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TMI Blog2022 (3) TMI 1238X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee going for a toss. Without dealing with this aspect of the matter as also without conducting further inquiries from its own records and ignoring the evidences filed by the assessee showing purchase of raw material from the said party and payment also being made to it by banking channels, the disallowance of purchases merely for the reason that notice u/s. 133(6) of the Act remained unserved, we hold is not justified. Merely on account of non appearance of parties, purchase transactions conducted with them could not be said to be bogus when otherwise the assessee had filed all relevant evidences in support and the book results of the assessee were accepted including sales made by it. The disallowance of purchase made from M/s Gautam Stone Grinding Mill is directed to be deleted. Ground no. 1 is allowed. Disallowance of depreciation and additional depreciation on account of purchases made of plant and machinery - Burden of proof - HELD THAT:- We have noted that copies of bills of purchases of plant and machinery as also the bank statement highlighting payments made to the said party mentioned in the narration were filed. Therefore the burden of proof stood duly dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - ITA No. 1004/Ahd/2017 - - - Dated:- 25-3-2022 - Ms. Annapurna Gupta, Accountant Member And Shri Mahavir Prasad, Judicial Member For the Appellant : Shri Tej Shah, A.R. For the Respondent : Shri V.K. Singh, Sr. D.R. ORDER PER : ANNAPURNA GUPTA, ACCOUNTANT MEMBER:- The present appeal has been filed by the Assessee against the order passed by the Commissioner of Income Tax (Appeals)-1, Ahmedabad, (in short referred to as CIT(A)), dated 28-02-2017, u/s. 250(6) of the Income Tax Act, 1961(hereinafter referred to as the Act ) pertaining to Assessment Year (A.Y) 2012-13. 2. Brief facts relating to the case as transpires from the orders of the authorities below is that the assessee company is engaged in the business of manufacturing of construction chemical and wall putty. During the course of assessment proceedings for the impugned year, the Assessing Officer (A.O) disallowed various expenses on account of the enquires made by him from the parties to the transactions drawing a blank. The said expenses are as under: (i)Bogus purchases (ii) Depreciation on plant and machinery purchased during the year and (iii) freight outward expenses. 3. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner of Income Tax vs Nikunj Eximp Enterprises (P) Ltd. (2013) 216 Taxman 171 (Bombay). We shall take up each expense and deal with it separately. 7. The purchases from M/s Gautam Stone Grinding Mill amounting to ₹ 13,41,501/- was held to be bogus and the same confirmed by the Ld. CIT(A) at para 2.9 of the order is as under: 2.9. On careful consideration of entire facts, it is observed that purchases made from Coating Specialties Ltd. and Gautam Stone Grinding Mills, the appellant has furnished the ledger account of the assessee from its books of account and copy of return of income for the A.Y. 2012-13. The appellant has also furnished the copy of purchase bills received from coatings specialties (India) Ltd, but copy of bank Statements of Gautam Stone Grinding Mills has not been furnished by the assessee. The appellant has also not submitted the copy of bank Statements of Gautam Stone Grinding Mills before me during the course of appellate proceedings. The A.O. is also satisfied with the purchases made from Coating Specialties Ltd as indicated in the Remand Report (supra). Under the facts and circumstances of the case, I am partly inclined to accept the contention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties. It is not denied that the assessee had filed copies of all bills raised by Gautam Stone to the lower authorities. Copy of the bank statement evidencing payment made to Gautam Stone was also filed to the revenue authorities. We have also gone through the bank statement wherein the narration mentioning payment made to Gautam Stone by cheque has been highlighted by the ld. Counsel for the assesse. Nothing adverse has been pointed out by the Revenue with respect to the aforesaid facts. The assessee having clearly established the factum of payment through banking channels and the revenue not pointing out anything to the contrary, we fail to understand the relevance and the requirement of bank statement of Gautam Stone to establish the genuineness of the transaction. Further the assessee having furnished bills of Gautam Stone, the bank statement showing payment to him and also the acknowledgement of return of income filed by the proprietor of Gautam Stone, his onus for establishing the genuineness of the transaction we hold stood discharged. The fact that the said party was not found at the stated address alone is not sufficient to hold that the transaction was bogus. The return of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the additions on account of bogus purchases not only on the basis of stock statement i.e. reconciliation statement, but also in view of the other facts. The Tribunal records that the Books of Accounts of the respondent-assessee have not been rejected. Similarly, the sales have not been doubted and it is an admitted position that substantial amount of sales have been made to the Government Department i.e. Defence Research and Development Laboratory, Hyderabad. Further, there were confirmation letters filed by the suppliers, copies of invoices for purchases as well as copies of bank statement all of which would indicate that the purchases were infact made. In our view, merely because the suppliers have not appeared before the Assessing Officer or the CIT(A), one cannot conclude that the purchases were not made by the respondent-assessee. The Assessing Officer as well as CIT(A) have disallowed the deduction of ₹ 1.33 crores on account of purchases merely on the basis of suspicion because the sellers and the canvassing agents have not been produced before them. We find that the order of the Tribunal is well a reasoned order taking into account all the facts before concluding th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .T. Rules, stating that during the course of assessment proceedings, the appellant was unable to submit the requisite details. The appellant requested to get these verified by AO as the same was not available at the time of assessment proceedings. The same has been admitted as additional evidence in the interest of the natural justice as it was closely connected to the issue and these facts were not called by the A.O. at the time of the assessment order. The same were sent to the A.O. for his verification and necessary enquiries related to the issue. 