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TMI Blog2013 (7) TMI 513X X X X Extracts X X X X X X X X Extracts X X X X ..... ted parties according to which rate paid to the sister concern was found reasonable after considering the transportation charges which the assessee would have to incur in case of purchases made from outside. Therefore, the CIT(A) rightly concluded that disallowance made by the AO u/s. 40A(2) was not justified. In favour of assessee. - ITA.No.802/PN/2010 - - - Dated:- 16-5-2013 - Shri Shailendra Kumar Yadav And Shri R. K. Panda,JJ. For the Petitioner : Smt.Deepa Khare For the Respondent : Shri Rajesh Dawot ORDER Per Shailendra Kumar Yadav, JM:- This appeal has been filed by the Revenue against the order of the CIT(A) on following grounds: 1. The order of the learned CIT(A) is erroneous on ground of law and fact. 2. The learned CIT(A) erred in deleting the addition made by the Assessing Officer u/s.40A(2) of Rs.12,58,064/- being the unreasonable purchase price paid to its sister concern M/s.Aarti Industries for purchase of scrap. 3. The learned CIT(A) erred in overlooking the fact that the addition made by the Assessing Officer was based on detailed verification of seized documents as well as books of accounts of the assessee and also that of its sister con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt order is extracted below:- "As per books of accounts produced for verification for the year under consideration, it is seen that the assessee has made following purchases of scrap from its sister concern Aarti Steel Industries, Nashik. Purchase L.F 1 Date Amt. 12.5.05 Rs.123881 10.8.05 Rs.176806 10.8.05 Rs.183274 11.8.05 Rs.174201 2.11.05 Rs.219918 2.11.05 Rs.236130 16.12.05 Rs.91530 21.12.05 Rs.120464 17.0.06 Rs.84589 7.2.06 Rs.134766 Total Rs.1545559 Less Excise Duty borne by 'a' Rs.216846 Basic purchase effected Rs.1328713 On verification of the records of Aarti steel Industries for the year under consideration, it is seen that the sale of scrape to Rajrani Steel Casting Pvt. Ltd is shown at Rs.1328713/-. On verification of the quantity trading account of scrap as per excise register (From IV), pertaining to Aarti Sell Industries, it is seen that the quantity of scrape sale to sister concern is worked out at 52.465 MT with Opening stock of scrap at 117.985, generation 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R G-l for working of the figure of opening stock, generation and closing stock after crystalising the sale to sister concerns are not reliable evidence. The above issue regarding the discrepancy in quantity of scrap when cross verified sister concern has been observed form details of quantity as per books of accounts of the assessee and that of Aarti Steel Industries. The assessee has not given any explanation as to the discrepancy apparent in the accounts furnished with the return of income in its own case and the accounts furnished with the return of income of Aarti Steel Industries. Therefore the assessee has failed to explain the above discrepancy. It is therefore, a case of disallowance of excessive expenditure in the case of the assessee. The amount of Rs.1255064/- is added to the total income u/s.40A(2). I am satisfied that this is a fit case for initiation of penalty proceedings under sec.271(l)(c)." 4. Matter was carried before the first appellate authority wherein Ld. Authorised Representative made submissions before the CIT(A), which are reproduced as under:- "In our submission we have already given quantitative details from Excise Register (R.G.-l) of M/s Aarti Ste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12/08/05 Bill No.235 Waste scrap of steel KG. 16140 12.00 600 12.60 National Lamination Inds., Daman 11/08/05 Bill No.331 Waste scrap of steel KG. 15030 12.00 600 12.60 Precision Transcore Inds., Daman 11/08/05 Bill No.209 Waste scrap of steel KG. 12580 13.00 600 13.60 Aarti Steel Inds., Daman 11/08/05 Bill No.099 Waste scrap of steel MT. 11.520 13000 100 13.10 Shree Giriraj Enterprises Mumbai 12/08/05 Bill No.694 Waste scrap of steel MT. 15.770 12940 600 13.54 Kudremukh Iron Steel Co., Karnataka 26/08/05 Bill No.3322 Waste scrap of steel MT. 17.000 12800 1100 13.90 There is very slight difference in rate because of the following reasons: 1. Difference in type of material 2. Difference in Transportation cost 3. Difference in duties taxes rate. We are herewith enclosing the copy of above purchase bills for your perusal. This fact is ignored by Learne ..... X X X X Extracts X X X X X X X X Extracts X X X X
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