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2016 (5) TMI 761 - AT - Income TaxAddition on bogus purchases and non-business expenditures - Held that:- In the audited financial statements at Annexure-I to Form No.3CD dated 21.09.2009 wherein consolidated financial figures are to be mentioned by the Tax Auditor. In this Annexure- I, there is a specific column at Sr. No.10 which asks about the commission received by the assessee during the year and to our surprise, the amount shown in the current year as well as preceding year is NIL. We also observe from the audited balance-sheet that the inventory at ₹ 2,16,358.79 is appearing under the head “application of funds” but the same figure does not find any place in the audited Trading & Profit & Loss Account and no details are available on record to show as to what is this inventory about, because if it is an inventory, then the assessee is having regular purchase and sale transactions and he may be treated as trader. Further, at the year end, there is an amount of ₹ 54,13,176.52 is payable to farmers which is approximately 30% of the sales and in the balance-sheet under “advance and deposits” a sum of ₹ 39,15,975/- is shown as advance to M/s. Thakorbhai & Co., Amalsad, Navsari. These types of financial transactions raise a question as to whether the assessee has entered into these transactions as a trader of agricultural goods or as a commission agent. We are, therefore, of the view that there are series of questions which remained unanswered in the order of the ld. Assessing Officer and more specifically about the distinction between the type of activity of which the assessee is actually engaged into has not been brought on record which needs to prove that whether the assessee is a commission agent or a trader of agricultural products. We, therefore, set aside the matter to the file of the ld. Assessing Officer to examine various issues discussed above and pass a fresh assessment order after giving proper opportunity of being heard to the assessee and while framing fresh assessment order, he should be clear to assess as to whether the assessee is a commission agent or a trader and then proceed further to deal with the related issues. - Decided in favour of Revenue for statistical purposes.
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