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2012 (7) TMI 341 - AT - Income TaxChallenging the re opening of assessment u/s 147 - Held that:- The AO received information from investigation wing that assessment is a beneficiary of the bogus accommodation purchase bills and on this information, AO applied his mind and formed a belief that income has escaped assessment - it was neither a change of opinion nor it conveyed a particular interpretation of a specific provision which was done in a particular manner in the original assessment, the reason to believe has been appropriately understood by the Assessing Officer - was sufficient material on the basis of which notice was issued - against assessee. Against the deletion of addition made on account of bogus purchases by CIT(A) - Held that:- Not getting the accounts audited as per the provisions of section 44AB even when the turnover exceeds the limit also solidify the belief that transactions were not genuine - CIT (A) observation that no sales can be executed without making corresponding purchases is perverse as during financial year 1999-00 and 2000-01, the installed capacity for Atta shown in accounts is 60,000 MTs while production was 73,149 MTs and 84,316 MTs respectively. Assessee was also getting grinding done on lease contract also. All these facts show that there cannot be a direct nexus between purchases and sales - in favour of assessee. Against the deletion of addition made on account of employees provided fund and ESIC by CIT(A)- Held that:- The deduction of payment of employees’ contribution towards provident fund and ESI cannot be disallowed under section 43B, if paid before the due date of filing the return - in favour of assessee. Against the deletion of addition of interest free loan given to sister concern of assessee by CIT(A) - assessee also gave interest-free loans and advances to its sister-concerns - Held that:- Revenue was not able to establish any nexus between the amount borrowed by the assessee company on interest and the amounts advanced by the assessee to its sister-concerns. In fact major parties from whom interest was not charged were the same as in assessment year 1977-78 for which the Tribunal held that there was no warrant for adding any notional or deemed interest - to decide whether interest on funds borrowed by the assessee to give an interest free loan to a sister concern should be allowed as a deduction under section 36(1) (iii), one has to enquire whether the loan was given by the assessee as a measure of commercial expediency - in favour of assessee.
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