3.7. The A.O. has submitted the Remand Report and stated that the notice u/s 133(6) of the act was issued during the remand proceedings. However, the same is not responded. Therefore, the assessee was requested to produce the person for verification. The assessee was not produced the person but filed confirmation of accounts and copy of return of income. The confirmation is not signed. Therefore, the veracity of the additional evidences produced by the assessee is not verifiable. 3.8. The appellant has submitted the Rejoinder of the Remand Report and stated that during the course of the remand proceedings, we have already sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made from M/s. Pneucon Process Technologies as under: (i) invoices of M/s. Pneucon Process Technologies at paper book page 72 to 73 (ii) Bank statement of the assessee depicting payment of machinery to Pneucon Process Technologies and ledger account of the assessee at paper book page no. 27 to 28 of P.B-2. 16. Ld. D.R. on the other hand relied on the order of the A.O./CIT(A) 17. We have gone through the facts before us and find that as in the case of purchases made by the assessee from Gautam Stone, all possible evidences vis- -vis purchase of plant and machinery made by the assessee from M/s Pneucon Process Technologies were filed. We have noted that copies of bills of purchases of plant and machinery as also the bank statement highlighting payments made to the said party mentioned in the narration were filed. Therefore the burden of proof stood duly discharged by the assessee and we have noted that nothing adverse has been pointed out by the revenue with respect to aforementioned evidences. It is only the fact that the party was not traceable in response to notice u/s. 133(6) issued by the AO. and the assessee was unable to produce him that the evidences were discarde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 46A of I.T. Rules stating that during the course of assessment proceedings, the appellant was unable to submit the requisite details. The appellant requested to get these verified by AO as the same was not available at the time of assessment proceedings. The same has been admitted as additional evidence in the interest of the natural justice as it was closely connected to the issue and these facts were not called by the A.O. at the time of the assessment order. The same were sent to the A.O. forhfs verification and necessary enquiries related to the issue. 5.7. The A.O. has submitted the Remand Report that the notice issued u/s 133(6) of the act during the course of assessment proceedings had not been responded. During the course of remand proceedings, also notice u/s133(6) of the Act issued on 06/01/2017 has not been responded. Moreover, the assessee could not produce the above persons though the opportunity was provided vide letter dated 16/01/2017 the assessee has also not produced any evidence in this regard. Therefore, the additions made on the issue may kindly be sustained. The appellant has submitted the Rejoinder of the Remand Report and stated that all the expenditu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... genuineness of its claim by way of invoices of the said party as also demonstrating payment to the said party through banking channels and the revenue, we have noted has without pointing anything adverse in the said evidences has held the same to be bogus for the reason that the notice issued by the A.O. u/s. 133(6) remained unserved/unresponded, 22. For the reasons discussed above by us at para 11-12 while dealing with the issue of bogus purchases and purchase relating to plant and machinery, the impugned expenses are also held to have been proved by the assessee to be genuine and disallowance made is directed to be deleted. 23. Ground no. 3 is allowed. 24. Ground no. 4 reads as under: 4. That the Ld. CIT (A) erred in law and on the facts of the case in confirming the action of the AO in disallowing preoperative expenses of ₹ 2,09,634/-. 25. The Ld. CIT(A) has dealt with the issue at para 6.3 and 6.4 is as under: 6.3. I have gone through the facts and the submission of the appellant carefully. It is seen from the profit loss account that appellant has written off ₹ 31,99,676/- as preoperative expenses. On careful perusal of the ledger account by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Testing expos s 35,000/- (iii) Laboratory Expenses 38,846/- (iv) and Salary LAB Staff 5,74,332/- 27. He contended that 1/5 of this expenses amounting to ₹ 2,09,635/- which was claimed as preoperative by the assessee and was not allowed by the Ld. CIT(A) without giving any reason. 28. Ld. D.R. on the other hand supported the order of the Ld. CIT(A). 29. We have gone through the facts of the case and have noted that the disallowance of preoperative expenses of ₹ 2,09,634/- has been sufficiently demonstrated by the assessee as relating to R D expenses incurred of which 1/5 had been claimed during the year. The ld. CIT(A) we have noted has given no reason for not allowing the claim of the assessee and has failed to appreciate the contention of the assessee and the facts as pointed out by him. We therefore hold that the claim of the assessee to preoperative expenses of ₹ 2,09,634/- was duly established and the disallowance of same is therefore directed to be deleted. 30. Ground no. 4 is allowed. 31. In effect, appeal of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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