2011 (4) TMI 1457 - AT - Income Tax

Summary

Issues involved: Appeal by Revenue against order of Commissioner (Appeals) for assessment year 2007-08.

Deletion of bogus purchases:
The Commissioner (Appeals) observed that the appellant, a trader in construction material, was able to identify purchases and corresponding sales with evidence such as truck numbers, purchase invoices, and sales bills. The Commissioner found that the Assessing Officer did not examine the books of account in detail and wrongly concluded purchases were bogus. The Commissioner held that the addition was unjustified and deleted it. The assessee made payments by crossed cheques, and the Assessing Officer erred in considering figures much higher than actual purchases. The Tribunal upheld the Commissioner's order and dismissed the Revenue's appeal on this ground.

Disallowance of lorry diesel expenses:
The second ground related to disallowance of lorry diesel expenses, which was deleted by the Assessing Officer. The Commissioner (Appeals) analyzed three years of data and found that the percentage of lorry diesel expenses to turnover remained consistent at 4% to 5%. The Tribunal found no issue with the Commissioner's findings and ruled against the Revenue on this ground.

Conclusion:
The Tribunal dismissed the Revenue's appeal, upholding the Commissioner (Appeals)'s decision regarding deletion of bogus purchases and disallowance of lorry diesel expenses. The order was pronounced in open court on 27.4.2011.