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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 ..... l in the form of Ingots/billets from its sister concern - rate difference was worked out on the basis of excess credit period allowed than the normal payment of one week - HELD THAT:- Considering the fact that the assessee uncontrovertedly contended to have availed excess credit period from Mauli Steels Pvt. Ltd. during the last six months of the financial year in contrast to normal credit period of one week during the first half, the contention of assessee for excess small payment for purchases made during such period cannot be rejected. Relevant to note that the authorities below have tried to make out a case that the assessee made purchases at excessive rate from its sister concern. Impliedly, the provisions of section 40A(2) have been invoked, though specific reference to the same is absent. If the authorities were satisfied that the assessee made purchases at excessive rate, then it was upon them to bring on record some material to indicate that the purchase rate was excessive in comparison with some comparable case or the market rate of the goods purchased. As nothing has been done in this regard, we are of the considered opinion that the assessee deserves to succeed on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This appeal by the assessee is directed against the order dated 16-03-2016 passed by the CIT(A)-1, Aurangabad in relation to the assessment year 2011-12. 2. This appeal was taken up for hearing for the first time on 21-06-2018, when the assessee was not represented. The matter has been adjourned from time to time on several occasions, but the assessee has chosen not to be present. 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 ₹ 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 ₹ 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 ₹ 55,61,979/-. The assessee had paid interest to the bank amounting to &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd to have passed a journal entry on 31-03-2011 on account of rate difference at ₹ 26,33,125 against the sales made by Mauli Steels Pvt. Ltd. Thereafter, the AO recorded that the assessee could not furnish any explanation and details substantiating the claim of rate difference leading to disallowance of ₹ 26,33,125. It was also held that it was a case of diversion of income in the hands of its sister concern, being an entity, which was suffering losses, with an overall intention to reduce burden of taxes. The ld. CIT(A) affirmed the disallowance. 6. Having heard the ld. DR and gone through the relevant material on record, it is observed that the assessee admitted claim of Mauli Steels Pvt. Ltd., its sister concern, against the rate difference for sum of ₹ 26,33,125/-. It can be seen from the impugned order that the same AO had assessed the case of Mauli Steels Pvt. Ltd., Jalna for the same assessment year and accepted the transaction of ₹ 26.33 lacs as income shown in its Profit Loss Account. It is further a matter of record as contended before the ld. CIT(A) that M/s. Mauli Steels Pvt. Ltd. did not file any loss return. Rather, it was a case of filing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground that the assessee could not show that 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 ₹ 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 the account of Bajrang Steels. It can be seen from the impugned order that the assessee specifically stated that sum of ₹ 69,55,385 was unsecured loan. Such a finding has been recorded at page 26 of impugned order, which has not been controverted by the ld. CIT(A). If it was a case of unsecured loans coming from the A.Y. 2005-06 onwards, there could have been no addition u/s 68 of the Act in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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