9911796707
TMI Blog2004 (3) TMI 356X X X X Extracts X X X X X X X X Extracts X X X X ..... n were sham or if it could be shown that the value of the goods purchased and as shown in the books was not the actual value and that the transactions were not bona fide. We agree that it is open to the tax authorities to discard the figures of transactions shown in the books of the account and disallow a part of price paid to the partners in respect of the purchases made from them. For the foregoing reasons, we accept this ground and delete the impugned addition. Disallowance of interest - We find that the proposition of law in this regard is well settled and there is no need to repeat all the decisions, time and again, that there must be established nexus between the interest-free advances and interest bearing loans by the Department and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he CIT(A) for asst. yr. 1991-92. 2. The brief facts of the case are that the assessee is manufacturing mustard oil, refined oil, etc. A search under s. 132 of the IT Act (for short the Act) was carried out on 17th Aug., 1990 at the business premises of the assessee-company and the residential premises of its directors. A survey under s. 133A of the Act was also carried out at the business place and the office premises at Jaipur. During the course of survey/search, certain discrepancies in cash and stock were noticed, for which the directors of the company could not offer any satisfactory explanation. The assessee-company by now became a public limited company under s. 43A of the Companies Act, 1956. It continued manufacturing of refined oi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The AO made the addition at 3 per cent of the value of purchases on the ground that the purchases were made from the related concerns of the directors and were on higher side. The learned Departmental Representative has relied on the orders of the tax authorities. We have perused the facts on record but we are unable to find out from the assessment order the basis or the reasons where the AO came to the conclusion that the purchases were made at a higher price as compared to the prevailing market price. We feel that the AO was persuaded for the simple fact that these purchases were made from the concerns belonging to the relatives of the directors. The CIT(A) has confirmed this addition on the basis that the facts of purchases had been m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heet and P&L a/c, available on record. On the other hand, the learned Departmental Representative has justified this addition although he could not support the factum that there was nexus between the interest-free advances and interest bearing loans. We find that the proposition of law in this regard is well settled and there is no need to repeat all the decisions, time and again, that there must be established nexus between the interest-free advances and interest bearing loans by the Department and then and only then the interest can be disallowed. As we have already mentioned above, the Department has failed to establish such a nexus. Consequently, we allow this ground and delete the impugned disallowance. 5. The next issue pertains to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd on physical verification. The AO has applied a particular percentage of the process loss, whereby he added various amounts in respect of mustard oil, groundnut oil, watermelon oil and sunflower oil. But it seems that the AO has not given any reasoning for rejecting the process loss. In our considered opinion, the addition is not justified on peculiar facts when the purchases are fully vouched, the consumption has not been stated to be unreasonable because the AO has not disputed the consumption. With regard to the chemicals, the assessee's explanation that it had maintained aggregate stock register and it was not possible to maintain day-to-day stock of consumption but the purchases were fully vouched, and, the impugned addition is uncal ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
