9911796707
TMI Blog2006 (5) TMI 145X X X X Extracts X X X X X X X X Extracts X X X X ..... h, 1998 and the issue in question was restored to the file of the AO by the first appellate authority for a fresh decision after allowing the assessee a reasonable opportunity of hearing. The assessee-firm has head office at Nohra, and branch offices at Dabwali, Bhatinda and Mumbai. It had shown loss in cotton at Rs. 14,68,499 in the branch office at Dabwali. On being called upon to explain the reasons for incurring such heavy losses, it was stated that the assessee had entered into advance contract and on account of rise in cotton rates in subsequent period it sustained loss as cotton was supplied to the purchasers at the contracted rates with which advance contracts were made. All the details were furnished. The AO noted that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said contract letters were without any despatch numbers. The correspondence was also not available. The AO, therefore, held that the claim of the appellant was not verifiable. (4) The appellant has to explain as to when and how the confirmations from the parties were received. The AO has noted that no postage expenditure was recorded in the postage expenditure account of the dates of the contracts or on immediately succeeding dates. The AO has stated that no correspondence is available even in the Ahmedabad office of the appellant. (5) Enquiry was conducted by the Investigation Wing at Ahmedabad during which, by letter dt. 15th April, 1998, addressed to the ADIT (Inv.), Ahmedabad and copy forwarded to the AO, it was stated by M/s Ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so shows that in fact there were no advance contracts for sale of cotton. (8) The appellant has claimed that cotton was purchased through cotton contract notes from the local market to comply with the terms of advance contract made with the mills of Arvind Group of Ahmedabad. The AO has noted that there is no practice of purchase of cotton through contract notes and even if the purchases are made through contract notes, a copy of such contract note is required to be sent to Northern India Cotton Association. In the appellant's case, the AO found that no such copies were sent. (9) The AO has observed that generally the advance contracts are made through brokers who maintain Sauda Bahi recording therein complete details such as name of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO has noted that the transactions of Rs. 9,19,458 claimed to have been made with M/s Devi Trading Co. Srikaranpur has been found recorded by Sriganganagar firm for Rs. 9,18,539 after reducing dalali of Rs. 919. The AO found that the photocopy of sale bills filed by the appellant with contract notes of Anoopgarh firm shows that these bills have been issued by Sriganganagar concern but Sriganganagar firm has shown total sale of Rs. 9,18,539 in financial year 1993-94. The contract of purchase was made on 1st March, 1994 and the sale to the mills is on 9th Sept., 1994 i.e. later than the date of purchase and still a loss has been declared." The assessee had declared loss of Rs. 20,30,132 in the Bhatinda Branch out of which loss of Rs. 19, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s regarding date of contract, date of purchase bill, quantity of bales, station, quantity, amount of purchases, etc. have been duly reflected. Pages 35 to 55 of the paper book are copies of contract notes with Arvind Mills Ltd. Pages 31 to 34 of the paper book is the statement of purchases showing details of purchases made by Arvind Mills Ltd. from the assessee which was sent by Arvind Mills Ltd. to the ADI, Ahmedabad. The transactions in the statement are tallying with those as per contracts. These facts make it amply clear that the advance contracts were entered into by the assessee with the companies under the flagship concerns of Arvind Mills. All the transactions shown by the assessee with complete details exactly tally with those reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of addition of Rs. 2,19,939 made by the AO on account of estimated profit in Sriganganagar head office by holding that the purchase rate of cotton declared by the assessee was acceptable. 6. Hem we find that the AO made this addition by estimating the profit after disallowing the losses. While reaching this conclusion, the AO adopted purchases at prudent rates as per the Punjab Cotton Bulletin after rejecting the declared price by the assessee. The learned CIT(A) deleted this addition. 7. Having regard to the facts of this case, we find that this ground is consequential to the earlier ground. Since we have held that the purchase price declared by the assessee and the loss so suffered were genuine, there cannot be any question of making ..... X X X X Extracts X X X X X X X X Extracts X X X X
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