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TMI Blog2020 (8) TMI 676X X X X Extracts X X X X X X X X Extracts X X X X ..... sent. Finally, the matter came to be fixed for hearing today. Neither the assessee is represented nor any adjournment application has been placed on record. We are therefore, disposing off the appeal ex-parte qua the assessee on merits. 3. The first ground is against the confirmation of disallowance of interest on advances amounting to Rs. 4,81,775. Briefly stated, the facts of the case are that the assessee is a Private Limited company engaged in the manufacture of M.S. Bars and C.T.D. Bars. A return was filed declaring total income of Rs. 8,67,440. During the course of the assessment proceedings, the Assessing Officer (AO) observed that the assessee advanced money to Om Trading Company and others to the extent of Rs. 55,61,979/-. The as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les have been stated to be made, there could have been no further evidence to corroborate the same, unless the contention of the assessee of having made sales was faulted with. The ld. CIT(A) simply rejected the contention of having made sales to these parties without showing as to how the same was not correct. Once it is held that the amount was outstanding out of sales made, the business purpose is automatically established and there can be no question of disallowance in respect of outstanding amount for business purpose. We therefore, order to delete the addition. 5. Ground 2 of the appeal is against the confirmation of disallowance of Rs. 26,33,125 on account of rate difference. During the course of the assessment proceedings, the AO o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounts and the corresponding income in the hands of Mauli Steels Pvt. Ltd. The assessee further made out a case before the ld. CIT(A) that long credit period was offered to it by the supplier, for which some higher rate was charged. The assessee purchased total quantity of M.S. Ingots/billets of 6821.610 MT from M/s. Mauli Steels Pvt. Ltd., Jalna for Rs. 16.45 crores, giving average rate of Rs. 24,121 per MT. It was only for the purchases made during the period 01-10-2010 to 31-03-2011 totaling 2633.12 per MT that the rate difference at Rs. 1,000 per MT was debited totaling Rs. 26.33 lacs. Such rate difference was worked out on the basis of excess credit period allowed than the normal payment of one week. Considering the fact that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the liability was existing. The ld. CIT(A) echoed the assessment order on this point. 9. Having heard the ld. DR and gone through the relevant material on record, it is observed from the impugned order that the sum of Rs. 69.55 lacs was shown as payable to Bajrang Steels. The assessee contended before the ld. CIT(A) that Bajrang Steels was a proprietorship concern of Shri Mukesh Gupta, a director of the assessee. On further query from the ld. CIT(A), assessee submitted that the account of Bajrang Steels Trading was squared up by journal entries passed during the years relevant to the A.Ys. 2012-13, 2013-14 and 2014-15. The assessee further detailed the narration of the parties who were allowed corresponding credit against the debit to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt material on record, it is seen from page 29 onwards of the impugned order that the assessee submitted that the difference was because of accounting mistakes committed by the other parties and not any lapse on the part of assessee company. Simply because there is a difference in closing balances of a creditor in the books of the assessee and the assessee's account in the books of the creditor, it cannot, automatically, lead to the addition for the differential amount. One needs to verify the transaction for the year. It is only if certain transactions for the year have been suppressed/overstated by the assessee that the enquiry initiates in the direction of disallowance. Such a difference is the beginning and not the end of the road for m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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