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TMI Blog2021 (9) TMI 221X X X X Extracts X X X X X X X X Extracts X X X X ..... in the order of the CIT(A) in directing the A.O. to delete the disallowance made by the A.O. on account of expenditure on transportation. Accordingly, we dismiss the grounds raised by the revenue on this issue. Addition based on the various loose papers impounded during the Survey proceeding conducted in the business premises of assessee - clandestine removal and unaccounted sales - CIT-A deleted the addition - HELD THAT:- CIT(A)'s categorical finding is that the A.O. during the survey proceedings of the assessee company's business premises have not collected any material from assessee company which indicate unaccounted sales and the loose papers impounded from business premises of M/s. B.S. Transcomm belong to them and assessee company cannot be held responsible for the other company's record and their statement - No reason to interfere with the order of CIT(A) in deleting the addition made by the A.O. on account of unaccounted sales. Revenue ground dismissed. Addition u/s. 40A(2)(a) (b) - appellant company had made purchases both from related party and unrelated party - AO compared the price of purchase from related party and unrelated party and disallo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year the same was at ₹ 1,24,55,142/-. The Assessing Officer observed that increase in sales during the year when compared to last year is only 27% whereas freight outward is increased by 210%. Further, he observed that the freight expenses debited were around 1 to 21 lakhs in initial months and suddenly in the months of January, February, and March these were increases to crores and all these expenses were payable to M/s. APK Road Carriers. Therefore, the Assessing Officer held that the transactions with APK Road Carriers are not genuine and whatever the amounts recorded payable to M/s. APK Road Carriers are nothing but inflation of expenditure by the appellant company and disallowed the expenditure on transportation. 5. Aggrieved by the order of AO, the assessee preferred an appeal before the CIT(A). 6. During appeal proceedings, the appellant company submitted that the expenditure was genuine and it had made advance payment to APG against installation and erecting of 132KVA line in factory premises. Subsequently, APCPDCL recommended another party which was more economical. Accordingly, it cancelled the dealing with APG before execution and obtained refund of the advan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial Number. Further, the transportation bills of APK Road lines clearly shows the details to whom the transportation is done. The Assessing Officer in his remand report has wrongly stated that the serial Nos. on the bills are not there and the details are not available. 8.3.5 The Assessing Officer in his assessment order states that the freight expenses debited were around 1 to 2 Lacs in the initial months and suddenly in the month of January, February and March, these expenses were increased in Crores. The appellant, in response to the same, states that the amount of freight debited in the month of January, February and March pertains to the transportation charges of the earlier months also. The appellant contends that the invoices had been accounted in the months of January, February and March as they had been received during those months only. A month wise comparison of freight with corresponding purchase and sales during that month is totally wrong as there are circumstances where the bills of the services rendered may be raised at a later period. The proof of services rendered by the transporter from the month of April 2008 has been verified by me from the sales invoices ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure or received the services. Since the services are received and ultimately the payment is made by way of account payee cheques and on which TDS is deducted and the revenue is reflected in the income of the receiver as proved by the appellant, the expenditure cannot be disallowed on this ground. 8.3.8 The Assessing Officer in his assessment order has stated the assessee has not produced the complete bank account of APK Road Carriers, but it has produced the bank account partly to its convenience. I have verified the complete ledger account with payment details and am satisfied that the transportation expenses are ultimately paid and the contention of the Assessing Officer that the payments made to APK Road Carriers on account of transportation has been received back by the appellant is not correct. 8.3.9 Further the Assessing Officer states that he had issued summons to APK Road Carriers to the address mentioned on the Invoices. But no one appeared in this connection. The appellant contends that the APK Road Carriers are not in receipt of any summons. Further the Assessing Officer had not disclosed to the appellant that any summons had been issued to APK Road Ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The ld. DR besides relying on the order of the A.O. submitted that the assessee company in support of its claim of expenditure produced freight bills and ledger copies are self-made, therefore, the genuineness of the expenditure is doubted by the A.O. and made the addition accordingly. 