2003 (12) TMI 288 - AT - Income Tax

Summary

Issues Involved:
1. Whether the CIT(A) erred in allowing 100% depreciation on gas cylinders claimed by the assessee.
2. The genuineness of the purchase of 505 gas cylinders by the assessee.
3. The validity of evidence provided by the assessee to support the purchase.
4. The relevance of the statements and affidavits provided by the alleged seller, Shri Amar Singh Choudhry.
5. The role of the AO in verifying the purchase and the subsequent findings.

Detailed Analysis:

1. Depreciation Claim:
The Revenue challenged the CIT(A)'s decision to allow 100% depreciation on 505 gas cylinders worth Rs. 14,14,000. The CIT(A) concluded that the transaction was genuine and allowed the depreciation claim, which the Revenue appealed against.

2. Genuineness of the Purchase:
The AO questioned the genuineness of the purchase, citing that the alleged seller, M/s Puja Gases, did not exist at the given address and that the proprietor, Shri Amar Singh Choudhry, admitted to signing a false affidavit under duress. The AO's investigation revealed that M/s Puja Gases had vacated the premises in December 1991, and the business was not operational at the time of the alleged transaction.

3. Validity of Evidence:
The assessee provided multiple pieces of evidence including bills, delivery challans, a letter from Puja Gases, an affidavit from Shri Amar Singh Choudhry, a lease agreement, and bank statements. The AO found discrepancies in the signatures on the bills and delivery challans compared to those on the affidavit and statement of Shri Amar Singh Choudhry. The AO also noted that M/s Puja Gases had not filed sales-tax returns since 1992-93, questioning the legitimacy of the transaction.

4. Statements and Affidavits:
Shri Amar Singh Choudhry, in his statement, admitted that he was unaware of the business activities of M/s Puja Gases, which were managed by his deceased son. He also stated that the affidavit was signed under the influence of Mr. R.P. Bhatia from Durant Refrigeration. The CIT(A) found contradictions in Shri Amar Singh Choudhry's statements but ultimately held that the transaction was genuine based on the evidence presented by the assessee.

5. Role of the AO:
The AO conducted a detailed investigation, including visiting the alleged business premises, recording statements, and verifying sales-tax records. The AO concluded that the transaction was bogus, as M/s Puja Gases was not operational, and the sales bills were fake. However, the CIT(A) found that the AO's conclusions were based on conjectures and surmises, and the evidence favored the assessee.

Conclusion:
The Tribunal upheld the CIT(A)'s decision, dismissing the Revenue's appeal. The Tribunal agreed with the CIT(A) that the transaction was genuine, noting that the purchase was made through brokers in a secondary market for gas cylinders, and the payment was made by account-payee cheque. The Tribunal found that the AO's suspicions were not justified and that the assessee had provided sufficient evidence to support the purchase and claim for depreciation. The appeal filed by the Revenue was dismissed.