue from sale of poultry feed and revenue from sale of integration of birds. The assessee has made purchases of day-old broiler chicks from SRHPL, which is also in the business of dealing with chicks. For this purpose, the assessee has filed confirmation letters from SRHPL and invoices for the purchases. However, the Assessing Officer, without appreciating the facts, simply made an addition towards genuine purchases, and therefore, requested to delete the addition made by the Assessing Officer. 5. The LD.CIT(A) after considering the relevant submissions of the assessee and also taking note of various submissions made by the assessee, observed ....
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....iler chicks from SRHPL as genuine transactions, without appreciating the fact that, the assessee could not establish the authenticity of purchases with relevant evidence, including e-way bills and delivery challans. Further, the assessee has failed to disclose related party transactions, even though the provisions of Section 40A(2)(b) of the Act mandate the disclosure of such transactions in the financial statements and tax audit report. Although, the Assessing Officer has pointed out various defects, including corresponding bogus sales made to related parties to support the addition made towards bogus purchases from the related party, but the LD.CIT(A) deleted the addition made by the Assessing Officer by accepting the explanation of the assessee. Therefore, he submitted that the addition made by the Assessing Officer should be sustained. 8. The learned counsel for the assessee, Shri S.K. Gupta, Advocate, on the other hand, supporting the order of LD.CIT(A) submitted that, the assessee has furnished all possible evidence including, ledger account in the books of account of the assessee along with supporting evidence such as purchase bills and confirmations from SRHPL. The asses....
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....nd also proved the delivery of day-old broiler chicks purchased from related parties to the farmers for integration purposes. The Assessing Officer never disputed the fact that the assessee has furnished all the evidence, however, he doubted the genuineness of purchases from the related parties, only on the ground that, the purchase invoices are not supported by e-way bills and delivery challans and further, the goods are delivered to different addresses, which is evident from the purchase invoices. Therefore, concluded that the purchases from related party are not genuine. 10. We have given our thoughtful consideration to the reasons given by the Assessing Officer to disallow purchases of day-old broiler chicks from SRHPL, and we ourselves do not subscribe to the reasons given by the Assessing Officer, for the simple reason that the Assessing Officer having noticed the fact that the assessee is into two different segments of business i.e., one from sale of poultry feed and another from the sale of integration of birds, but erred in not accepting the corresponding purchases of day-old broiler chicks from SRHPL. We further noted that the assessee has reported revenue from two seg....