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2020 (4) TMI 25 - AT - Income TaxDisallowance of transportation charges - assessee has not furnished all supporting evidence - entity of the parties as well as the genuineness of the transactions was not established - notices u/s 133(6) were not served upon the parties - assessee was engaged in the business of trading of mines and minerals - HELD THAT:- In the business of trading of mines and minerals it incurred a high volume of transportation charges. Sometimes the assessee hired local transport for the transportation of goods. The ld. Counsel submitted that in the year under consideration the assessee incurred transportation charges amounting to ₹ 5,76,26,254/-, out of which it paid ₹ 8,82,059/- to M/s Shakti Transport during the F.Y. 2009-10. The assessee received bill and invoices from Shakti Transport and thereafter made the payment through account payee cheque. The ld. Counsel submitted that during the assessment stage the party called M/s Shakti Transport did not cooperate with the assessee,therefore, the assessee could not produce the said party before the ld. Assessing Officer, but assessee submitted the bill, ledger and relevant bank statement for the payment made. We note that there is merit in the submission of the ld. Counsel as the assessee produced bills, ledger copy, bank statement (transaction done through banking channel) to prove the bona fide of the transaction, therefore, we delete addition. Addition of share application money u/s 68 - HELD THAT:- The company duly filed Form No.2 with the Registrars of Companies for the aforesaid shares issued. The quantity and value in respect of share application money has been properly accounted for in the books of accounts of the company and explained properly to the Assessing Officer. Further, the Ld AO added the share application money as unexplained cash credit as per section 68 of the Income Tax Act 1961 whereas the assessee is a company (not being a company in which the public are substantially interested), and shares were issued to the existing Directors/shareholders therefore identity of the share subscribers are not in doubt. The Assessing Officer made addition on the ground that quantity and value in respect of share application money is not matching. We note that assessee filed reconciliation and submission as noted above and there is no mismatching. Hence, we delete the addition. Undervaluation of closing stock - HELD THAT:- total value of closing stock is ₹ 29,80,494/- of which ₹ 4,93,533/- comprises of Non iron Ore Fines Products and ₹ 24,86,961/- comprises of Iron Ore Fines Products. The said value includes cost of purchase, freight inwards and loading and unloading charges. The aforesaid method of valuation of closing stock is as per Accounting Standard-2 and the assessee has been applying the same method regularly. We note that the Assessing Officer allowed such valuation in all previous assessment years, therefore, based on the principal of consistency the assessee’s claim should be allowed in this year also. As the assessee was applying the method of valuation of closing stock as per Accounting Standard-2 on a regular basis without any deviation, the addition sustained by ld. CIT(A) on account of undervaluation is directed to be deleted. - Assessee appeal allowed.
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