9. On the other hand, the ld. AR submitted that the bills clearly indicate the name of the consignor and consignee and the amount paid to APK Road lines is duly accounted by them as can be seen from the financial statements of them and the certificates provided. Copy of APK road Carrier financial statement, form 26AS and return acknowledgment for F.Y. 2008-09, confirmation are enclosed. The accounts of APK Road Carriers for the A.Y. 2009-10 was also scrutinized by the income tax department. 10. We have considered the rival submissions and perused the material on record as well as gone through the orders of revenue authorities. The Assessing Officer observed that increase in sales during the year when compared to last year is only 27% whereas freight outward is increased by 210%. Therefore, the Assessing Officer held that the transactions with APK Road Carriers are not genuine and whatever the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ief facts of the case are that the assessing Officer based on the various loose papers impounded during the Survey proceeding conducted on 21-11-2012 in the business premises of assessee noticed that the assessee company during F.Y. 2010-11 had made unaccounted purchase of 518.55 MTs of Sponge Iron M/s. Arshad Ispat, Koppal. Further Shri Gopal Agarwal, brother of Pramod Kumar Agarwal, factory in charge and authorized signatory of M/s. M.S. Agarwal Foundries Pvt. Ltd. in his sworn statement dated 19-07-2011 recorded u/s. 14 of the Central Excise Act, 1944 had accepted the same and paid an amount of ₹ 8,50,000/- on account of Central Excise Duty on such clandestine removal and unaccounted sales of MS Billets and TMT bars amounting to ₹ 68,77,022/-. 12.1. During the course of appeal proceedings, the appellant stated that the Central excise department has forcefully taken the declaration of unaccounted sales and collected the duty. The assessee company has filed an appeal against the central excise order and the matter is sub judice. 12.2. The assessee company also, inter-alia, contended that even in case of unaccounted sales, it is gross profit which is to be added a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anscomm is deleted in the absence of any material af assessee's camp any record. 12.6. To sum up, out of the total addition of ₹ 1,93,95,052 on account of unaccounted sales, the CIT(A) gave relief to assessee of ₹ 1,90,12,002 and ₹ 3,83,050 was sustained. 13. Aggrieved, the revenue is in appeal before the ITAT. 14. We have considered the rival submissions and perused the material on record. While deleting the addition made by the AO, the CIT(A)'s categorical finding is that the A.O. during the survey proceedings of the assessee company's business premises have not collected any material from assessee company which indicate unaccounted sales and the loose papers impounded from business premises of M/s. B.S. Transcomm belong to them and assessee company cannot be held responsible for the other company's record and their statement. Therefore, we do not find any reason to interfere with the order of CIT(A) in deleting the addition made by the A.O. on account of unaccounted sales. Thus, grounds Nos. 1 2 raised on this issue are dismissed. 15. As regards ground No. 3 regarding deletion of addition of ₹ 1,30,80,016/- made by the A.O. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w of above, it cannot be said that there is no product profile difference between MS ingots purchased from sister concern i.e. Agarwal foundries and the unrelated parties. Thus, it cannot be said that there are any excess payments made by the assessee company to its sister concern. Therefore, I hold that the A.O. is not justified in making disallowance u/s. 40A(2)(a) (b) of ₹ 1,30,80,016/- and hence it is deleted. 6. We have considered the rival submissions and perused the material on record as well as gone through the orders of revenue authorities. The CIT(A)'s categorical findings are that the assessing officer erred by comparing prices of two different quality product supplied by M/s. Agarwal Foundries and unrelated parties. The Assessing officer has not tried to find out the fair market value of the product. The appellant company has also produced the details of sale price of finished product manufactured using higher grade material which fetch extra margins to company. Furthermore, both M/s. Agarwal Foundries and Appellant Company are taxed at maximum rate of tax. Therefore, we do not find any infirmity in the order of the CIT(A) in deleting disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X
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