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TMI Blog2015 (4) TMI 708X X X X Extracts X X X X X X X X Extracts X X X X ..... M. K. Singh, Sr.D.R. For the Respondent : Shri S. N. Divetia, A.R. ORDER Per Shailendra Kumar Yadav, J.M: This appeal has been filed by Revenue against the order of Commissioner of Income Tax (Appeals)-VIII, Ahmedabad, dated 04.07.2011 for A.Y. 2008-09 on the following grounds. 1. The Ld.CIT(A) has erred in law and on facts in deleting addition of ₹ 95,01,945/- on account of expenses for purchase of grey cloth without appreciating the fact that the assessee had failed to substantiate its claim with necessary supporting evidences during the assessment proceedings. 2. Assessee is closely held company and engaged in the business of traders and merchant exporters of cotton and other items. The only issue before us is with regards to addition of ₹ 95,01,945/- on account of expenses for purchase of grey clothes. Assessing Officer has made impugned addition by observing detailed reasoning, reproduced in para 4.1 of CIT(A) s order. 2.1 Matter was carried before the First Appellate Authority, wherein various contentions were raised on behalf of assessee and having considered the same CIT(A) has granted relief to the assessee by following CIT(A) s o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnual accounts with the tax audit report. It also filed detail of inventories and also provided all the required papers, documents, supporting evidences and confirmation etc to A.O. during assessment proceedings. 3.3.2 The Ld. A.R. on behalf of the appellant further submitted that the appellant having export of large quantity of cotton, requires grey cloth for packing of the export material as per the specific requirement of the foreign buyers as well as general terms and conditions of export marketing. He further submitted that occasionally the appellant sales grey cloth ( Packing material) if not immediately required for packing of export goods. The appellant has purchased grey cloth of ₹ 5869299/- during the year under consideration. There was no opening stock of impugned grey cloth ( packing material) on the first day of the F.Y. However, there was closing stock as on 31.3.2007 of ₹ 1675714.56 which has been shown in Scheduled-N of audited annual accounts. The appellant has also shown the sales of grey cloth of ₹ 12,50,310 during the year under consideration which is shown in Schedule-M of audited accounts. The above information was submitted to the A.O. al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... already declared in the income side of the audited P L A/c, for the relevant F.Y 2006-07, the addition made by A.O. falls in the category of double taxation and therefore deserves to be deleted. 3.3.5 The remaining amount of grey cloth (packing material) of ₹ 29,43,275/- is stated to be consumed by the appellant for affecting the export sales of 181.75 Crs. The submission of the appellant on this ground appears tobe convincing as the grey cloth consumed in F.Y. 2006-07 is merely 0.16% of the total sales which appears to be extremely reasonable and justifiable in terms and quantum of turnover during the year under consideration. 3.3.6. Further, the assessee filed the ledger accounts of the parties from whom the grey cloth has been purchased alongwith copy of bank statement wherein even the name of the supplier has been stated in respect of the payments made. The observation of the A.O. that the bank statement of M/s M M Traders shows immediate withdrawal of cash after depositing the cheque does not automatically lead the conclusion that the said purchases are bogus. The assessee has discharged its onus by submitting the required details to the A.O. Therefore, the burde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to support its claim of grey cloth purchase. 3.3.9. The reliance placed by the Ld. A.R on the following cases also supports the contention of the appellant. (i) The ITAT, Ahmedabad in the case of ITO Vs Sonal Construction Pvt Ltd, ITA No. 1838 1839/Ahd/2009 dated 21.01.2011 on the similar facts held as under:- On consideration of the above facts, we are of the view that no interference is called for in the order of CIT(A), the Ld. CIT(A) found that the rates of cement purchased from M/s Nirav Traders is almost same as compared to the purchase rate of other traders. The purchased bills were produced and all the payments have been made through A/c payee cheques. No evidence was brought on record that the purchase price paid to the above parties returned back to the assessee. The Ld. CIT(A) was therefore justified in deleting he addition on the above issue. (ii) On the identical fact, the ITAT, Ahmedabad in the case of ITO Vs Shri Parag Shah in ITA ITA No. 2214/Ahd/11 A.Y. 2008-09 [ ITO vs. M/s.Komal Amin Expor ts Pvt . Ltd. ] Page 8 No.1563/Ahd/2002 dated 3.11.2006 held as under::- The assessee went in appeal before the CIT(A) who deleted the addition by observin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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