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TMI Blog2012 (8) TMI 464X X X X Extracts X X X X X X X X Extracts X X X X ..... h the order under challenge - Decided against assessee - TAX CASE (A) NOS.164 & 165 OF 2012 - - - Dated:- 8-8-2012 - MR.JUSTICE ELIPE DHARMA RAO, MR.JUSTICE M.VENUGOPAL, JJ. For Appellant : Mr.Balachander for Mr.S.Sridhar For Respondents : Mr.T.Ravikumar COMMON ORDER ELIPE DHARMA RAO, J. These tax case appeals have been filed against the common order dated 16.12.2011 passed by the Income Tax Appellate Tribunal, "A" Bench, Chennai in I.T.A.No.1876/MDS/2010 and I.T.A.No.61/MDS/2011 respectively for the assessment year 2005-06. 2. The brief facts leading to the filing of the above tax case appeals are as follows: The assessee company is engaged in the business of manufacture of Indian Made Foreign Liquor (IMFL). It filed its return of income for the assessment year 2005-06 on 31.10.2005 admitting a total income of Rs.57,33,742/-. After the case was processed under section 143(1) of the Income Tax Act, it was taken up for scrutiny and notice under section 143(2) of the Act was issued to the assessee. Pursuant to the same, the assessee furnished all the details required by the Assessing Officer. The Assessing Officer, after verifying the details f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eady granted to furnish the said details. Out of the nineteen letters issued to the suppliers, only four of them confirmed; three letters were returned unserved and twelve suppliers did not confirm the transactions, though they received letters. On the basis of the above materials available, the Assessing Officer, found that the onus is on the assessee to prove that it had transactions with other parties and that the assessee had failed to prove the existence of the parties from whom old bottles were purchased. On the basis of the above findings, the Assessing Officer treated the purchases made from fifteen parties amounting to Rs.12,52,19,585/- as not genuine and added the same to the total income of the assessee for the relevant assessment year. In the first appeal, the Commissioner of Income Tax (Appeals), on consideration of the materials available, found that the assessee had been meeting its requirement of old bottles by making payments in cash; however, to circumvent the provisions of section 40A(3) of the Act, the assessee had been resorting to issue of account payee cheques in the name of bogus parties; getting back the same in cash; using the said cash to purchase old bot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the same, it was found that the amounts debited were paid to the employees of the assessee. On further verification, it was discovered that the employees, who had received the amounts, had submitted monthly statements along with list of persons, to whom the amounts were paid. The Assessing Officer found that, in support of the payments, self-made vouchers were prepared and the vouchers did not contain the address or designation of the persons to whom the amounts were paid. Though the assessee claimed that the said payments were made to brokers and other middlemen as incentives to promote brands, yet, the Assessing Officer disallowed the same relying upon the Explanation to section 37(1) of the Act on the ground that the said payments were bribe paid to TASMAC employees. The Commissioner of Income Tax (Appeals) also, disagreed with the claim made by the assessee to treat the said amount of Rs.1,00,02,150/- spent by the assessee as expenditure incurred by the assessee towards sales promotion, in view of the fact that the Assessing Officer had clearly stated that the said amount was paid directly to employees of TASMAC and therefore the claim of the assessee that the same was pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tamil Nadu. Out of those nineteen suppliers, letters had been sent only to four of them and out of the remaining fifteen parties, notice sent to three of them had remained unserved and twelve parties had not furnished the information sought for. Based on the above materials, the Assessing Officer had held that the assessee had failed to discharge the onus to prove the existence of the parties with whom the assessee had transactions. The Commissioner of Income Tax (A) had held that purchases made by the assessee should be treated as cash purchases as provided for under section 40A(3). However, the Tribunal had held that the Commissioner, having accepted that transactions with nine parties were not genuine, ought not to have applied the provisions of section 40A(3) of the Act. Accordingly, the Tribunal cancelled the findings rendered by the Commissioner in respect of the said issue and remitted the matter back to the Assessing Officer with specific directions. On re-appreciation of the entire materials available on record, we do not find that the Tribunal had committed any error in passing the said order. Therefore, we are not inclined to interfere with the same. 7. As far as t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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