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TMI Blog2011 (1) TMI 1164X X X X Extracts X X X X X X X X Extracts X X X X ..... M.R. Bhatt for Mauna M. Bhatt for the Appellant R.K. Patel for the Respondent JUDGEMENT Harsha Devani: In this appeal under section 260A of the Income Tax Act 1961 (the Act), the appellant revenue has challenged order dated 5th September 2008 made by the Income Tax Appellate Tribunal [the Tribunal], proposing the following questions: "[A]. Whether the Appellate Tribunal has correctly appreciated the facts on record so as to confirm addition to the extent of 25% only out of the addition made in respect of bogus purchases from G.M. Traders and Steel Trading Co.? [B]. Whether the Appellate Tribunal is right in law and on facts in confirming the order passed by the CIT (A) deleting the addition of Rs.7,88,590/- made on account of inflation in purchase cost of MMTC?. [C]. Whether the Appellate Tribunal has correctly appreciated the facts on record so as to confirm addition to the extent of 25% only out of the addition make in respect of cash withdrawal from MMTC/GMT? [D]. Whether the Appellate Tribunal has correctly appreciated the facts on record so as to confirm addition to the extent of 25% only out of the addition made in respect of purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inflation of purchase price of the material purchases through the said associate concerns, viz., GMT and STC. He, accordingly, confirmed 20% disallowance out of Rs.49,31,050/-. While confirming the disallowance to the extent of 20%, the Commissioner (Appeals) placed reliance upon a decision of the Tribunal in the case of Vijay Proteins reported in 58 ITD 432. In revenue's appeal before the Tribunal, it was contended that even if the decision of the Tribunal in the case Vijay Proteins (supra) were to be followed, the Commissioner (Appeals) ought to have restricted the addition to 25% and not 20%. The Tribunal in the impugned order, after appreciating the evidence on record enhanced the disallowance to 25% of the cash withdrawals by following its earlier order in the case of Vijay Proteins. Mr. M.R. Bhatt, learned senior advocate, appearing on behalf of the appellant revenue submitted that the decision of the Tribunal in the case of Vijay Proteins [supra] is subject matter of challenge before this Court in IT Reference No.139 of 1999. It was submitted that in the circumstances, the appeal deserves to be admitted and the question of law as proposed or as may be deemed fit by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posed question [A] wherein the Tribunal has restricted the addition to 25% on similar facts. In the circumstances, for the reasons stated hereinabove, the said grounds of appeal do not give rise to any question of law. As regards proposed question [B] which pertains to deletion of addition of Rs.7,88.590/- made on account of inflation of expenses paid to Metal and Machine Trading Co. (MMTC), the Assessing Officer has found that MMTC was a partnership firm of Shri Nitin Gajjar along with his father and brother operating from Bhavnagar. A perusal of their transactions with the assessee indicated that there is some inflation of expenses as detailed in paragraph 6.1 of the assessment order. After considering the evidence on record, the Assessing Officer disallowed the amount Rs.7,88,590/- on account of payment made to MMTC. The assessee preferred appeal before the Commissioner (Appeals), who upon appreciation of the evidence on record found that the Assessing Officer had not rejected the genuineness of the purchases made from MMTC while making the disallowance. His observations were based on inflation of rates which were being charged from the assessee. According to the Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer after examining the evidence on record and considering the explanation given by the assessee, made addition of Rs.44,54,426/- Rs.39,59,490/- being the purchase price of the Crane along with its spare parts and Rs.4,94,936/- being depreciation claimed by the assessee. The Commissioner (Appeals), upon appreciation of evidence on record, was of the view that the Assessing Officer has not appreciated the facts of the case properly and had made disallowance which was not permitted by the Income Tax Act. It was held that disallowance could only have been made in respect of expenses debited to Profit and Loss account whereas in the present case the purchase of crane and spare parts of the crane and other machineries were in the nature of acquisition of capital asset. According to the Commissioner (Appeals) the disallowance could have been made on depreciation only if at all the Assessing Officer conclusively proved that the purchases of crane and other parts are bogus. Upon appreciation of the material on record the Commissioner (Appeals) found that the Assessing Officer has simply brushed aside all the evidence on account of technical infirmities and that the evidence such as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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