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TMI Blog2021 (9) TMI 133X X X X Extracts X X X X X X X X Extracts X X X X ..... med in first appeal. In our view the ld CIT(A) took a reasonable view, which we affirm. No contrary facts or law is brought to our notice to take other view, thus, we affirm the order of the ld. CIT(A). Appeal of the Revenue is dismissed. - ITA No.1483/AHD/2010, IT(SS)A No.227/AHD/2012 - - - Dated:- 27-8-2021 - Shri Pawan Singh, Judicial Member And Dr. Arjun Lal Saini, Accountant Member For the Assessee : Shri Saurabh Suparkar, Senior Advocate with Mrs.Urvashi Shodhan, Advocate. For the Revenue : Shri Sreenivas T. Bidari CIT(DR) ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. These two appeals by Revenue are directed against the orders of ld. Commissioner of Income tax (Appeals)-II, Ahmedabad for the assessment year (AY) 2006-07 and 2007-08 dated 17.02.2010 and 13.02.2012 respectively. In both the appeals, the assessee has raised certain common grounds of appeals, facts in both the years are almost similar, except variation of figures of disallowances of bogus purchases. Therefore, with the consent of parties, both the appeals were clubbed, heard and decided together by common order. For appreciation of fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any other source of income. The Return of Income for the assessment year (A.Y.) 2006-07 was filed on 31.12.2006, declaring income of ₹ 28,53,006/-. Later on, case was reopened under section 147 of the Act. A notice under section 148 of the Act was issued on 20.02.2008. The case was reopened on the basis of certain intelligence received by the Assessing Officer that assessee claimed huge deduction on account of purchase of enameled copper wire which is not genuine. The other tax collecting agencies (Excise department) collected certain incriminating evidence against certain companies. The Assessing Officer during the reassessment proceedings issued show cause notice dated 19.12.2008 as to why the purchase shown from three (03) companies i.e. 1) Bharat Insulation Company (India) Ltd.; 2) Precision Wire India Ltd and 3) Bhagwat Wire Industries aggregating of ₹ 6.45 Crore be not added to the total income. The assessee filed its reply dated 24.12.2008. In the reply, the assessee stated that assessee is engaged in manufacturing of bare copper wires, requires copper in various forms i.e. copper scrap, copper of high purity and copper ingots. The copper purchased are sent to r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into consideration. The assessee also explained that concept of income and its taxation is different from the concept of manufacturing Central Excise. 3. The explanation furnished by assessee was not accepted by the Assessing Officer. The Assessing Officer held that it is the allegation of Excise Department that no goods have actually came to the factory premises of the assessee that only bogus vouchers were received from the supplier. The assessee cannot claim the deduction of purchase material which are not actually purchased physically. The purchases are on paper and not eligible for deduction under the Income Tax Act. It is not possible for tax authorities to physically verified certain aspects during the assessment proceedings as the matter are related to a period which is over a long back and that is not possible to verify whether material were actually received or not!. However, as per the findings of the Excise Department, no goods were actually received by assessee. The Assessing Officer disallowed the entire purchases from all three parties aggregating of ₹ 6.45 Crore, in the assessment order dated 30.12.2008 passed under section 143 r.w.s 147 of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce raw material i.e enamelled copper winding wire for manufacturing low price finished product of Bayer Copper Wire, relating into losses. The claim of assessee that enamelled copper wire gives better quality is not supported by any evidence. The Excise Department made enquiries from Transport Commissioner of Gujarat, which reveal that none of the vehicles mentioned on the invoices of alleged purchase and it is related lorry receipts for transportation of enamelled copper winding wire from Aurangabad factory and Biwandi Godown of Bharat Insulation Company entered in Gujarat. On the basis of such aforesaid observation and report of Excise Department, the ld. CIT(A) concluded that purchases are not proved to be genuine. However, the assessee claimed that payments were made through cheques and purchased are genuine, which is not acceptable as there is no conclusive evidence. However, the ld. CIT(A) held that the Assessing Officer is not justified in making addition of entire purchases and treating it as undisclosed income. The assessee had manufactured the corresponding finished goods and sold it and bring the money in the books and offered for taxation. The assessee must have purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remises of its manufacture have transported to the assessee s premises. The assessee could not prove beyond doubt to the Excise Authority that actual material was transported. The AO after giving opportunity to the assessee disallowed the purchases. The ld. CIT(DR) for the Revenue prayed for restoring the order of the ld.AO by reversing the order of the ld. CIT(A). 7. On the other hand, the ld. Senior Counsel for the assessee submits that the AO relied on the report of the third party. No independent enquiry or investigation was carried out by the ld.AO. The AO has not issued any notice under section 133(6) of summon under section 131 to the parties from whom the assessee made purchases. The purchases was made through account payee cheques. Goods purchased were shown in the inward register. On the basis of raw material, the assessee prepared finished goods. The AO has not rejected the books of accounts nor disputed the sale of assessee s finished goods. Manufacturing is not possible in absence of raw material. The AO during the assessment, recorded that it is not possible for the Income Tax Authority to verify the certain aspect as matter relating toe period which long back. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchased raw material from open market from third party in the form of copper wire or enamelled wire has claimed. Without consumption of raw material production is not possible and accordingly addition of entire amount of purchases is not justified. We further find that neither the Assessing Officer made any independent enquiry nor brought any independent material on record, except making reliance on the show cause notice issued by the Excise Department. 10. The Hon ble Gujarat High Court in PCIT vs. Ganga Glazed Tiles (P.) Ltd., 117 taxmann.com 107 held that assessing officer was not justified in making addition in the re-assessment proceedings in respect of profit earned on suppressed sales as there was no independent material brought on record by Assessing Officer other than those collected by the Excise Department and which, were yet to be verified. We find that the Revenue filed Special Leave Petition before, challenging the order of High Court before Hon ble Supreme Court and the same was dismissed vide order dated 27.01.2020 reported vide [2020] 117 taxmann.com 108 (SC). 11. Now adverting to the fact of present case, as noted above, the ld.CIT(A) restricted the ad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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