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2020 (5) TMI 513 - AT - Income TaxRectification u/s 154 - addition being 20% of the bogus purchases - HELD THAT:- AO as taken into consideration the material and the outcome of the enquiries received subsequent to conclusion of the assessment proceedings. It cannot be held that the action of the AO of rectifying the mistake do not emanate from the record of the AO available at the time of assessment. Ergo, it cannot be held to be a mistake apparent from the record rectifiable u/s 154. There are other provisions enshrined in the Act to bring the amounts to the tax fold which are based on the replies received for the queries raised during the assessment proceedings but such action cannot be resorted to under the provisions of Section 154. Hence, the action of the revenue is held to be legally void. As a result, the appeal of the revenue is dismissed. Capitalization of Repair & Maintenance - Nature of expenses - revenue or capital expenses - HELD THAT:- AO has given no reason for disallowance of ₹ 2,14,720/-. The bills have been short listed only an amount of ₹ 5,18,000/-. The short listed bills also consist of bills for repairs, replacement of parts, custom duty, flooring and plaster. Keeping in view the nature of the expenditure, it cannot be treated as capital expenditure. The repairs to machinery and replacement of membrane filters or expenses which are regularly incurred in the manufacturing process and cannot be treated as capital expenditure in nature. Hence, we decline to interfere with the order of the ld. CIT (A) on this issue. Regarding the disallowance which are related to these revenue expenditure which were disallowed by the Assessing Officer without bringing anything on record is also hence liable to be deleted. Disallowance on account of Coal purchases - The payments have not been disputed and there was no record of any amounts or kick back received from VCM to the assessee. Since, VCM and the assessee were not related concern as per the provisions of Income Tax Act, no passing of the profits could also be attributable. In the absence of any evidence as to non-supply of the material (coal) and in the absence of any evidence that the purported excess money paid has been received back by the assessee, the amount of addition made on the difference of the amount paid by the assessee to VCM and VCM to its suppliers cannot be brought to tax treated as unexplained expenditure as per the provisions of Section 69C. The appeal of the revenue on this ground is dismissed. Addition on account of Unverifiable purchases - Assessee has submitted the entire bills and the transport vouchers before the AO alongwith the details of the trucks. The bills of various companies from which the VCM procured the coal has also been submitted before the AO alongwith the weighmentslips. In the context of disallowance of 20% of purchases, we do not find any evidence gathered by the AO to resort to such action. As per the record, there is no reason to disallow mere 20% of the purchases, if the AO believes that the purchases were bogus. The action of AO without any evidences collected either by the way of enquiry of the movement of trucks or by brining on record any evidence regarding the non-purchase/receipt of the coal cannot be held to bevalid. Assessee has furnished al l the evidences regarding the placement of purchase order, contracts, purchases, transport and delivery of the coal from Mughalsarai (UP) to Bhiwadi (Raj.). Hence, the 20% disallowance on the said purchases made by the AO in the absence of any evidences contra brought on record cannot be upheld. The order of the ld. CIT (A) on this ground is hereby confirmed.- Appeals of the revenue are dismissed.
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