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2020 (11) TMI 595 - AT - Income TaxBogus purchase of machinery - AO merely on the basis of enquiries conducted at the alleged premises of the supplier formed an opinion that it is a case of bogus purchase - HELD THAT:- The assessee in order to prove the genuineness of the purchase has furnished invoice and the sanction letter of the bank. The assessee had financed the purchase and installation of the machine from Andhra Bank. The bank had certified that payments were made to. M/s. Span Enterprises, the vendor and M/s. Jupiter Graphics, who had installed the machine. This fact has not been rebutted by the Department. Machine was purchased during the financial year 2008-09 and Inspector visited the premises of the vendors in December, 2014. The possibility of vendors shifting the place of business in between cannot be ruled out. Further, we observe that no finding of fact has been recorded by AO that these parties never had their place of work at the given addresses. Thus, the right course to verify purchase and installation of machine was to visit the premises of the assessee, which the Inspector failed to do. Purchases alleged to be bogus is not a trading asset but a fixed asset. The purchase of fixed asset is not reflected in the P&L Account, hence, the same was not claimed by the assessee as an expenditure. Once the expenditure has not been claimed, the same cannot be disallowed. No infirmity in the order of CIT(A) in deleting the addition qua alleged bogus purchase of machinery and allowing assessee’s claim of depreciation on the same. - Decided against revenue. Validity of reopening of assessment - AO without disposing the objections by passing a reasoned order has proceeded to pass assessment order - HELD THAT:- Hon’ble Supreme Court of India in the case of G.K.N. Drive Shafts India Ltd. [2002 (11) TMI 7 - SUPREME COURT] has laid down the procedure to be followed by the AO for disposal of the objections and also the time line for filing of objections by the assessee in the case of reopening of assessment. In the present case we find that after reasons were supplied to the assessee, the assessee had not filed any objections against aforesaid reasons for reopening. The objections as referred to at page 27 of the Paper Book are in fact not the objections. No specific ground has been taken by the assessee alleging deficiency in notice. Moreover, the so called objections by the assessee were prior in time to the furnishing of reasons by the Assessing Officer. No objections were filed by the assessee after receipt of reasons. A specific query was made to the ld. Authorized Representative for the assessee as to whether any objections were filed by the assessee after reasons for reopening were supplied by the Assessing Officer, to which the ld. Authorized Representative for the assessee replied in negative. - Decided against assessee.
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