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TMI Blog2021 (1) TMI 412X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned order passed by the tribunal is hereby quashed and the matter is remitted to the tribunal to decide the issue afresh. - I.T.A. NO.342/2014 - - - Dated:- 4-1-2021 - THE HON'BLE MR. JUSTICE ALOK ARADHE And THE HON'BLE MR. JUSTICE V. SRISHANANDA FOR THE PETITIONER : BY MR. K.V. ARAVIND, ADV. FOR THE RESPONDENT : BY MR. SHANKAR A, SENIOR COUNSEL A/W MR. M. LAVA, ADV. JUDGMENT This appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act for short) has been preferred by the revenue The subject matter of the appeal pertains to the Assessment year 2007-08. The appeal was admitted by a bench of this Court vide order dated 24.11.2015 on the following substantial questions of law: (i) Whether the Tribunal was correct in holding that the assessing officer did not make any independent enquiry, whereas, in fact it was the assessing officer who had initiated enquiry and requested the sales tax Department to investigated the existence of the three purchase parties at Solapur? (ii) Whether the Tribunal was correct in holding that there was no independent enquiry made by the assessing officer except for the repor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. It is further submitted that the suppliers to the assessee have not been identified and the same have been found to be bogus and the sales tax registration number shown in the invoices has been confirmed to be bogus by the sales tax authorities and there were no stamps on the invoices by the government authorities like Agricultural Produce Market Committee (APMC) and check post. It is also pointed out that the documents relied on by the assessee like receipt of goods, weighment slips, inverse slips are self made by the suppliers said to be registered in Solapur and the bank accounts have been maintained in the place of the assessee and the cash has been withdrawn by the employees of the assessee. It is also pointed out that the bank accounts were introduced by the director of the assessee company and the identity of all the three parties / suppliers have not been established and the tribunal without application of mind has proceeded to recorded that the aforesaid aspect amounts to irregularities in the purchase of raw materials. It is further submitted that the finding recorded by the tribunal is perverse and since, the assessee was claiming expenditure under Section 37 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e suppliers was in excess of prevailing market price and the purchases were properly recorded in the books of accounts. It is also submitted that due to addition made by the Assessing Officer in the order of assessment, the gross profit of the assessee was increased from 8.56% and 8.30% to 37% and 35% for Assessment Years 2006-07 and 2007-08, which is not possible. Our attention has also been invited to para 30 and 31 of the memorandum of appeal filed by the assessee in I.T.A.Nos.285-286/2014 and it has been submitted that the tribunal has rightly made disallowance at 20% of the purchases from the three parties. It is also urged that the expenditure was incurred by the assessee exclusively for the purpose of business for the procurement of raw materials and the same has rightly been allowed by the tribunal under Section 37(1) of the Act and once there exists a nexus between the business of the assessee and the expenditure incurred, the same cannot be disallowed on the facts and circumstances of the case. It is also submitted that a finding of fact has been recorded by the tribunal, which has not been demonstrated to be perverse therefore, no interference is called for in this appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eproduced below. 4. Further on analysis of banks statements of the above there Solapur Parties, it was found that payments made by the assessee to the above parties were immediately withdrawn on the date of credits to the accounts of the said three parties as detailed below: 4.2 The Chitradurga Bank furnished account opening forms of M/s Sree Siddeswara Commercials and M/s Spoorthi Commercials. 4.3 The above introducer of the account of M/s Priya Commercials is none other than the director of the assessee-company. 7. An analysis of the above documents and the answers of the chief manager indicate that a common person had signed the pay-in- slips of assessee company, at the reverse of the cheque leave of the assessee company for withdrawal of cash, the pat-in-slips of the three Solapur parties and the cheque leaves of the Solapur parties and the cheque leaves of the Solapur parties on the reverse side for receiving cash from the Bank. 8. Thus, from perusal of the relevant extracts of the order passed by the Assessing Officer, it is axiomatic that the Assessing Officer has conducted an independent enquiry and thereafter, has recorded the conclusion with regard ..... X X X X Extracts X X X X X X X X Extracts X X X X
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