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TMI Blog2009 (10) TMI 942X X X X Extracts X X X X X X X X Extracts X X X X ..... g the addition made by the Assessing Officer on account of alleged unaccounted cash sales amounting to ₹ 40,200/-. 3. We have heard the rival contentions and gone through the facts and circumstances of the case. We have also perused the case records including the assessment order as well as the order of CIT(A). The brief facts are that the Assessing Officer during the course of assessment proceedings noticed that the assessee has effected cash sales to M/s. Techno Rub Industries on 05-03-2001, 07- 03-2001 and on 10-03-2001 amounting to ₹ 18,500/-, 13,500/- and ₹ 8,100/- respectively for which the Director of the company has issued stamped receipt to the above mentioned party i.e. M/s. Techno Rubb Industries and copies of these stamped receipts issued to the above mentioned party had been obtained and kept on record. On verification of the cash book, the Assessing Officer noticed that no entry has been made in cash book in respective dates, a specific notice on this point was issued to the assessee asking to show cause as to why the cash sales as mentioned above should not be added to income of assessee. The assessee replied in general that a clerical error was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee were of ₹ 33,400/- as detailed above, whereas the AO was questioning about the sales totaling to ₹ 40,200/- made in the month of March, 2001 and CIT(A) therefore find that the AO was justified in rejecting he vague explanation furnished by the assessee in the matter. It is quite clear that the documents on which the AO lay hands clearly indicate cash sales totaling to ₹ 40,200/- in the month of March, 2001 to M/s. Techno Rubb Inds. which were not reflected in the books of account and as a consequence, the AO was fully justified in bringing to tax such unaccounted sales as income of the assessee. The consequential addition of ₹ 40,200/- made by the AO is accordingly, confirmed and this ground of assessee's appeal is therefore rejected. In view of the above, we dismiss this issue of the assessee's appeal. 4. The next issue in this appeal of the assessee is against the order of CIT(A) in confirming the disallowance made by the AO on account of rate and confirmed the expenses of ₹ 82,881/-. ITA No.160 1089/Ahd/2006 A.Y. 2001-02 Zeo Chem Pvt. Ltd. v. ITO Central Ward-2(1) ACIT Cir-1, Bng. Page 4 5. We have heard the riv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s passed by the appellant in it's book for which no confirmation of respective party is available. The claim of the appellant that such amounts were deducted by customer for rate difference requires to be authenticated and confirmed by respective party so as to ascertain that the ITA No.160 1089/Ahd/2006 A.Y. 2001-02 Zeo Chem Pvt. Ltd. v. ITO Central Ward-2(1) ACIT Cir-1, Bng. Page 5 corresponding entries have been passed by the respective part in their accounts. As the appellant failed to furnish any confirmation of the amounts credited to the account of various parties and that too through journal entries on the last day of the financial year, the claim of the appellant was rightly rejected. It is so, because in the normal course, the entries for rate difference would be passed on various dates and when the accounts of various customers are finalized and not through journal entries at the year end just to reduce the taxable profits. For the reasons above, I hold that the consequential addition of ₹ 82,881/- made by the A O did not call for any interference. The same is, accordingly confirmed. This ground of appeal is, therefore, rejected. Aggrieved, now assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... giving following finding in para-6.4 of his appellate order:- 6.4 After careful consideration of the relevant facts, I find that the appellant failed to bring on record confirmation of the respective party in support of the transactions. No document or evidence was brought on record by the appellant to suggest that any commission was payable to the respective party and as to what specific services were rendered by the party and in what manner such commission was to be computed. Mere passing of suo-moto entries by the appellant in it's books of account at the year end will not obviously entitle the appellant to claim the deduction, unless and until such transaction is confirmed by the respective party and such commission receipt is shown as income by the respective party and such commission receipt is shown as income by the respective party. I, therefore, hold that with the given facts, the AO was justified in disallowing the claim. Consequently, the addition of ₹ 91,000/- made by the AO on this ground is, therefore, confirmed. This ground of appeal is, therefore, rejected. We find that even now before us Ld. Counsel for the assessee has not filed any evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs were not paid, as the materials were defective. (iii) The allowance of production loss at 10% is very less. (iv) The AO has not cited any comparable cases where the production loss was as low as 10% which is what the AO has allowed to the appellant. (v) The AO has computed the production loss by comparing consumption of raw materials without considering the opening stock of semi-finished materials available in stock. That is why in the beginning of the year, the production loss calculated by the AO is low. This is because he has not considered that in the opening stock, semi-finished materials were available which were converted into finished goods. Relevant extracts from the accounts of the preceding year are enclosed, which show that there was 18,660 MTs of materials in the form ITA No.160 1089/Ahd/2006 A.Y. 2001-02 Zeo Chem Pvt. Ltd. v. ITO Central Ward-2(1) ACIT Cir-1, Bng. Page 8 of semi-finished goods. Thus, the production in the earlier years was partly out of the opening stock of semi-finished goods. The CIT(A) referred the objections of the assessee to the Assessing Officer and the AO submitted his remand report as under:- 7.3 The AO vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o.160 1089/Ahd/2006 A.Y. 2001-02 Zeo Chem Pvt. Ltd. v. ITO Central Ward-2(1) ACIT Cir-1, Bng. Page 9 found to be allotted to M/s. Titon Electrical Agency. The CST No. quoted on the purchase bills from this party were also found to be allotted to one M/s. Maruti Portaries Pvt. Ltd. (ii) On inquiry with the Sales Tax Deptt. It was discovered that the GST number quoted by P.M Minerals, Porbandar on the purchases bills were belonging to another concern, M/s. Jay Chamunda Inds. (iii) Similarly, on inquiry with the Sals Tax Deptt. Iot was discovered that the GST number quoted by M/s. Anand Timber Mart on the purchase bills were belonging to another concern, Mukhi Agency. During the course of appellate proceedings, there is an admitted position by the appellant that no payment was made to any of these parties and that all payments were still outstanding. The evidences clearly indicate that these parties were non- existence and therefore, there was a clear attempt on the part of the appellant to introduce fictitious purchases in the name of such non-existent parties to artificially reduce taxable profit and defraud the revenue. With evidences on record, therefore, I find t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,95,775/- 4. M/s. Shriram Acid Chem Agfency, Mehsana Rs. 14,84,558/- 13. We find that the CIT(A) in the opening words has stated that the Assessing Officer has committed the following mistake while passing the assessment order and accordingly CIT(A) has stated that the assessment order passed by the Assessing Officer is considered as erroneous and prejudicial to the interest of Revenue and accordingly a proposal to set aside the impugned order of the Assessing Officer u/s.263 of the Act for framing afresh assessment, issuing show cause notice was made. The Ld. counsel stated that this matter, i.e. the possible production of zeolite powder production allowing 351 of manufacturing loss and the consequent addition on account of unexpected investment in the closing stock of finished product has already been considered by the Assessing Officer. Subsequently, the Ld. Counsel for the assessee taken us to the relevant finding of the AO at page-8 of assessment order last para has already been considered. The Ld. Counsel for the assessee as regards to second issue in the show cause about the non-genuine parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ujarat Heavy Chemicals Ltd., or M/s. Tata Chemicals and the purchases made from these two companies are supported by delivery challans and L.R. In nut shell the heavy purchases of raw-materials shown during the year from M/s. P.M. Minerals, porbandar, M/s. Cjhamundra Salt Supplies, Morbi, M/s. Ram Acis Chem Agency, Mehsana and M/s. Anand Timber Mart are not supported by the delivery challans and lorry receipts. The bills produced by the assessee alleged to have been issued by the above mentioned parties appears fictitious. 14. And finally on rejection of the books of account and estimated disallowance of purchases as discussed in para- 7 to 7.7 amounting to ₹ 13,80,686/-. In view of these, Ld. Counsel for the assessee stated that the assessment order is neither erroneous nor prejudicial to the interest of the Revenue. On the other hand, Ld. Departmental Representative relied on the revision order passed by the CIT(A) u/s.263 of the Act. We find from the above facts and circumstances that the Assessing Officer has already discussed both the issues raised by the CIT(A) in its revision order and the show cause noticed issued at the preliminary stage, the very reason listed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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